Guggenheim has abandoned the bullish scenario on Rivian shares. What is the forecast now?

Guggenheim dropped its recommendation to buy shares of electric car maker Rivian and downgraded them to neutral. The reason for the revision was the elimination of tax incentives for the purchase of electric cars, as well as weak sales of the company's pickup truck. In addition, Rivian will probably no longer be able to capitalize on the sale of carbon credits to other automakers. The company faces a tough year ahead before new models are released in 2026, the investment bank said.

Guggenheim analyst Ronald Evsikov worsened his rating on shares of Rivian from Buy to Neutral (Hold), Barron's reports. At the same time, it reiterated a target price of $16 per paper - suggesting a potential upside of 25% relative to the last close. 

Rivian Automotive securities fell 2.5% to $12.8 in Monday trading.

U.S. President Donald Trump's "Big and Beautiful Law" repeals the $7500 tax credit that car owners receive when buying electric cars. The measure will come into effect in September and, according to an analyst, will hamper the growth of sales of all electric cars.

Rivian is already having difficulties in 2025: the company announced that it plans to sell about 43,000 R1S and R1T models - 18% less than it delivered in 2024, when it was about the pickup trucks of the previous version of the R1. The launch of the more affordable R2 and R3 is not scheduled until 2026.

"Continued weakness in sales of the R1 lineup and Trump's tax law pose both fundamental and image risks to our bullish scenario for new R2/R3 pickup sales and cannot be ignored," the analyst wrote in a note that quotes Barron's.

Possible changes in environmental regulation remain an additional risk for the company. Congress may limit the authority of the state of California to control carbon emissions, on the basis of which Rivian receives carbon credits for the sale of environmentally friendly vehicles and sells them to automakers that produce cars with internal combustion engines.

As a result, Guggenheim predicts Rivian will sell 150,000 vehicles in 2028, while analysts previously expected 185,000. That estimate is well below market consensus, Barron's notes. According to FactSet, analysts on average expect 282,000 Rivian pickups delivered in 2028, and yet that's still not enough to reach operating profit, the publication states. To reach at least break-even, mass-market automakers typically need to sell about 400,000 vehicles a year. This is true for both conventional and electric cars, Barron's explains.

Not all automakers will be affected equally by the removal of subsidies for electric vehicle purchases in the U.S., announced BNP Paribas analyst James Picariello on July 3. General Motors, Ford, Hyundai and Kia have all seriously ramped up production of electric vehicles in recent years. However, as the BNP analyst notes, "without government support and with weakening consumer demand, these efforts are likely to slow." While "for companies that are fully focused on producing electric vehicles, such as Rivian, Lucid and Tesla, this could mean an increase in available market share," Picariello suggested.

The law signed by Trump opens the door for a revaluation of stocks in the electric vehicle sector, which has generally been declining since the start of the year amid macroeconomic risks including uncertainty around duties, noted Bloomberg.

So far, the attitude to Rivian shares on Wall Street is cautious: only one in four analysts recommends buying them, follows from MarketWatch data. 61% take a neutral stance, like Guggenheim. There are also four "sell" tips. Wall Street's average price target is just below $15 per share, up nearly 16% from the last close of trading. The company's value has declined 28% over the past year.

This article was AI-translated and verified by a human editor