 
									 
																		
									
									
								Investor's Corner
How Rivian’s deal with Mercedes bolsters the EV maker’s long-term outlook
After Rivian Automotive (NASDAQ: RIVN) struck a deal with Mercedes-Benz last week for a strategic partnership and joint production effort of electric delivery vans, analysts are explaining how the move could help bolster the EV maker’s long-term outlook.
Last week, Rivian and Mercedes-Benz announced they would build all-electric delivery vans for the European market, where the EV company has yet to deliver a vehicle. In the United States, Rivian is currently offering customers the R1T pickup, but its EDV, or Electric Delivery Van, is one of the main focal points of the company’s early production.
In 2019, Rivian found itself a worthy investor and supporter in Amazon, which ordered 100,000 EDV units from the company. Deliveries began this year after extensive pilot programs yielded adequate data for a controlled launch in several cities. The EDV is an early signal of success for Rivian as it struggles to ramp production of the R1T and R1S due to parts shortages. Supply chain issues have been cited by Rivian in the past for delayed production and delivery dates.
However, the EDV’s arrival in Europe and Rivian’s partnership with Mercedes-Benz is bolstering the company’s long-term future, which has been not in doubt but definitely questioned by those with extensive knowledge of the industry. While armchair commentators have speculated that Rivian and other EV startups would not survive the early days of production, Tesla CEO Elon Musk advised the automaker to cut costs and ramp production at its first factory before expanding with new manufacturing facilities within the United States.
The EDV partnership with Mercedes gives Rivian a new bit life, according to numerous analysts. The electric van sector, while predominately controlled by Ford, is still widely up for grabs due to relatively low volumes. While the United States may have a higher concentration of these vehicles, Europe is still lacking sustainable commercial logistics solutions, and Rivian’s EDV product is suitable for the market, Dan Ives of Wedbush explained (via MarketWatch):
“We view this as a smart strategic move by Rivian to penetrate Europe while ramping production of the EDV platform to meet its long-term growth and profitability targets. We believe Rivian is primed to capture the massive influx of current and future EV demand, capitalizing on a unique global TAM from a core engineering and design perspective along with the Amazon commercial relationship has the potential to be a major EV stalwart over the next decade. Production is improving to at least hit the 25k deliveries this year and we have confidence that customer reservations continue to increase into FY23 with the stage set for a seminal year ahead.”
Ives has a $45 price target on Rivian and an ‘Outperform’ rating on the stock.
 Credit: Rivian
Additionally, Ben Kallo of Baird Securities has also said the Rivian deal will help the company solve scalability with the production portion of the deal occurring at an existing Mercedes-Benz facility in Europe. Kallo also said that Rivian has a chance to “mount a challenge to Tesla’s current dominance” in the coming years as it continues to address its total scalable market through strategic partnerships like this one:
“With few details disclosed regarding the proposed partnership, the total addressable market for electric vans is still vague. Despite a lack of clarity, RIVN is set to benefit from Mercedes’ scale while lending from its strong technology position. As the world accelerates its shift to EVs, Rivian has a solid opportunity to mount a challenge to Tesla’s current dominance.”
Kallo and Biard hold a $51 price target with an ‘Outperform’ rating on the stock. At the time of writing, shares were down just 1.6 percent on the day, but have surged over 14.5 percent since the partnership was announced last week.
Disclosure: Joey Klender is not a RIVN shareholder.
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Investor's Corner
Tesla investor Calpers opposes Elon Musk’s 2025 performance award
Musk’s 2025 pay plan will be decided at Tesla’s 2025 Annual Shareholder Meeting, which will be held on November 6 in Giga Texas.
 
														One of the United States’ largest pension funds, the California Public Employees’ Retirement System (Calpers), has stated that it will be voting against Elon Musk’s 2025 Tesla CEO performance award.
Musk’s 2025 pay plan will be decided at Tesla’s 2025 Annual Shareholder Meeting, which will be held on November 6 in Giga Texas. Company executives have stated that the upcoming vote will decide Tesla’s fate in the years to come.
Why Calpers opposes Musk’s 2025 performance award
In a statement shared with Bloomberg News, a Calpers spokesperson criticized the scale of Musk’s proposed deal. Calpers currently holds about 5 million Tesla shares, giving its stance meaningful influence among institutional investors.
“The CEO pay package proposed by Tesla is larger than pay packages for CEOs in comparable companies by many orders of magnitude. It would also further concentrate power in a single shareholder,” the spokesperson stated.
This is not the first time Calpers has opposed a major Musk pay deal. The fund previously voted against a $56 billion package proposed for Musk and criticized the CEO’s 2018 performance-based plan, which was perceived as unrealistic due to its ambitious nature at the time. Musk’s 2018 pay plan was later struck down by a Delaware court, though Tesla is currently appealing the decision.
Musk’s 2025 CEO Performance Award
While Elon Musk’s 2025 performance award will result in him becoming a trillionaire, he would not be able to receive any compensation from Tesla unless aggressive operational and financial targets are met. For Musk to receive his full compensation, for example, he would have to grow Tesla’s market cap from today’s $1.1 trillion to $8.5 trillion, effectively making it the world’s most valuable company by a mile.
Musk has also maintained that his 2025 performance award is not about compensation. It’s about his controlling stake at Tesla. “If I can just get kicked out in the future by activist shareholder advisory firms who don’t even own Tesla shares themselves, I’m not comfortable with that future,” Musk wrote in a post on X.
Investor's Corner
Tesla enters new stability phase, firm upgrades and adjusts outlook
Dmitriy Pozdnyakov of Freedom Capital upgraded his outlook on Tesla shares from “Sell” to “Hold” on Wednesday, and increased the price target from $338 to $406.
 
														Tesla is entering a new phase of stability in terms of vehicle deliveries, one firm wrote in a new note during the final week of October, backing its position with an upgrade and price target increase on the stock.
Dmitriy Pozdnyakov of Freedom Capital upgraded his outlook on Tesla shares from “Sell” to “Hold” on Wednesday, and increased the price target from $338 to $406.
While most firms are interested in highlighting Tesla’s future growth, which will be catalyzed mostly by the advent of self-driving vehicles, autonomy, and the company’s all-in mentality on AI and robotics, Pozdnyakov is solely focusing on vehicle deliveries.
The analyst wrote in a note to investors that he believes Tesla’s updated vehicle lineup, which includes its new affordable “Standard” trims of the Model 3 and Model Y, is going to stabilize the company’s delivery volumes and return the company to annual growth.
Tesla launches two new affordable models with ‘Standard’ Model 3, Y offerings
Tesla launched the new affordable Model 3 and Model Y “Standard” trims on October 7, which introduced two stripped-down, less premium versions of the all-electric sedan and crossover.
They are both priced at under $40,000, with the Model 3 at $37,990 and the Model Y at $39,990, and while these prices may not necessarily be what consumers were expecting, they are well under what Kelley Blue Book said was the average new car transaction price for September, which swelled above $50,000.
Despite the rollout of these two new models, it is interesting to hear that a Wall Street firm would think that Tesla is going to return to more stable delivery figures and potentially enter a new growth phase.
Many Wall Street firms have been more focused on AI, Robotics, and Tesla’s self-driving project, which are the more prevalent things that will drive investor growth over the next few years.
Wedbush’s Dan Ives, for example, tends to focus on the company’s prowess in AI and self-driving. However, he did touch on vehicle deliveries in the coming years in a recent note.
Ives said in a note on October 2:
“While EV demand is expected to fall with the EV tax credit expiration, this was a great bounce-back quarter for TSLA to lay the groundwork for deliveries moving forward, but there is still work to do to gain further ground from a delivery perspective.”
Tesla has some things to figure out before it can truly consider guaranteed stability from a delivery standpoint. Initially, the next two quarters will be a crucial way to determine demand without the $7,500 EV tax credit. It will also begin to figure out if its new affordable models are attractive enough at their current price point to win over consumers.
Investor's Corner
Bank of America raises Tesla PT to $471, citing Robotaxi and Optimus potential
The firm also kept a Neutral rating on the electric vehicle maker, citing strong progress in autonomy and robotics.
 
														Bank of America has raised its Tesla (NASDAQ:TSLA) price target by 38% to $471, up from $341 per share.
The firm also kept a Neutral rating on the electric vehicle maker, citing strong progress in autonomy and robotics.
Robotaxi and Optimus momentum
Bank of America analyst Federico Merendi noted that the firm’s price target increase reflects Tesla’s growing potential in its Robotaxi and Optimus programs, among other factors. BofA’s updated valuation is based on a sum-of-the-parts (SOTP) model extending through 2040, which shows the Robotaxi platform accounting for 45% of total value. The model also shows Tesla’s humanoid robot Optimus contributing 19%, and Full Self-Driving (FSD) and the Energy segment adding 17% and 6% respectively.
“Overall, we find that TSLA’s core automotive business represents around 12% of the total value while robotaxi is 45%, FSD is 17%, Energy Generation & Storage is around 6% and Optimus is 19%,” the Bank of America analyst noted.
Still a Neutral rating
Despite recognizing long-term potential in AI-driven verticals, Merendi’s team maintained a Neutral rating, suggesting that much of the optimism is already priced into Tesla’s valuation.
“Our PO revision is driven by a lower cost of equity capital, better Robotaxi progress, and a higher valuation for Optimus to account for the potential entrance into international markets,” the analyst stated.
Interestingly enough, Tesla’s core automotive business, which contributes the lion’s share of the company’s operations today, represents just 12% of total value in BofA’s model.
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