Rivian Automotive’s (RIVN) stock dropped about 19% in the past month as investors worried demand for electric vehicles was declining across the industry.
Now UBS thinks that drop is a good chance to buy. On November 2, UBS analyst Joseph Spak upgraded his rating on RIVN from a Neutral to a Buy. He also maintained his $17 price target, CNBC reported.
Spak cited real demand for Rivian’s cheaper R2 vehicle as the reason for the upgrade. He also believes the company’s profit margins are close to turning positive. Based on UBS’s belief, Rivian’s biggest challenge now is scaling up production fast enough.
What UBS saw that other investors missed
Rivian builds and sells electric trucks and SUVs. It also sells the software features that are inside those vehicles.
The company’s latest mainstream product is the R2 SUV, which the company intended to use to break into the mainstream car market. So far, it has been successful, and the R2 is already the best-selling Rivian vehicle by volume.
That is why Spak sees the recent sell-off as “a buying opportunity ahead of the R2 ramp.”
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In Spak’s view, the sell-off is mostly because investors are worried about the broader EV market, while the demand for Rivian’s own vehicles has still held up.
Rivian even said it hosted more than 103,000 demo drives in the third quarter, which surpassed its second-quarter record, Yahoo Finance reported. That suggests many people are interested in Rivian vehicles.
Rivian bought Third Dimension AI, a 15-person startup whose 3D world tech began in video games, to sharpen self-driving simulation for its cars.Michael Vi / Getty Images
Why the cheaper R2 model changes the picture
Right now, Rivian’s R1T truck and R1S SUV start around $75,000. That price range is usually the territory of luxury cars, which means you won’t find those vehicles in most households.
However, the midsize R2 SUV starts near $45,000. That is about the price range many families already pay for a gas-powered SUV.
The company’s addition of a cheaper EV model lets Rivian compete with popular electric SUVs like the Tesla Model Y and the Ford Mustang Mach-E.
But the company needs to be able to keep up with production.
UBS believes it will and projects Rivian will deliver about 82,000 R2 units in 2027 from its factory in Normal, Illinois, Investing.com reported. At full capacity, the factory can build up to 155,000 R2 vehicles a year.
The software angle Wall Street is starting to notice
Rivian is also planning for a general release of its point-to-point update on its Autonomy+ service in 2027. The point-to-point service lets a Rivian vehicle drive itself between two points that the owner sets.
Scaringe said during the Q3 2026 report that, “We are super excited about Point to Point. We are laying the foundations for a future that we believe will be fully electric, autonomous and AI defined.”
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According to Rivian, the Autonomy+ service costs $49.99 a month, or $2,500 for a one-time purchase. If drivers choose to pay for the service every month, it creates a steady source of income for Rivian.
What to watch before buying Rivian stock
Rivian is building a new factory in Georgia, and because of that, UBS projects the company will have negative free cash flow of about $3.7 billion in 2027.
However, the firm also notes that Rivian has about $13 billion in available and planned capital, which should carry the company until 2029 without having to raise more money, Investing.com reported.
Investors should pay attention to the Autonomy Day event on December 9, 2026, Rivian’s year-end 2026 margin update, and plans for the R2 production ramp in 2027. If any of those develop issues, the stock could give back its recent gains.
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