Rivian’s $5bn VW deal is a “game changer”

Rivian’s (NASDAQ:RIVN) $5 billion deal with Volkswagen is a “game changer”, that’s according to American stockbroker Wedbush, which upgraded its target to $20 from $15.

It sees VW injecting capital into a technology joint venture and collaboration that’s expected to see architecture and software that will power vehicles being developed by both companies.

Rivian expects to accelerate the development of its SUV, whilst VW expects to more quickly move towards having what it is describing as “software-defined vehicles” (SDVs).

“This is a core game changer for Rivian and changes the capital structure of the company looking ahead for the story and the Street's view at a key time,” Wedbush analyst Daniel Ives said in a note.

Ives described it as “a breath of fresh air”, as he penned the upgrade note.

“Rivian will leverage this opportunity by utilizing this robust capital roadmap to support future growth while vertically integrating its software platform and electrical architecture while achieving further cost savings and deliver improved vehicles down the line,” he said.

“Importantly, this partnership will provide capital needed for the R2 ramp and GA plant R2/R3 midsize platform which we view as a large step in the right direction and a key move for Rivian going forward.”

The analyst added the Wall Street will mainly still be focused on Rivian’s ‘profitability story’ and its execution – especially in regard to the delivery of the R2 model and the construction of its plant in Georgia.

Rivian stock was up 23.35% in Wednesday’s trading, at $14.75.