There's no denying Tesla has been the centerpiece of the electric vehicle (EV) revolution to date. And rightfully so. It didn't just bring EVs into the mainstream. It made them cool. Patient shareholders have been well rewarded for riding out the stock's extreme volatility too.
As time marches on, other EV players are entering the fray, providing new options to investors who fear Tesla stock's most rewarding days are in the rearview mirror.
Case in point: Rivian Automotive(NASDAQ: RIVN). Shares are up more than 40% from their November low despite sector-wide lethargy during this stretch. What gives? And more importantly, might Rivian stock continue to soar?
Rivian isn't just on a roll -- it's accelerating too
This bullishness hasn't always been in place, for the record. Although well up for the past few weeks, Rivian's share price is still down more than 90% from its late-2021 peak hit shortly after the company's initial public offering (IPO).
Just put the move in the proper context. The IPO came in the middle of the COVID-19 pandemic at a time when bored investors were highly receptive to any reasonably bullish story. As was the case with plenty of other tickers, reality eventually brought this one back to earth.
The post-IPO volatility seems to have run its full course. And the EV company itself has continued to expand its production capacity while simultaneously bolstering its marketing efforts. Last year's total production of 49,476 vehicles and delivery of 51,579 EVs were both record-breaking. Fourth-quarter deliveries of 14,183 units are the company's second-highest quarterly number ever. The supply chain hiccup feared in October is clearly no longer a threat.
Data source: StockAnalysis.com. Chart by author.
But can the still-unprofitable company continue this pace of growth at a time when consumer interest in EVs is waning so much that even the deeper-pocketed "majors" of the automotive world are reining in their EV ambitions?
It can. Here's why.
This EV maker offers more of what consumers actually want ... and need
At first blush, it looks like just another EV maker that isn't Tesla. And that's not an unfair assessment.
Rivian is doing things differently from Tesla, though, making its lineup more marketable.
Chief among these strategic differences is the fact that Rivian is making the kinds of vehicles consumers want: pickup trucks and SUVs. And not in the odd shape of Tesla's Cybertruck, which has been panned for its unusual futuristic look. With the exception of its vertically slitted headlights, many consumers would be unable to readily distinguish between a Rivian-made vehicle and a truck or SUV manufactured by a major car company.
Rivian's also well aware that its EVs must be affordable for the general public. While its R1S sport utility vehicle and R1T pickup truck are both relatively expensive, the R2 SUV in development will start at a reasonable sticker price of $45,000. The smaller R3 should start at an even lower price point, making it competitive not only with Tesla's comparable Model Y but with most similar, combustion-powered vehicles.
Perhaps the most compelling thing Rivian is doing that bolsters the argument for stepping into the stock is the company's effort to help consumers get past their concerns about driving range and charging anxieties. Not that Tesla doesn't offer something similar, but Rivian is making it easy to find which of the nation's 69,632 charging stations will work for their vehicle and even helping them plan a long-distance road trip to accommodate any charge-ups needed along the way.
As the dust settles, Rivian's risk and reward comparisons are becoming compelling
Still, while significant revenue growth is expected, profits are nowhere on the horizon. What's going to drive this stock upward in the interim?
This is one of those occasional cases when the future is so compelling that the market's willing to pre-emptively price in what awaits. For instance, although the sales growth pace of EVs might be slowing down, the industry's near-term and likely long-term growth remains enormous. BloombergNEF predicts worldwide sales of EVs will swell from 2024's figure of around 17 million in 2024 to 30 million in 2027 on the way to 73 million in 2040.
Helping drive this growth is the continued proliferation of charging options. The Motley Fool's in-house research indicates the United States alone will need a total of 182,000 fast-charging stations by 2030 when it will need to support over 40 million EVs on our roads. Similar growth dynamics apply outside the U.S. as well where Rivian is eyeing eventual expansion.
So, although net profits are still a ways off, the future is compelling even if it's still a bit fuzzy. It's at least becoming clearer -- something that couldn't convincingly be said just a couple of years ago. As the dust continues to settle, more investors can feel good about stepping in.
Just keep a watchful eye on any position you may have in Rivian stock. The dust may be settling, but there's still plenty of volatility left.
Should you invest $1,000 in Rivian Automotive right now?
Before you buy stock in Rivian Automotive, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Rivian Automotive wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $832,928!*
Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. TheStock Advisorservice has more than quadrupled the return of S&P 500 since 2002*.
James Brumley has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.
