Newly public startup Rivian is the company that could disrupt Tesla's dominance in the electric vehicle space, according to Morgan Stanley. "Rivian's compelling product, strong management, and deterministic access to capital are underpinned by a strategic relationship with AMZN to decarbonize the final mile. We see it as 'the one' that can challenge Tesla," Morgan Stanley's Adam Jonas said. Morgan Stanley initiated coverage of Rivian with an overweight rating and set a price target of $147 on the stock, 40% higher than Rivian's Friday close. Shares edged lower in premarket trading Monday. Rivian turned heads in its public debut in November, one of the biggest IPOs this year that valued the startup at a higher market cap than legacy automaker Ford. The stock is down 2% from its opening price. Morgan Stanley is bullish on Rivian's electric delivery van product, calling it "the most capable/desirable product in the market for $80k." "The electric delivery van (EDV) has the potential to dominate the fast growing final mile EV fleet which has been largely unaddressed by the EV market until now," Jonas said. Amazon's stake in Rivian shows just how compelling Rivian's product is, according to Morgan Stanley. The firm believes Amazon will order roughly 300,000 units through 2025 or 2026. Plus, Morgan Stanley likes Rivian's management, which it says has proven its ability to raise capital. However, the firm noted several key risks to Rivian's growth. Scaling production, competing against Tesla and raising more capital to fund its expansion are among the challenges facing Rivian. —CNBC's Michael Bloom contributed reporting.
Rivian R1T all-electric truck in Times Square on listing day, on Wednesday, Nov. 10, 2021 in New York.
Ann-Sophie Fjello-Jensen | AP
Newly public startup Rivian is the company that could disrupt Tesla's dominance in the electric vehicle space, according to Morgan Stanley.