Rivian turns to AI, autonomy to woo traders as EV gross sales stall

DETROIT — Rivian Automotive will let synthetic intelligence take the wheel to attempt to persuade traders that its future will be extra profitable than its previous.

The all-electric car maker is ready to host its first “Autonomy and AI Day” on Thursday as its core enterprise of manufacturing and promoting EVs hasn’t been as fruitful as anticipated since its preliminary public providing in 2021.

Shares of the automaker are off greater than 80% since then as inside and exterior challenges have brought on gross sales and manufacturing to be slower than deliberate. The corporate additionally continues to lose billions of {dollars} yearly, regardless of important price reductions and beneficial properties in software program income because of a multiyear $5.8 billion three way partnership deal with German automaker Volkswagen.

CEO RJ Scaringe has at all times offered the corporate as a know-how play in various kinds – from initially touting its cloud-based tech and “vertically built-in ecosystem” to extra not too long ago highlighting new “zonal” software program structure and AI aspirations.

However the strain is on for Rivian to ship. It has tactically introduced its software program and automation efforts in home to unlock future development potential for traders and to attempt to increase its buyer base amid slowing gross sales of EVs and regulatory adjustments.

“Over the long run, we imagine what’s going to differentiate Rivian’s autonomous capabilities can be our end-to-end AI-centric method,” Scaringe mentioned final month in the course of the automaker’s most up-to-date quarterly investor name.

Rivian is following the technique of different “pure EV” automakers within the U.S., particularly Tesla.

The U.S. EV chief has promised house owners for greater than a decade that its vehicles would be capable of get upgraded to autonomous autos that may work for them whereas they sleep or make a cross-country journey with no human intervention. The corporate launched a pilot robotaxi service in Austin, Texas, this yr, with human security drivers on board, and intends to increase that to new U.S. markets subsequent yr.

Fellow EV carmaker Lucid additionally not too long ago struck a partnership with AV startup Nuro to convey driverless options to its EVs.

However Wall Road is not utterly shopping for into the hype.

Morgan Stanley this week downgraded Rivian to underweight, citing the EV deceleration and Rivian not having the “scale or stability sheet to assist the capital depth” of reinvesting within the present “business hype cycle” round AVs and AI. It additionally downgraded Lucid and Tesla for one or each of these causes.

“We’re taking a extra cautious view on the Auto Trade heading into 2026 after a surprisingly resilient 2025,” Morgan Stanley analyst Andrew Percoco wrote in a Sunday investor notice.

Scaringe has mentioned the AI Day will embody in-depth seems on the computing energy of Rivian’s new autos, comparable to its upcoming “R2” SUV; its autonomous car platform; and information flywheel during which information inputs are used to repeatedly enhance merchandise.

The hope is to extend confidence in Rivian’s future autos and applied sciences, which Wall Road analysts imagine may very well be licensed to different corporations.

Rivian is presently considered as lagging Tesla and even legacy automakers comparable to Normal Motors, Ford Motor and German luxurious manufacturers in terms of its superior driver help methods, or ADAS. Its options solely not too long ago allowed some drivers to have their palms off the wheel whereas freeway driving beneath sure circumstances, a milestone different automakers have already reached.

Rivian’s AI Day comes greater than 4 years after Tesla grew to become the first automaker to host such an occasion. Whereas Rivian is recurrently in contrast with Tesla, its AI Day is anticipated to focus extra on autos and supporting software program initiatives somewhat than noncore companies comparable to humanoid robots like Tesla has completed.

Wall Road analysts typically count on Rivian on Thursday to supply extra particulars on the long run capabilities of its autos.

“Administration will doubtless present up to date timelines on its subsequent technology options and maybe higher dimension the associated fee/assets required to attain its ambitions,” Deutsche Financial institution analyst Edison Yu mentioned in an investor notice. “Excessive stage, the corporate has alluded to a vertically built-in, AI-centric autonomy platform that digests uncooked, multi-modal sensor information to coach giant fashions.”

Superior driver help methods and autonomous autos have as soon as once more turn into a spotlight for traders and auto corporations as AI applied sciences have grown over the previous yr.

The automotive business has been working towards true AVs for some time, although it has seen little success apart from from Google-backed Waymo and, more and more, Tesla’s ADAS options. However insiders and consultants suppose AI can lastly unlock the true potential of the know-how.

“We imagine RIVN will try to point out why they need to be seen as a critical gamers within the US AV area, which presently is essentially seen as a two participant recreation between Tesla and Waymo,” Barclays analyst Dan Levy mentioned in a Friday investor notice.

Wall Road analysts count on Rivian will give attention to its in-house software program enabling extra superior ADAS options, together with the power for its autos to ultimately be capable of drive themselves in sure circumstances.

Scaringe has mentioned the corporate expects to broaden the use circumstances of its hands-free methods to “nearly any street” within the quick time period, adopted by eyes-off driving within the years forward. He has not too long ago voiced assist for lidar, or mild detection and ranging, methods that enable autos to raised detect or “see” their environment.

“We applaud Rivian for its autonomy pivot particularly given our view that stage 3 autonomy can be a vital step for all OEMs [original equipment manufacturers]. Its objective of in-sourcing may make autonomy a revenue middle, which is necessary particularly given the corporate’s liquidity scenario,” RBC analyst Tom Narayan mentioned in a notice final week.

Rivian’s present autos characteristic a collection of radar, cameras and different sensors however not lidar.

SAE Worldwide, previously often known as the Society of Automotive Engineers, has characterised automated driving for autos from stage 0 to stage 5. The best stage 5, is a totally autonomous car, with every stage from stage 0 including extra applied sciences and permitting human drivers to be extra “out of the loop.”

Autos on U.S. roadways immediately have various ranges of autonomy however practically all are categorized as stage 2 — permitting drivers to have their palms off the wheel in sure circumstances — or beneath, together with these with cruise management and “adaptive cruise management.”

Extra not too long ago, many corporations have centered on rising their ADAS methods previous stage 2, the place autos can largely drive themselves beneath sure circumstances.

Trade consultants have additionally raised questions on demand for AV applied sciences. Normal Motors was the primary to supply hands-free driving applied sciences in 2017, however the rollout was sluggish and adoption was low following the tip of free trials.

Even at Tesla, which is considered as a software program and know-how chief within the U.S. with “tech-savvy” consumers, solely about 12% of shoppers paid for its top-end “FSD” system that may management the car beneath many circumstances, the corporate not too long ago mentioned.

Regardless of Rivian’s gross sales being down 14% by the third quarter and the corporate’s downward steering revisions, shares of Rivian are up greater than 30% this yr amid beneficial properties in operational revenue and investor optimism.

The bullishness is led by the corporate’s new rollout of applied sciences and upcoming launch of its new “R2” car in the course of the first half of subsequent yr.

However on condition that these are each forward-looking catalysts, Wall Road analysts count on a lot of the upside potential to already be priced into the corporate’s inventory worth.

“We imagine traders are much less more likely to be bullish on the case of RIVN catching as much as Waymo/Tesla in AV, and we count on that check drives / a powerful tech stack is much less more likely to transfer the inventory (with this arguably already embedded within the inventory),” Levy mentioned.

Shares of Rivian closed Tuesday at $17.71, up 0.1% forward of the AI occasion. The inventory is up 33% this yr however is a far cry from the firm’s IPO of $78 per share.

— CNBC’s Lora Kolodny and Michael Bloom contributed to this report.