Morgan Stanley downgrades Rivian amid EV winter warning. Stock faces 2026 headwinds as analyst shifts focus to hybrids over pure electric. The electric vehicle honeymoon might be ending. Rivian Automotive, once Wall Street’s darling startup challenging Tesla’s dominance, just received a sobering reality check from Morgan Stanley. Analyst Andrew Percoco downgraded the stock to ‘Underweight’ from ‘Equal Weight’, warning that the EV “winter” isn’t just coming—it’s already here, and it’s settling in for 2026.
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The Downgrade That Signals Deeper Trouble
Morgan Stanley’s move wasn’t isolated. The same analyst also downgraded Tesla to ‘Equal Weight’ from ‘Overweight’, despite acknowledging the company’s leadership potential in autonomous mobility, renewable energy, and robotics. The reason? Tesla’s trading at 30 times estimated 2030 EBITDA, and near-term risks to consensus estimates are mounting.
For Rivian, the prognosis is bleaker. While maintaining a $12 price target, Morgan Stanley’s cautious stance reflects broader industry headwinds that smaller EV makers will struggle to weather. The brokerage noted a “moderately more positive” outlook for internal combustion engines and hybrid vehicles—a statement that would have seemed heretical just two years ago.
November Numbers Paint Mixed Picture
Rivian’s November sales offer both hope and concern. The company sold 4,500 vehicles in the U.S., marking a 14.1% increase from October and 24.1% year-over-year growth. Sounds impressive until you realize Rivian has only posted year-over-year gains in three of the past eleven months.
CEO RJ Scaringe already warned investors that sales would soften after a strong third quarter. In October, the company narrowed its full-year production guidance to 41,500-43,500 units from the previously announced 40,000-46,000 range. For a company trying to achieve economies of scale, these production volumes remain painfully small compared to established players.
What This Means for Global EV Markets
Rivian’s struggles mirror challenges facing the broader electric vehicle industry. Even China’s EV giants are experiencing profit squeezes amid fierce competition and softening demand. When BYD—the world’s largest EV manufacturer—records sales declines for the first time in years, startup players like Rivian face existential pressure.
For Indian consumers watching this unfold, Rivian’s challenges carry important lessons. The EV revolution isn’t a straight line upward. As India’s charging infrastructure expands and domestic manufacturers launch competitive electric SUVs, the market will inevitably experience consolidation. Not every EV startup will survive.
Retail Sentiment Remains Neutral
Stocktwits sentiment for Rivian stayed neutral over the past 24 hours, with investors divided. Some view the stock as speculative with long-term potential, while others remain cautious about near-term headwinds. Notably, RIVN stock gained in nine consecutive sessions before closing marginally lower on Friday, and year-to-date has rallied approximately 35%.
This volatility captures the EV sector’s current paradox: long-term optimism collides with short-term uncertainty. As traditional automakers pour resources into hybrid technology and governments worldwide reconsider EV incentives, pure-play electric startups find themselves in increasingly precarious positions.
The Hybrid Comeback Nobody Expected
Perhaps most telling is Morgan Stanley’s “moderately more positive” outlook on ICE and hybrid vehicles. This represents a remarkable shift in Wall Street sentiment. Two years ago, hybrids were considered transitional dinosaurs. Today, they’re looking like pragmatic survival strategies.
For Indian manufacturers like Mahindra pursuing both pure EV and conventional strategies simultaneously, this validation couldn’t come at a better time. The future of mobility might be electric, but the path there appears longer and more complex than Silicon Valley predicted.
As winter settles over the EV market, investors and consumers alike are learning an uncomfortable truth: revolutionary technology doesn’t guarantee revolutionary returns. Sometimes survival matters more than disruption.
