Rivian (NASDAQ:RIVN) has shown that it can rapidly ramp up the production of its electric vans and trucks, while the demand for its electric vehicles has been and is likely to remain strong.  Moreover, the automaker has forecasted that its gross margins can reach around 25%.

Given these points, I think the company’s stock price can surge more than 10-fold by early 2028 to $165.  I’ll explain my reasoning in the paragraphs below.

Strong Demand and Rapid Production Ramps

In 2022, Rivian manufactured nearly 25,000 EVs and sold slightly over 20,000 units. There is a wide gap between the number of EVs it produced and the number it sold, as has been the case in recent quarters, for this company and its competitors. Indeed, Rivian noted during its fourth-quarter earnings call that it could not fulfill all of its orders until “well into 2024.”

Increasing my optimism about the automaker’s demand outlook, Morgan Stanley’s Adam Jonas, a very well-respected stock analyst focusing on the electric-vehicle sector, recently wrote that Rivian’s products are “differentiated.” At the same time, EV demand is likely to climb meaningfully going forward. Thus, Jonas is clearly bullish on the automaker’s long-term outlook.

On the production side, the automaker manufactured over 10,000 EVs in the fourth quarter, putting its annual run rate at 40,000 vehicles. Officially, Rivian expects to produce 50,000 vehicles in 2023, although internally, it has reportedly discussed making 62,000 EVs this year.

Either way, the automaker has been able to ramp up its production tremendously, and is poised to continue on this path.

Forecasting Rivian’s 2027 Financial Results

Rivian CFO Claire Rauh McDonough has said that the automaker will, starting in 2027, produce 400,000 of its upcoming R2 SUVs annually. Let’s assume the automaker makes 400,000 other EVs in the same year. I think that’s a realistic target, given Rivian’s ability to ramp up production so far, and that Tesla (NASDAQ:TSLA) produced 1.3 million EVs in 2022. And, let’s say that Rivian’s average selling price in 2027 is $80,000. Assuming the automaker delivers 775,000 of the EVs it makes in 2027, that would work out to $62 billion of revenue.

Rivian has said that its “long-term goal” is to generate gross margins of around 25%. If it can achieve a gross margin of 25% on a top line of $62 billion, its gross profit would come in at $15.5 billion. The company’s operating expenses would probably not increase tremendously since it will likely not need, for example,  many more executives, office buildings, or sales, marketing, design, and R&D professionals. In 2022, its operating expenses came in at $3.7 billion. Those expenses climb slightly less than 50% to $4.5 billion.

Given those figures, its operating income would be $11 billion. If the shares trade at 15-times its expected earnings payment, the price of RIVN stock would be, everything else being equal, $165. That would represent an increase of roughly 13-fold above where RIVN stock currently trades.

Rivian’s Reviews Remain Strong

Notably, the reviews of Rivian’s EVs continue to be highly complimentary, indicating that the demand for its vehicles will continue to be strong. For example, in an April 23 review of Rivian’s R1S SUV, Dinel Golson, a columnist for The Verge, a tech website, wrote that the EV “is one of the most comprehensively well-designed and engineered vehicles I’ve ever experienced.” He called it “one of the best-looking SUVs on sale” and raved that “Rivian excels” when it comes to providing a high-quality driving experience.

Additionally, Chris Davies, writing for another tech website Slash Gear, called the R1s “compelling” in an April 26 article. Davies noted that this EV does not support either Apple (NASDAQ:AAPL) or Alphabet’s (NASDAQ:GOOG) entertainment system. However, ultimately, I believe that will work in investors’ favor, as Rivian will be able to offer many subscription infotainment apps to its customers.

The Bottom Line on RIVN Stock

Given the strong demand for Rivian’s EVs, its demonstrated ability to ramp up its production quickly, and the excellent reviews its Evs have garnered, I remain incredibly bullish about the long-term outlook for RIVN stock. If all goes well for the automaker, I think shares of RIVN stock could soar 10- to 13-times above their current levels in roughly 4.5 years.

As of the date of publication, Larry Ramer owned shares of RIVN. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Larry Ramer has conducted research and written articles on U.S. stocks for 15 years. He has been employed by The Fly and Israel’s largest business newspaper, Globes. Larry began writing columns for InvestorPlace in 2015. Among his highly successful, contrarian picks have been PLUG, XOM and solar stocks. You can reach him on Stocktwits at @larryramer.

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