Shares of Rivian Automotive, a leading electric vehicle (EV) maker, jumped 18% on Friday to reach their highest level in nearly two years at $19.37. This surge added to the stock's 24% year-to-date gain, driven by positive comments from analysts about the company's innovative approach to autonomous driving and artificial intelligence (AI).
Rivian's integrated strategy for developing custom self-driving chips and AI has impressed analysts. The company announced its plan to shift away from using Nvidia processors for autonomous driving and introduced a competitively priced driver-assistance subscription package called Autonomy+.
Rivian's proprietary silicon chip, the Rivian Autonomy Processor 1 (RAP1), will be manufactured by Taiwan Semiconductor Manufacturing Co. (TSMC). Two RAP1 chips will power the new Autonomy Compute Module 3, which can process 5 billion pixels per second and deliver four times the performance of the current Nvidia-powered system.
Autonomy+ will cost $2,500 for a one-time purchase or $49.99 per month, significantly undercutting Tesla's Full Self-Driving (FSD) system, which costs $8,000 upfront or $99 monthly. This move is expected to make Rivian's EVs more attractive to customers.
The new RAP1 chips and advanced systems will be used in the R2 model, which is set to enter production in the first half of 2026. Rivian plans to launch eyes-off functionality in 2026 and point-to-point travel without continuous driver supervision in 2027 through incremental software updates.
Rivian's CEO, RJ Scaringe, said, usually, you can't lower cost and improve performance, but here, we improved performance dramatically and simultaneously lowered cost by hundreds of dollars per vehicle. The company's vertical integration approach has resonated strongly with financial institutions, with brokerage Needham and Co. raising its price target on Rivian by 64% to $23 per share.
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