1 Surprising Reason Rivian Stock Is a Buy in 2025

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5 hours ago

Rivian's sales growth should spike in 2026.
There's another metric to keep your eye on.
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Tesla has been stealing the headlines following the launch of its new robotaxi service in Austin, Texas. Rivian (NASDAQ: RIVN), meanwhile, hasn't received a lot of press recently, but when you look under the hood, there are several major reasons to get excited.
There's one catalyst that few investors are paying attention to right now that could add huge fuel to the stock price in early 2026. That makes now the time to buy for investors looking to stay ahead of the curve.
When it comes to sales growth, it's been a tough couple of years for Rivian. The company's sales base today isn't much higher than it was at the end of 2023 due to several factors.
Sales of electric vehicles industrywide has been below expectations, and weak consumer confidence has keep interest muted for the company's two luxury vehicles -- the R1T and R1S -- both of which can cost upwards of $100,000, depending on options. Those vehicles were also first released in 2021, adding staleness to the company's vehicle lineup.
Fortunately, a big change is expected in 2026. This year, analysts predict annual sales growth of just 5.3%. In 2026, however, sales growth is expected to pick up to 40.5%.
What's the cause? One factor: The release of new, affordable models.
After years of development, Rivian is expected to begin releasing the first of three new models next year. The R2 will come first, with an expected price of under $50,000. The R3 is expected to follow as an even cheaper model.
The R3X, meanwhile, is a high-performance version of the R3. While its details are unknown, the starting price is also expected to be below the $50,000 mark. That's critical, considering a majority of prospective electric-vehicle (EV) buyers are looking to spend less than $50,000 on their next vehicle purchase.
Without these newer, more affordable models, Rivian wouldn't be a viable option. The two vehicles currently in its lineup are simply too expensive.
However, with the company's fresher lineup and more affordable options, analysts are very bullish on sales growth next year. But there's another surprising factor that should positively impact Rivian's financials even before these vehicles hit the road.
In recent quarters, Rivian has attained positive gross margins for the first time in company history. This feat is a huge vote of confidence for the company's long term financial sustainability.
Because it's still losing money on a net profit basis, Rivian will continue to rely on outside capital to survive. Being able to sell its vehicles not at a steep loss should help keep that capital flowing. Any further improvements should add even more confidence.
The release of Rivian's new, more affordable models should help profit metrics like this considerably, given higher sales will provide the company with considerably more scale. But this scale will take many quarters -- or perhaps even many years -- to play out.
More immediately, however, the mere act of getting these vehicles ready for production should help Rivian boost gross margins. How? By reducing manufacturing costs of its current lineup.
The R2, R3, and R3X are built on a different platform than the R1S and R1T. But in many ways, they're just stripped-down versions of those more luxury-minded vehicles.
To produce lower-priced vehicles, the Rivian team scrutinized its current processes, looking for ways to cut costs. In the process, they were able to make hundreds of hardware and software updates to its existing lineup to lower current manufacturing costs.
Management expects this process to continue. "As we launch R2, there's a lot of further cost-saving and improvements we've made to our overall technology stack, and we're going to see those make their way into R1 in different ways," Rivian's CEO said recently to investors.
There are some headwinds to consider. Bringing new vehicles to market can often be a lengthier, more costly process than realized. Plus, government-supported financial incentives supporting EV demand could go away soon. But Rivian's new models should still grow sales significantly in 2026, with some of the potential cost savings realized before the end of 2025.
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Ryan Vanzo has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.
1 Surprising Reason Rivian Stock Is a Buy in 2025 was originally published by The Motley Fool