Tesla vs. Rivian: Which EV Stock Promises Better Returns for Investors?

Tesla remains dominant in the EV market, outpacing newcomers like Rivian. Investors weigh the seasoned veteran against the promising upstart for long-term investment potential.

Over recent years, the electric vehicle (EV) market has seen a surge of new entrants. Rivian, with its off-road-capable EVs, has particularly caught attention. Its successful initial public offering (IPO) in 2021, valued at nearly $12 billion, showcased the market’s confidence in its potential. But the question remains: Can it challenge the established dominance of Tesla?

Tesla’s Unwavering Dominance

 

Despite the influx of new players, Tesla’s stronghold in the EV market remains unchallenged. A testament to this is the recent statistic from U.S. EV sales in 2023: Tesla outsold its next 19 competitors combined. With a staggering 325,291 vehicles sold, it dwarfed Chevrolet’s 31,000 and Rivian’s 17,969. Tesla’s two-decade experience in vehicle production gives it a clear edge, with Rivian being a relatively new entrant.

Rivian’s Progress: A Closer Look

Rivian has shown commendable growth. In Q3 2022, it manufactured 7,363 vehicles and delivered over 6,500. Fast forward to Q3 2023, production and deliveries rose to around 16,300 and 15,564, respectively. Yet, when juxtaposed with Tesla’s 435,059 vehicles delivered in the same quarter, Rivian’s journey to challenge Tesla seems long and arduous.

Financial Health: Tesla and Rivian Head-to-Head

Financial metrics offer a deeper insight into a company’s health. Both Tesla and Rivian recently hit all-time highs in revenue. Rivian crossed the $1 billion mark, a significant milestone. However, Tesla’s revenue from its EVs in Q2 2023 was a whopping $21 billion. Tesla’s efficient manufacturing and cost mitigation strategies have enabled it to maintain an 18% gross profit margin, even after significant price cuts. In contrast, Rivian, still striving for profitability, reported a loss of nearly $33,000 per vehicle sold.

The Future: Potential and Risks

Tesla’s commitment to innovation, especially in autonomous driving, positions it for future growth. Elon Musk’s vision of a robotaxi business could revolutionize transportation. Rivian, while promising, faces challenges in achieving profitability and competing with established players.

Conclusion: Making the Investment Choice

Comparing Tesla to Rivian is akin to juxtaposing a seasoned player with a budding contender. While Rivian offers the allure of untapped potential, the risks are substantial. Tesla, with its proven track record, industry dominance, and innovative drive, remains a more compelling choice for investors.