Goldman Sachs analysts recently embarked on a field trip to gather insights from leading electric vehicle companies in the industry. After Morgan Stanley’s negative assessment, the team sought to understand the challenges and opportunities in the EV market by meeting with executives from Tesla and Rivian.
Starting their visit at Tesla’s Fremont factory, the analysts engaged in discussions with key executives, including VP of IR Martin Viecha and Investor Relations Lead Abhinav Davuluri. Topics ranged from the current EV slowdown to upcoming vehicle models like the Cybertruck and the advancements in artificial intelligence. Tesla highlighted being between growth waves, with new products and entry into new markets expected to drive growth in the near future. Notably, Tesla remains flexible with pricing strategies and plans to maintain positive free cash flow annually.
Regarding Tesla’s progress on the 4680 batteries and advancements in AI technology, the analysts got insight into the company’s optimistic outlook. Additionally, the discussions touched upon Tesla’s growth potential in energy and services sectors. Despite various risks in vehicle pricing and competition, as well as delays in product launches, analysts maintained a neutral rating with a price target of $190 for Tesla shares.
Shifting the focus to Rivian, the analysts later met with executives in Palo Alto to discuss the company’s strategies and outlook. Rivian emphasized its flexibility with pricing and plans to introduce new SKUs and leasing options to support demand for the R1 electric vehicle. The company aims to achieve a positive gross margin in the fourth quarter of 2024, driven by improved material costs and increased revenue from software and services.
Rivian also highlighted strong interest in its upcoming R2 model, with a significant number of pre-orders not only from existing customers but also new ones. With a cautious approach to capital allocation and cash management, Rivian plans to extend its runway until the start of R2 production in the first half of 2026. Despite positive prospects and risks in cash burn and supply chain, analysts maintained a neutral rating with a price target of $13 for Rivian stock.
As the EV industry faces challenges amid the current slowdown, analysts’ neutral ratings on both Tesla and Rivian reflect cautious optimism and a balanced view of the companies’ prospects in the evolving market landscape. With a focus on key growth drivers, pricing strategies, and product innovation, these insights provide valuable information for investors navigating the dynamic electric vehicle industry.
