Rivian has emerged as Wall Street’s favorite electric vehicle stock as Tesla and the broader industry face slowing demand that has forced companies to slash prices. Jefferies initiated coverage of Rivian with a buy rating and a $16 stock price target ahead of the launch of its R2 midsize SUV on Thursday. The price target implies 45% upside from Wednesday’s close of $11.03. “From the start, Rivian has been gifted more time and capital than most start-up peers to ‘do things right,'” analyst Philippe Houchois told clients in a research note Thursday. Rivian is the only major stand-alone U.S. electric vehicle maker right now that has a consensus buy rating from Wall Street, with 55% of analysts endorsing the stock with an average price target of $17.22. Tesla, Fisker and Lucid all have hold ratings from a majority of analysts at the moment. “In our view, management has indeed created a well-defined life-style brand with leading sustainability and environmental credentials as well as pioneered an EV last-mile delivery van platform,” Houchois wrote. Rivian has an “unmatched capital base” that could help it correct gaps in its business model but the company faces two key tests this year, Houchois wrote. Rivian needs to slash production costs by $35,000 to $40,000 per unit and demonstrate that it can manufacture the R2 at a significantly lower cost than its previous models, the analyst said. “These will determine the terms under which Rivian will raise the estimated $2.5bn funding it needs to see through the launch of R2 and whether the business can remain independent or its IP assets could be more valuable to a larger organization,” Houchois told clients. Jefferies estimates that Rivian will burn through $9 billion of cash this year before generating positive free cash flow in 2027. As Wall Street grows bullish on Rivian, Tesla is facing growing skepticism from analysts at least in the near term. It was once the industry darling — more than half of analysts had a buy rating on Tesla as recently March 2023. Today, nearly half of analysts rate Tesla as hold with an average stock price target of $210.65, implying 19% upside from Wednesday’s close of $176.54. Morgan Stanley analyst Adam Jonas, a Tesla bull, cut his price target for the EV maker this week, arguing that the company could lose money this year as it struggles with an aging product lineup amid growing competition from hybrids. Jonas still believes in Tesla long term due to its investments in artificial intelligence and robotics, but said the company needs to shore up its core auto business. Tesla and Rivian shares are down 28% and 52%, respectively, year to date. Rivian is the closest EV maker to Tesla in spirit “with its own software stack, strong brand identity, global potential, and similar growth pains,” Houchois told clients. — CNBC’s Michael Bloom contributed to this report.