It’s been another week, and battling analysts gave different opinions about Rivian following a decisive Department of Energy decision, an adjustment to Tesla’s Cybertruck has one analyst reacting and Bank of America analysts says this luxury brand is one of the best automotive industry stock in 2025.
A Rivian R1T electric vehicle (EV) pickup truck at the company’s showroom in New York, US, on Tuesday, Jan. 2, 2024.
Rivian and Biden’s Buzzer Beater
By the time this reaches your screens, President Donald J. Trump will already have taken the oath of office; however, the former president will not have vacated the seat in the Oval Office without leaving something behind.
The finalization of a Department of Energy loan to Tesla, rivaling EV automaker Rivian (RIVN) to the tune of $6.6 billion, was among the last decisions made during former President Biden’s last week in office. According to the administration, the money will finance the development and construction of a new, 9 million square feet manufacturing plan in Georgia.
As per Rivian, the new facility will be used to build its new, smaller “midsize” vehicles, including the R2 and R3, to the tune of 400,000 SUVs annually.
“This loan will help us accelerate the launch of our Georgia plant for R2 and R3, providing thousands of jobs in the state,” Rivian CEO RJ Scaringe said in a statement. “People are incredibly excited to get behind the wheel of our new models, and this additional capacity for our mass market products is key to U.S. leadership in the electric vehicle industry.”
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However, analysts at Truist believe that the DOE agreement doesn’t move the needle for Rivian stock.
In a note published on January 16, Truist analysts gave a “Hold” rating and raised the price target of Rivian stock from $12 to $14, noting that 2025 will be another volatile year for the domestic EV sector. The analysts noted that Donald Trump may choose to repeal specific parts of the Biden-era Inflation Reduction Act, notably the parts that offer buyers subsidies on electric vehicles for their neutral stance.
Though the IRA EV tax credits have a minimal effect on Rivian buyers (most of its vehicles are well within the price limit), the new government’s willingness to rescind the initiative still creates uncertainty for EV stocks.
On the flip side, UBS analyst Joseph Spak raised the price target on Rivian stock from $11 to $14 in his latest note and kept a Neutral rating, citing several factors, including the company’s growth potential, expansion plans, and partnerships with automakers like Volkswagen.
Related: Tesla makes surprising decision on Cybertruck production
The Tesla Cybertruck discount case
On November 21, 2019, Tesla’s Elon Musk unveiled what ended up being the (TSLA) Cybertruck.
On stage, he made a few promises; most notoriously, an on-stage demonstration that showed the glass was unbreakable showed the vehicle’s designer shattering not one but two windows with a metal ball.
However, most importantly, Musk promised that production of the vehicle would begin in 2021 with a starting price of $39,900.
By now, we all know that did not happen. It ‘officially’ went on sale about two years later, with promised range figures not met, and not all the trim levels of the vehicle were available for purchase from the start. Nonetheless, the Cybertruck became the best-selling electric pickup in the United States in 2024 and the fifth-best-selling EV overall that same year.
With such achievements, it would be peculiar to know that such a vehicle would have a demand problem. On January 15, Tesla began knocking off up to $1,600 on some Cybertrucks, and those used as demo vehicles got discounts of up to $2,630.
In a note, Global Equities Research analyst Trip Chowdhry argued that Tesla is offering the discounts because consumers are looking for a smaller, more affordable all-electric pickup, noting that their current offerings aren’t scratching an itch with the current buyer base.
He concludes that Tesla should consider a different variant of the Cybertruck: a lower-cost, compact, mass-market version. Chowdhry suggests that by reducing the Cybertruck’s size by 20 percent, Tesla would be able to hit a price point between $40,000 and $60,000—closer to what Musk promised its customers back in 2019.
The GER analyst also expressed skepticism about Tesla’s manufacturer incentives, stating they will not spur demand for the vehicle. Additionally, Chowdhry also noted that, based on anecdotal comments from vehicle insurers in California, Tesla’s Cybertruck seems to be losing ground to rival Rivian’s R1T among EV buyers in the same segment.
HATFIELD, UNITED KINDOM – JANUARY 11: The Ferrari 12Cilindri at HROwen Ferrari in Hatfield, Hertfordshire. Hatfield is the main hub destination for HROwen with their main HQ being based there. (Photo by Martyn Lucy/Getty Images)
Bank of America calls this luxury auto stock a top pick
While MS analysts have kept Tesla as one of their Top Picks, Bank of America analysts led by John Murphy have not highlighted its stock in their US Autos 2025 Year Ahead overview on January 14.
Instead, the lone automaker it listed was none other than the racing world’s biggest brand: the New York Yankees of Formula 1 and the bulk of other racing series worldwide: Ferrari (RACE) .
As a car enthusiast, to call Ferrari a simple “car brand” like Toyota or even Mercedes-Benz is like denoting Louis Vuitton as simply a luggage brand—too much of a simplification for what they sell: a brand, an image that other people desire.
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It is why the character of Cameron Frye, played by Alan Ruck in the 1986 film Ferris Bueller’s Day Off, describes his father’s 1961 Ferrari 250GT California as “his love,” and “his passion” and why the salesman was extremely hesitant to lend Al Pacino and Chris O’Donnell’s characters a Mondial t cabriolet in the 1992 film “Scent of a Woman.”
Most people in the United States struggle to afford a house, much less the average new car, but BofA cites Ferrari’s ultra-luxury appeal as the main driver behind its ‘Buy’ rating.
In the report, it calls the prancing horse a “unique asset with significant intangible brand value and a true luxury status,” noting that the brand’s high price point and exclusivity are the main drivers behind continued growth.
“We believe the company’s balanced strategy of restrained volume growth, steady price increases, and new model introductions over our forecast period should drive strong consistent revenue and earnings growth.”
Related: Groundbreaking Chinese EV, strong Ferrari quarter have analysts excited
In late August 2024, Morgan Stanley analysts, led by Adam Jonas, gave Ferrari stock a $520 price target, one of the highest forecasts on Wall Street. In the note, Jonas noted that Ferrari was much less exposed than other luxury brands; even the ‘Birkin bag’ maker Hermès.
“We are not aware of any other global luxury brand with anywhere near as low exposure to China as Ferrari,” Jonas wrote, also noting that the brand has a two-year-long order book and that its limited-edition models sell out instantly.
However, BofA analysts feel that its new products, along with its new moves in Formula 1 (seven-time F1 World Champion Lewis Hamilton is due to start testing soon at Fiorano), will help drive the brand [and its stock] forward in 2025.
“In our view, the stock should outperform in 2025 supported by a stronger mix (F80 will start ramping in late 2025, followed by the HyperCar in late 2026) and its improved racing performance in 2024,” Murphy wrote.
“[Ferrari] also continues to focus on differentiating its vehicles and improving operations. We expect RACE’s financial outlook will likely remain conservative. Further, we’d note that the company’s financial performance is resilient during macroeconomic uncertainty.”
Related: Veteran fund manager issues dire S&P 500 warning for 2025
