Rivian turns to AI, autonomy to woo investors as EV sales stall

Introduction to Rivian’s AI Day

Rivian Automotive, an all-electric vehicle maker, is set to host its first “Autonomy and AI Day” on Thursday. The event aims to showcase the company’s future plans and technologies, particularly in the field of artificial intelligence. This move comes as Rivian’s core business of producing and selling EVs has not been as successful as expected since its initial public offering in 2021. The company’s shares have plummeted over 80% since then, and it continues to lose billions of dollars annually.

Rivian’s Strategy and Challenges

Rivian CEO RJ Scaringe has always positioned the company as a technology play, initially focusing on its cloud-based tech and “vertically integrated ecosystem.” Recently, the company has highlighted its new “zonal” software architecture and AI aspirations. However, the pressure is on for Rivian to deliver, and the company has brought its software and automation efforts in-house to unlock future growth potential. Despite significant cost reductions and gains in software revenue, thanks to a joint venture deal with Volkswagen, Rivian’s sales have been slower than planned.

Comparison with Other EV Makers

Rivian is following the strategy of other “pure EV” automakers in the U.S., such as Tesla. The U.S. EV leader has promised owners that its cars would be able to get upgraded to autonomous vehicles that can work for them while they sleep or make a cross-country trip with no human intervention. Fellow EV carmaker Lucid has also struck a partnership with AV startup Nuro and Uber for robotaxis, while increasing the capabilities of its own technologies with assistance from Nvidia.

Wall Street Expectations and Concerns

Wall Street analysts are not entirely convinced by Rivian’s hype, with Morgan Stanley downgrading the company to underweight, citing the EV deceleration and Rivian’s lack of scale or balance sheet to support the capital intensity of reinvesting in the current “industry hype cycle” around AVs and AI. Analysts expect Rivian to provide more details on the future capabilities of its vehicles, including its next-generation features and the cost/resources required to achieve its ambitions.

Rivian’s AI Day and Future Plans

Rivian’s AI Day is expected to focus on the company’s in-house software enabling more advanced ADAS features, including the ability for its vehicles to eventually be able to drive themselves in certain circumstances. The company hopes to increase confidence in its future vehicles and technologies, which could be licensed to other companies. Rivian is currently viewed as lagging behind Tesla and legacy automakers such as General Motors, Ford Motor, and German luxury brands when it comes to its advanced driver assistance systems.

Industry Trends and Demand for AV Technologies

The automotive industry has been working toward true autonomous vehicles for a while, but it has seen little success other than from Google-backed Waymo and Tesla’s ADAS features. However, insiders and experts believe AI can finally unlock the true potential of the technology. Industry experts have also raised questions about demand for AV technologies, with General Motors’ hands-free driving technologies rollout being slow and adoption being low following the end of free trials.

Stock Price and Investor Optimism

Despite Rivian’s sales being down 14% through the third quarter and the company’s downward guidance revisions, shares of Rivian are up more than 30% this year amid gains in operational profit and investor optimism. The bullishness is led by the company’s new rollout of technologies and upcoming launch of its new R2 vehicle during the first half of next year. However, Wall Street analysts expect much of the upside potential to already be priced into the company’s stock price.