German automobile manufacturing giant Volkswagen (Volkswagen) and the one with the title of “upstart electric vehicle”$Rivian Automotive (RIVN.US)$The announcement of the partnership is still causing heated debate in the electric vehicle industry. The market believes that the joint venture to be built with Rivian will focus on electric vehicle software and electric vehicle architectures. Rivian is considered one of the few companies that are close in terms of automotive electronic operating system/software technology/architecture design$Tesla (TSLA.US)$It is one of the electric vehicle manufacturers, and the technical aspects of Rivian software are most likely closely related to the currently hottest investment theme in the world, AI.

Adam Jonas, a well-known analyst at Morgan Stanley, who has the title of “the majority of Tesla,” pointed out that Rivian investors may want the Volkswagen relationship to go further than just fill the short-term cash flow gap.

The analyst recently warned: “If the joint venture with Volkswagen is just a new way to bring more capital into Rivian without changing the company's strategy/capital discipline, then investors should be prepared for the challenges they continue to face.” However, Jonas and his team of analysts believe that if the deal with Volkswagen is a prelude to a potential strategic or structural shift, then new alternative paths may completely open up.

For most Rivian investors, Rivian's strategic value is seen as greater than the value of its discounted cash flow. Jonas's team said Rivian is unlikely to receive up to 5 billion dollars of investment from Volkswagen without leading capabilities in electric vehicle software, vertically integrated hardware, and internalized autonomous driving architectures. Regarding the cooperation agreement with Volkswagen, a Rivian spokesperson said in an email statement: “The joint venture between the two companies will focus on electric vehicle software and architecture in the future. It's not car production.”

It is worth noting that Tesla management under Musk's leadership has continuously emphasized the popularity of the FSD (fully automated driving system) created based on Tesla's AI supercomputing system and the optimistic revenue expectations brought by FSD, as well as the importance of RoboTaxi to the company to be launched based on the latest upgraded FSD technology, which has been a major catalyst for Tesla's sluggish stock price trend since the beginning of the year.

Tesla's “AI” buff is finally starting to gain strength, leading Tesla to recover half a year's decline

Tesla's stock price surged nearly 30% last week — making it easy to smooth out all the declines in the first half of the year in just one week after entering the second half of the year. Tesla closed at $251.520 on Friday. At the end of last year, the stock closed at $248.480; in April of this year, it once fell to a break-low of $138.80.

Tesla, the electric vehicle leader whose market capitalization is much larger than Rivian, achieved the “halo” of AI to recover the decline of half a year within a week. Admittedly, the trigger for Tesla's sharp rise in stock prices was that deliveries in the second quarter exceeded expectations, but the core logic behind the sharp rise for many days was Tesla's “AI” super buff. As Musk said on Twitter, Tesla is not as simple as an electric car manufacturer; it is also a leader in the AI field.

In an interview with the media recently, Nvidia CEO Hwang In-hoon can be described as unstinting in praising Tesla's FSD based on AI supercomputing. Tesla FSD is based on Dojo supercomputing chips and Nvidia's high-performance AI GPUs (mainly H100; Musk said it will purchase Blackwell architecture GPUs in the future), and relies on these powerful hardware systems to support Tesla FSD's massive training/inference computing power requirements. Huang Renxun and many other tech leaders have publicly stated that Tesla FSD is currently the most advanced assisted driving system, which can completely free up human hands in most cases.

“Tesla is leading the world in autonomous vehicles.” Nvidia CEO Hwang In-hoon said in an interview with the media. Hwang In-hoon added, “What is really revolutionary about Tesla's 12th fully autonomous car is that it is an end-to-end generative model.” “It learns how to automate end-to-end driving by watching videos — surround videos, and uses generative artificial intelligence technology to predict paths and understand and drive cars. So this technology is truly revolutionary, and the work Tesla is doing is incredible.”

According to information, Tesla's latest FSD 12 version is currently in the initial testing phase, and a 30-day free trial was offered to new car owners earlier this year. The current fee for Tesla FSD is $99 per month, or $8,000 in advance to officially buy out FSD. Tesla reported in April that since its debut in March 2021, the cumulative mileage of the FSD has exceeded 1.3 billion miles.

However, FSD is still considered a Level 2 autonomous driving system by automobile regulators around the world, which means it needs to be used under human supervision, and has been subject to recall orders and government investigations into its technical capabilities in the US market.

Musk announced that he will launch his long-promised robotaxi (Robotaxi) on August 8. Tesla's new car will build a Tesla driverless electric taxi based on the latest upgraded FSD fully automatic driving technology.

“Sister Wood” Cathie Wood (Cathie Wood), who can be called “Tesla's number one fan” and “a staunch supporter of Musk,” believes that Tesla's market value is expected to exceed 8 trillion dollars. Ark Investment Management Company, founded and led by “Cathie Wood”, recently updated its target price for Tesla. Ark expects Tesla's stock price to reach 2,600 US dollars by 2029. Ark's main logic for bullish Tesla is that it is expected that by 2029, nearly 90% of Tesla's market value and profit will be due to the RoboTaxi taxi business built based on Tesla's extremely powerful AI supercomputing system.

Dan Ives, a senior analyst from Wedbush Securities, a well-known Wall Street investment agency, recently said that the key reason why Wedbush is optimistic about Tesla, the leader of electric vehicles, is that Wall Street institutions have realized that Tesla is probably the most underrated “AI investment target” in the US stock market. Ives and his analytical team believe that under the most optimistic circumstances, Tesla's single fully autonomous driving (FSD) business based on AI supercomputing may be worth as much as 1 trillion US dollars, exceeding Tesla's current total market value of about 700 billion US dollars.

Analyst Dan Ives raised Tesla's 12-month target share price from $275 to $300 (Tesla closed at $251.520 last week), reaffirmed the “outperforming market” rating, and set the most optimistic target price in a bullish situation at $400. Morgan Stanley analyst Adam Jonas, who has the title of “the majority of Tesla,” gave Tesla an extremely strong price target price of 310 dollars, due to the two “super buffs” of artificial intelligence (AI) and energy storage.

Tesla recovers half a year's decline and gives Rivian market capitalization management tips: do everything possible to rely on AI

The Morgan Stanley analysis team is optimistic about Rivian's core view that the electric vehicle manufacturer has a unique “AI advantage” beyond Tesla's investment target, that is, Rivian can expand a fully integrated AI-based automated driving and other electric vehicle software stack, which is critical to unlocking a wide range of artificial intelligence opportunities. Tesla used the “AI Buff” to recover half a year's decline in just one week, and also gave Rivian management a trick to achieve a significant increase in market value: do everything possible to rely on AI.

Jonas's team emphasized that the revenue generated by artificial intelligence technology is based on the possibility that investors will snatch up the “electric car upstart” Rivian for only 1/60 of Tesla's market value. The Morgan Stanley team led by Jonas set a bullish target of $33 for Rivian within 12 months (the stock closed at $14.790 as of last week). Among them, the team led by Jonas anticipates that the popular investment theme of artificial intelligence will have a significant positive impact on Rivian's market capitalization and stock price.

Rivian's Background: The company was founded by RJ Scaringe in 2009, initially named Mainstream Motors, then renamed Avera Automotive, and merged with Rivian in 2011. Rivian acquired the former Mitsubishi plant in Norman, Illinois in 2017 and became its main manufacturing facility. In 2018, Rivian unveiled its first models, the R1T electric pickup truck and the R1S electric SUV. The company successfully listed in November 2021 and plans to raise $13.5 billion in US stocks.

In late June, the EV maker revealed that it intended to form a joint venture with Volkswagen to develop next-generation electrical architectures and best-in-class electric vehicle software technology. The partnership is expected to accelerate the shared software development process between Rivian and Volkswagen. This partnership is thought to allow the two companies to combine their complementary strengths and reduce the cost of each vehicle by scaling up production and speeding up innovation in electric vehicle software technology around the world.

Rivian plans to contribute its exclusive expertise in electrification architectures and license existing intellectual property rights to joint ventures. Both companies aim to launch cars that benefit from the technology created by the joint venture in the second five years of this decade. In the short term, the joint venture is expected to enable Volkswagen to utilize Rivian's existing electrical architecture and software platform. As part of the partnership, Volkswagen plans to invest 5 billion dollars in Rivian.

Since the partnership with Volkswagen was announced by the media, Rivian's stock price has risen by more than 25%.

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