Barclays has downgraded its shares of electric vehicle company Rivian Automotive (NASDAQ: RIVN) from Overweight to Equal-Weight in a note Monday, citing three main reasons for the downgrade. First, the analysts believe that while Rivian has a great product and technology, it may not be enough to avoid the increased signs of demand pressure amid a broader EV slowdown. Secondly, they believe that demand softness implies risk from pricing and slower volume growth. Finally, Barclays also sees an ongoing need for capital raises at Rivian.
The analysts elaborated on this by noting that signs of demand weakness in the EV market emerged last year, with recent data points from the sales of R1S inventory units and the accelerated launch of a Standard range version indicating softened demand. This suggests that Rivian is likely to miss its 2024 target of reaching gross margin profitability. Additionally, the bank concluded that the consequences of weak demand are significant, including a challenged volume outlook and potential pricing risks.
Barclays also noted that with ongoing capital needs given preparation for the high volume R2 in 2026, they see future pressure on the company. Despite these concerns, Barclays still believes that Rivian has a strong product pipeline and is well positioned to capture market share in the rapidly growing EV market.