Glenn Surowiec of GDS Investments articulated his investment thesis on Rivian Automotive (US: RIVN) at Best Ideas 2026.
Thesis summary:
Rivian is a U.S.-based electric vehicle manufacturer transitioning from a niche player to a mass-market competitor under the leadership of founder RJ Scaringe. Glenn views the company as a high-quality business temporarily mispriced due to the cyclical nature of the auto industry and the capital intensity required for growth. Rivian established strong brand equity with its initial R1T and R1S models, ranking first in owner satisfaction by Consumer Reports for three consecutive years. The investment case hinges on the upcoming launch of the more affordable R2 and R3 platforms, scheduled for commercial rollout in 2026 and 2027, which utilize a vertically integrated strategy to control the entire technology stack. This approach includes a proprietary “zonal” electrical architecture that drastically reduces vehicle complexity by consolidating roughly 100 electronic control units into seven, thereby stripping out cost and weight while enabling faster software updates.
A central pillar of the thesis is the strategic joint venture with Volkswagen, which validates Rivian’s technology and addresses liquidity concerns. The partnership provides Rivian with up to $5.8 billion in capital across equity and loans, subject to achieving specific operational milestones—several of which, such as gross margin positivity in 2024 and 2025, have already been met. Beyond capital, the alliance allows Rivian to leverage Volkswagen’s global purchasing scale, moving the company away from venture-level component pricing. The joint venture aims to deploy Rivian’s zonal architecture and software across Volkswagen’s portfolio, potentially reaching tens of millions of vehicles by the end of the decade, creating a high-margin revenue stream distinct from hardware sales.
Operational execution remains the primary risk and catalyst, with a clear roadmap to reduce unit costs and scale production. Glenn notes that the contracted material bill for the upcoming R2 model is less than half that of the legacy R1, supporting a path to vehicle profitability. Production for the R2 is slated to begin at the Normal, Illinois facility in the first half of 2026, with a second facility in Georgia expected to come online in 2028 to support longer-term volume targets of 400,000 to 800,000 units. To augment hardware margins, Rivian is building recurring revenue through its autonomy platform, offering hands-free driving subscriptions at competitive rates, alongside potential expansion into insurance and maintenance services.
Regarding valuation, Glenn concedes that Rivian does not fit traditional value investing frameworks given that profits will remain negative until scale is achieved. However, he argues the shares recently traded at levels that aggressively discount the company’s long-term potential, having fallen from an IPO high of $180 to approximately $10. The valuation reflects the market’s fixation on short-term capital intensity rather than the de-risked balance sheet provided by the Volkswagen capital and a Department of Education loan. With a market capitalization depressed by upfront investment costs, the thesis presents an arbitrage opportunity on Rivian’s ability to survive the “valley of death” and emerge as a dominant, vertically integrated player with substantial gross profit potential in the coming years.
Disclaimer
Best Ideas 2026 is held from January 6-23, 2026. The content of this website is not an offer to sell or the solicitation of an offer to buy any security. The content is distributed for informational purposes only and should not be construed as investment advice or a recommendation to sell or buy any security or other investment, or undertake any investment strategy. There are no warranties, expressed or implied, as to the accuracy, completeness, or results obtained from any information set forth on this website. BeyondProxy’s officers, directors, employees, and/or contributing authors may have positions in and may, from time to time, make purchases or sales of the securities or other investments discussed or evaluated herein.
Slides
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