On September 8, Mercedes-Benz announced that they had signed a Memorandum of Understanding with Rivian Automotive, Inc. (NASDAQ: RIVN) for a “strategic partnership and joint production of electric vans.” The joint venture will “look to leverage shared investments, shared costs and will pursue operational synergies to rapidly scale electric van production.”
In the news release, the company’s said they would be investing and operating a factory in Europe to create large electric vans for both companies, with the end goal being to produce two large vans, one based on MB Vans Electric Architecture while the other will be based on the second generation electric-van, Rivian Light Van (RLV) platform.
Rivian currently has 18 analysts covering the stock with an average 12-month price target of US$59, or an upside of 60%. Out of the 18 analysts, five have strong buy ratings, seven have buy ratings, five analysts have hold ratings, and the last analyst has a sell rating on the stock. The street high price target sits at US$147 which represents an upside of 300%.
In Canaccord Genuity’s notes on the news, they reiterate their buy rating and US$6112-month price target, saying, “We see this announcement as an elegant way for Rivian to begin its global expansion in a capital efficient fashion.” They believe that this is Rivian’s start to TAM expansion and will allow for the opportunity for the company to expand its commercial business.
Though the details of the joint venture have not been disclosed, Canaccord believes that this deal was capital efficient and that Mercedes will provide the joint venture with the majority of the capital. Rivian meanwhile will provide the joint venture with a broad-based EV powertrain, battery, and software expertise.
Lastly, Canaccord asks the question, “where is Ford?” As they note that Ford holds a significant market share in the European commercial van segment, and that Ford owns roughly 87 million shares, or a 9.7% ownership stake in Rivian. Though they do not go on to speculate why Ford was not a part of this joint venture, they do say that the absence of Ford in the joint venture is “telling.”
Information for this briefing was found via Sedar and Refinitiv. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.