Rivian Stock Soars 18% Following Custom AI Chip Announcement and Competitive Pricing Strategy

Rivian Stock Soars 18% Following Custom AI Chip Announcement and Competitive Pricing Strategy

Rivian Automotive's stock jumped nearly 18% on Friday after analysts praised the electric vehicle maker's bold move to develop custom self-driving chips and launch competitively priced autonomous features.

The surge came just one day after shares had dropped 6% following the company's first Autonomy and AI Day, where Rivian announced it would move away from Nvidia's processors to develop its own chips for autonomous driving capabilities.

Key Developments Driving Investor Confidence

Custom Chip Strategy: Rivian unveiled the "Rivian Autonomy Processor," which will be manufactured by Taiwan Semiconductor Manufacturing Co. The new R2 model vehicles, launching in the first half of 2026, will be the first to feature these custom chips.

Aggressive Pricing: The company introduced "Autonomy+," a driver-assistance package priced at $2,500 one-time or $49.99 monthly—significantly undercutting Tesla's Full Self-Driving system at $8,000 upfront or $99 monthly.

Analyst Optimism: BNP Paribas analyst James Picariello noted the event "exceeded expectations" and positioned Rivian to become the "number 2 North America EV player," potentially surpassing Tesla in certain AI integration areas.

What This Means for Rivian's Future

• The custom chip approach could reduce dependency on external suppliers and improve margins
• Competitive pricing may accelerate adoption of autonomous features among consumers
• "Eyes-off" functionality is expected to launch in 2026, pending regulatory approval

Needham and Co raised its price target by 64% to $23 per share, citing confidence in Rivian's software-defined vehicle strategy. The stock reached $19.37, its highest level in nearly two years, bringing year-to-date gains to about 24%.

The self-driving systems still require human oversight, but Rivian's integrated approach to hardware and software could position it strongly in the competitive EV market.