UBS reaffirmed on Tuesday its Neutral rating on Rivian shares, citing limited brand awareness revealed by a survey it conducted with EV consumers.
The firm remains bearish on the stock. It reiterated the $13.00 price target on the Irvine-based EV maker, implying a downside of 16.8% based on Monday’s close at $15.63.
Over the past twelve months, the stock surged 44.4%, driven by stronger than expected first quarter financial results and the joint venture kicked off late last year with the Volkswagen Group.
The UBS Evidence Lab surveyed 10,500 participants, from which 41% were likely to consider a fully electric vehicle and only about 35% believed EVs were affordable in comparison to internal combustion engine (ICE) vehicles.
In a research note published on Tuesday, analyst Joseph Spak said that while “an increasing number of U.S. consumers are aware of the Rivian brand, overall awareness remains low.”
According to the analyst, only about 5% of battery electric vehicle (BEV) customers indicated “they would consider purchasing a Rivian.” However, “consumers still want more EV choices and alternatives,” which is positive for the brand.
Among those “who would consider buying a Tesla” about 30% are “more likely to consider purchasing a Rivian (up from 26% last year).”
Low “overall U.S. interest for EVs” combined with the “potential pushout of EPA requirements and repeal of the California waiver” could delay the transition to electric vehicles.
The analyst noted that “the removal of the California waiver may also limit Rivian‘s ability to generate and sell ZEV (zero-emission vehicle) credits” — a revenue stream that comes from selling excess regulatory credits to other automakers that don’t meet emissions targets.
The company reported a record gross profit of $206 million in the first quarter, marking its second straight quarter of positive profit, a result that was mainly due to $157 million in revenue from automotive regulatory credit sales.
The analyst stated that the low EV adoption rate is “likely exacerbated” by the prices. The “average price of a vehicle in the U.S. is currently $47,900 while the average BEV (including tax credits) is $57,400.”
Rivian‘s R1S SUV prices start at $75,900, while the R1T pickup is priced from $69,900.
Spak considered that “the potential removal of consumer clean vehicle tax credits (CVC),” which currently depends on the Senate approving Donald Trump’s bill, could “further limit EV adoption.”
Last week, the U.S. House of Representatives approved Trump’s “big, beautiful bill” that intends to cut clean energy incentives set during the previous administration. This includes the “leasing loophole” created within Biden’s Inflation Reduction Act (IRA).
The loophole allows leased EVs to qualify for the full $7,500 federal tax credit granted when buying an EV — even if the car wouldn’t normally be eligible — because it’s treated as a commercial vehicle under IRS rules.
The Zurich-based firm estimates that about 59% of Rivian R1S vehicles were leased in 2024. “While not all demand would be destroyed if CVCs are removed, we believe it would still be a headwind,” the analyst added.
Spak noted that these two factores are the reason for the R2 model launch being “so critical to the equity story” — the model is set to be launched in 2026, with a starting price of about $45,000.
Rivian‘s CEO RJ Scaringe stated on the latest earnings call that the company’s manufacturing plant in Normal would be closing temporarily to integrate key manufacturing processes for the SUV.
UBS estimates a “likely tougher near-term EV environment,” however sees “potential for a positive longer term outlook” given the R2 launch.
Cost reductions and improved efficiency in the manufacturing operations are key factores “near-term, especially if U.S. policies move away from an EV world.”
UBS also reaffirmed its price target of $190 on Tesla, implying a downside of 44% on the shares. Citing “declining Tesla interest” around the world, it maintained its Sell rating on the stock.
