Risks are mounting for Rivian Automotive , according to Bank of America analyst John Murphy. The analyst downgraded the electric vehicle maker to underperform from neutral and cut his price target by $3 to $10, which implies 22.9% potential downside for shares. “RIVN remains one of the most viable among the startup EV OEMs and is making progress towards sustainably positive gross margins. However, the 2025 outlook was softer than we had expected and the VW partnership is complicating earnings forecasts for at least the next four years,” Murphy wrote Monday in a note to clients, citing Rivian’s partnership with Volkswagen to develop EVs through a joint venture. He added that competition in the electric vehicle market is increasing, with new SUVs and CUVs, or sport utility vehicles and crossover utility vehicles, set to enter the space in 2026 and 2027. Coupled with Rivian’s seemingly slower-than-expected ramp of its R2 vehicle, more players in the market “could hinder RIVN’s longer-term volume trajectory,” Murphy said. Rivian exceeded Wall Street’s earnings expectations in its fourth quarter and achieved its first gross quarterly profit, a metric that includes production and sales but doesn’t factor in other corporate expenses. However, it expects lower sales in 2025. Rivian expects another “modest gross profit” this year, but it’s unclear when it will be profitable with all expenses factored in to its net income. Murphy expects Rivian to get hit by President Donald Trump’s hostile stance towards EVs and his administration’s focus on cost-cutting across the federal budget. He said there could be risk to Rivian’s loan of up to $6.6 billion from the Department of Energy, which was closed by the previous administration in mid-January. “Demand for EVs is slowing and may not get much better near-term with indications that the U.S. may pull back on EV incentives,” Murphy said. One of Trump’s early promises has been to eliminate the “electric vehicle mandate,” or essentially revise regulations such as federal emissions standards and fuel economy requirements that motivate companies to build EVs. Earlier this month, the Trump administration paused a federal clean energy program that intended to expand the country’s electric vehicle charging station network. Rivian shares are down 2.5% year to date, after climbing more than 28% over the past year on encouraging revenue growth. Shares are down 41% over the past three years.
