After a rough start to the new year, electric vehicle manufacturer Rivian Automotive (NASDAQ:RIVN) sparked positive momentum recently. Earlier on Wednesday, the Insurance Institute for Highway Safety (IIHS) stated that the Rivian R1S SUV earned entry into the agency’s Top Safety Pick+ ranks for the 2023 model year. RIVN stock gained nearly 1.5% during the late afternoon hours.
According to the accompanying press release, the award applies to vehicle models with a manufacturing date post-January 2023. Further, the R1S joins the Rivian R1T pickup truck in receiving this honor, meaning that both the company’s flagship consumer vehicles hold the non-profit agency’s highest safety award for 2023.
Additionally, so far this year, the R1S represents the only vehicle in the large SUV segment to take home the Top Safety Pick+ award. On the other end, the R1T is one of only three to earn the designation on a year-to-date basis.
“The R1 line of vehicles was designed to be among the safest on the road today through clean-sheet structural design, optimized materials, and fully integrated software,” said Rivian Vice President of Chassis Attributes and Safety Engineering Malin Ekholm.
“We are delighted to see R1S join the R1T in receiving the TOP SAFETY PICK+ award and will continue to make safety a key priority for our customers as they take on their next adventure,” added Ekholm.
RIVN Stock Has a Mountain to Climb
Despite today’s encouraging news, Rivian still faces significant challenges ahead. For the year, RIVN stock finds itself down about 24%. Since making its public market debut, shares have tumbled 90%. Therefore, the pressing question is, will the aforementioned vehicle safety award move the needle for the EV maker?
Parsing through Bloomberg’s assessment of RIVN stock, the answer may be probably not.
As the news agency remarked, investors have little faith that Rivian can compete in a crowded EV market. Immediately following its public trading debut, RIVN stock featured a market capitalization in excess of $150 billion. As of this writing, it sits a little over $12 billion.
Fundamentally, the most pressing concern for RIVN stock centers on the EV sector-wide price war. With Tesla (NASDAQ:TSLA) aggressively slashing (and raising) prices for its highly desirable vehicles, competing enterprises must almost surely respond. That’s going to add headwinds to an already-pressured financial profile for Rivian.
In addition, Rivian needs capital to increase its manufacturing base, by which economies of scale may facilitate a competitive canvas. Unfortunately, the Federal Reserve’s hawkish policy has only increased borrowing costs, making expansionary endeavors difficult.
As if RIVN stock needed any more challenges, the latest statements from Fed Chair Jerome Powell indicated there’s still a long way to go to bring down inflation.
Why It Matters
According to TipRanks, Wall Street analysts maintain a positive view of RIVN stock, pegging shares a consensus moderate buy. On average, their price target lands at $26.11, slightly more than doubling the time-of-writing price.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
