Here's why Baird thinks Rivian will surge over 40% in 2026
Back in August, Rivian Automotive (RIVN) got a vote of confidence from Wall Street about the impending launch of its new, more affordable R2 SUV in 2026.
Needham analyst Chris Pierce wrote at the time that the R2, which has a starting price of $45,000, “will be substantially expanding RIVN's TAM (total addressable market) beyond the more expensive R1 vehicle.”
Pierce added that there's “strong RIVN brand awareness, limited negative perception and encouraging purchase intent, positioning RIVN favorably to capture share as the R2 enters the mid-size SUV segment.”
And it turns out Needham isn't the only firm that is bullish on Rivian's R2 rollout.
Baird analyst Ben Kallo sent the EV automaker's stock surging on Thursday when he upgraded the shares to Outperform from Neutral and raised the firm's price target to $25 from $14, implying a 41% increase over the closing price on Thursday.
Kallo cited the launch of R2 as the reason for Baird's upgrade.
"We expect this to be a boost for RIVN's brand, product demand, and thus by extension the stock as deliveries begin near mid-year," Kallo wrote in a client note.
The optimistic view on deliveries of R2 is especially bold given that the US electric vehicle appears to be struggling in the face of political headwinds from the Trump administration.
That was driven home this week when Ford Motor Company (F) said that it is killing production of its fully electric F-150 Lightning truck and focusing on hybrid and extended range EV vehicles.
Ford noted that the "operating reality has changed, and we are redeploying capital into higher-return growth opportunities" in explaining its shift.
Overall US EV sales plunged 41% in November. Sales in October also fell 30.3% year-over-year.
The sales decline has come in the wake of the Biden-era $7,500 consumer tax subsidies for EV automobiles expiring at the end of September.
Autonomous strategy could drive growth
But Kallo also pointed to Rivian's recent announcement about its new autonomous platform as a potential growth driver for the automaker, saying that Baird views the autonomous strategy "positively for long-term competitiveness."
"We want to own into the new product cycle of launching the R2," he added.
Rivian's stock surged over 15% on Thursday after Baird's upgrade. It's up 52.5% for the year.
The company announced on Thursday a software update for owners of its second-generation R1 SUVs, which now have "Universal Hands Free" capabilities. Rivian had previously indicated that the update would be forthcoming during its "Autonomy & AI Day" last week.
The new feature will allow drivers to take their hands off the wheel on more than 3.5 million miles of roads in the US and Canada, the company said.
This includes a mix of highways and surface streets, provided that there are visible lane lines.
Rivian said that its long-term goal is to achieve Level 4 autonomy for its R2 vehicles, which is when a vehicle can operate without human input in certain conditions.
Baird isn't the only one on Wall Street that is sold on Rivian's autonomous strategy. Canaccord Genuity analyst George Gianarikas this week maintained his Buy rating on the stock, writing in a client note that he was "impressed by Rivian's tech culture and long-term vision."
He added that the company's recent event "showcased years of development in autonomy and AI."