Rivian Automotive (RIVN 0.24%) stock has performed very well thus far in 2025. Shares are up nearly 70% since the year began, with nearly all of those gains booked over the past month or two. Why is the market suddenly so bullish on Rivian stock?
There are two reasons: artificial intelligence (AI) and new, cheaper models. We'll discuss both of these catalysts in a moment. But the important takeaway here is that Rivian as a business is reaching a critical inflection point. Next year could be transformational for the company, with Rivian achieving what few electric vehicle (EV) stocks have achieved in the history of EVs.
NASDAQ: RIVN
Key Data Points
This is why electric car stocks fail
Over the past decade, more than 30 EV companies have gone under. The reason for these failures is obvious if you look under the hood. Starting an EV manufacturing business takes more than just a good idea -- it takes billions of dollars.
Huge amounts of infrastructure need to be designed and built to manufacture the cars themselves. And given massive increases in car technology, car makers must also either develop their own proprietary software stacks or pay third parties to license their technologies.
From idea to actual production, the process of getting an EV business up and running can easily take more than a decade, plus huge amounts of capital. Investors must be comfortable with putting more and more cash into a money-losing business for years at a time. Given these struggles, it's no wonder that the vast majority of EV businesses never take off. They all, at one point or another, simply run out of capital.
This is what makes Tesla so formidable right now. Few, if any, automakers in the world can raise fresh cash as easily as Tesla. The company can raise $30 billion in new capital, for instance -- more than Rivian's entire market cap -- by diluting shareholders by just 2%. Even if Tesla makes several major stumbles, it is extremely unlikely that it will go out of business. This is something almost no other EV company can claim.
To match Tesla's success, other EV stocks must reach the inflection point at which raising capital is no longer a desperate concern. This inflection point could arrive for Rivian as early as next year thanks to two catalysts.
Image source: Rivian.
Rivian has 2 major catalysts in 2026
Right now, Rivian is still very dependent on investors to remain solvent. The company has forged a multibillion-dollar agreement with Volkswagen, assuaging some of the capital concerns. But the company continues to lose money every quarter, only recently achieving positive gross margins.
What can Rivian do to finally shed the shackles of needing capital markets to survive? The biggest achievement, of course, would be generating a net profit. To do that, the company needs to achieve much greater scale than it has achieved thus far with just two models: the R1T and R1S. Both of those vehicles can easily cost more than $100,000 based on options, relegating them to a tiny fraction of the overall car-buying market.
In early 2026, however, Rivian expects to begin production of the R2 -- its first model priced under $50,000. Two other affordable models are expected to follow, making Rivian vehicles accessible for the first time to tens of millions of new buyers. In addition, the design of the R2 has created new manufacturing efficiencies that will lower costs for Rivian's existing vehicles, further improving margins.
While positive net profit margins may not be realized in the 2026 fiscal year, these new models should help Rivian achieve significantly better scale in the years to come, giving the company its best chance yet at becoming financially sustainable on its own. Over the short term, the market has finally realized Rivian's potential as an AI stock, bidding up its share price by more than 70% over the past month and a half.
This will make it easier for the company to raise money for next year's catalysts to be realized. Right now, few EV stocks are financially sustainable without tapping external capital markets. Next year, Rivian could be added to that list, giving the stock a newfound premium versus smaller, lesser financed competitors.
