Electric vehicle manufacturer Rivian Automotive (NASDAQ:RIVN) sells luxurious cars with impressive ranges. Yet, there are experts on Wall Street who flashed a warning signal about RIVN stock and clean energy investments in general.
Still, Rivian’s critics haven’t stopped a central bank from backing up the truck and buying loads of RIVN stock shares.
At the same, there’s an EV battery boom in the U.S. that’s creating vast amounts of wealth and jobs. As this industry rapidly expands, a Rivian Automotive executive is vigorously defending the automaker’s multi-year growth prospects.
So, let’s dive headfirst into the debate and see if there are compelling reasons to invest in Rivian Automotive now.
Which National Bank Bought RIVN Stock?
Here’s the scoop. Reportedly, Switzerland’s central bank, the Swiss National Bank, purchased 1.1 million RIVN stock shares in this year’s second quarter. With that, the central bank’s total investment in Rivian Automotive grew to a whopping 2.3 million shares.
I couldn’t find the Swiss National Bank’s specific reason for making these share purchases. However, at the very least, it’s reasonable to conclude that this central bank is probably bullish about the high-end clean-energy vehicle market.
Citigroup analysts recently published warnings about Rivian and Fisker (NYSE:FSR) and Rivian Automotive (both of which produce pricey EVs) along with a handful of other clean-energy companies.
“[S]tock selection within this subcategory should be considered very carefully,” the Citigroup analysts advised.
I actually agree with that cautionary note, but I like Rivian Automotive because the company is narrowing its earnings deficit. Furthermore, Rivian made a smart move by adopting Tesla’s (NASDAQ:TSLA) charging standard.
In addition, Rivian Automotive made its R1T and R1S models compatible with EVgo’s (NASDAQ:EVGO) Autocharge+ fast-charging system.
Lower Battery Prices and Rivian Automotive
While the Citigroup analysts offered a cautionary tone, Rivian Automotive’s finance chief, Claire McDonough, pointed out a tailwind that some market experts might not have considered.
In particular, McDonough (per a Reuters report) assured that Rivian will “benefit late this year and in 2024 from a significant deflation for battery material prices.”
The prices of certain commodities, such as lithium and copper, increased in the wake of the Covid-19 pandemic and Russia’s invasion of Ukraine. It’s quite possible that battery metal prices will ease back as supply chains get moving again.
McDonough contends that lower battery metal costs could boost Rivian Automotive’s margins. I wouldn’t use this argument as the sole reason to own RIVN stock, but’s another potential tailwind to add to the list.
Bear in mind, these are long-term considerations. Another bullish factor is Rivian Automotive’s Georgia-based EV production plant, which is expected to start manufacturing vehicles in 2026.
Thus, Rivian’s faithful customers and shareholders should be patient and think in terms of years, not months.
Multiple Reasons to Buy RIVN Stock
Should you invest in Rivian Automotive because Switzerland’s central bank did? Or because you expect battery metal prices to fall? Or maybe because Rivian has the potential to turn a profit in the coming quarters?
You’re encouraged to consider any of these factors, or just choose “all of the above.” There will be challenges along the way, but I still envision robust long-term growth for Rivian Automotive.
If you have time to buy RIVN stock in the low $20s, I recommend making your move before it’s too late.
On the date of publication, David Moadel 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.
