Where will Rivian be in 5 years?

A lot has changed for Rivian (RIVN 3.85%) in the last five years. And there could be even more changes in the next five years. Now could be an incredible time to invest in this new electric vehicle (EV) maker. Here are two major events to look forward to in the near future.

This major catalyst could happen very soon

It’s no secret that car manufacturing is a capital-intensive business. It takes billions of dollars to design a vehicle, build a factory, manufacture the vehicles and then market, sell and deliver them to consumers. Then there are warranty claims.

It also takes time. adze it literally took decades to go from zero to the small handful of models it sells today. And there were times during the trip when he almost went bankrupt. On ramping up production of his Model 3, for example, Musk said the company was about a month away from bankruptcy.

So far, Rivian has avoided the capital trap that has forced countless automakers — both electric and conventional — into bankruptcy and ultimately irrelevance. It launched its R1S and R1T models to great fanfare, winning Consumer Reports‘ the highest degree of customer satisfaction of any car manufacturer.

And it won the backing of major investors, including Amazon. But Rivian’s time is still limited. He loses around $33,000 on every vehicle he sells. And this while trying to spend billions of dollars on production capacity for new models aimed at the mass market.

The challenge of finite capital and mounting losses have certainly kept a lid on Rivian’s valuation. But those fears could ease significantly in the next quarter or two. In a recent letter to shareholders, management said it expected “modest gross profit” by the end of the year. This would represent a step change in the financial position of the company.

Even if the deadline is extended by a few more months, achieving positive gross profit should have a considerable impact on the stock price, especially considering that the company generated a gross loss of $2 billion in the last 12 months.

RIVN gross profit (TTM); data by YCharts. TTM = last 12 months.

Expect big things when this stage is reached

If Rivian turns positive gross margins soon, its capital position should improve dramatically. This is huge news for the biggest potential catalyst in the next five years: the introduction of mass market models.

Earlier this year, the executive unveiled three new models: the R2, R3 and R3X. All three are expected to start under $50,000. Just as the Model 3 and Model Y did for Tesla, these mass-market vehicles have the potential to increase Rivian’s sales base by an order of magnitude.

The company still has about $6 billion in cash on its balance sheet, plus an $827 million incentive package from the state of Illinois to develop its plant. However, Rivian will likely need to tap the debt and equity markets again to get these models on the road.

If it can bring the R2, R3 and R3X to market, expect big things. The introduction of mass market vehicles made Tesla the company it is today. But this will require patience. The R2 isn’t expected to ship until 2026 at the earliest, with the R3 and R3X launching months — if not years — later.

The biggest catalysts for Rivian over the next few years are clear. The company needs to achieve positive gross profit margins to help clear up funding concerns. Then they have to bring their lower cost models to market.

And if it can accomplish all of this without too much stock dilution, it’s hard not to like Rivian’s stock, which currently trades at a market cap of around $12 billion.