Rivian (NASDAQ:RIVN) hit the public markets last week. A company with only a few dozen vehicle sales and a market cap over $100 billion seems to have broken the imagination of some investors. But let's not forget that Tesla (NASDAQ:TSLA) is a $1.1 trillion company, one of the most valuable in the world, despite selling only about 1% of all vehicles produced globally. 

How can investors wrap their minds around these valuations and which stock is a better buy today? Let's dig into what we know and what we don't about these two electric vehicle stocks

Rivian R1S in a desert terrain.

Image source: Rivian.

Rivian's high expectations

It's hard to see how to justify Rivian's valuation given its current production of only a few hundred vehicles, but the market is a forward- looking mechanism, so we need to think about what Rivian will look like in the future. The company's first manufacturing plant in Normal, Illinois, has a stated capacity of 150,000 with the potential to increase to 200,000 vehicles by 2023 with some upgrades. Rivian has talked about adding manufacturing plants to that base, but it's not clear when that would happen, so 200,000 is the max supply we have visible right now.

We also know that Rivian has an order for 100,000 delivery trucks from Amazon and 55,400 pre-orders for the R1T and R1S. So, demand is strong enough to fill manufacturing capacity, but it's nowhere near the nearly 1 million vehicles Tesla is selling per year. 

What Rivian has going for it is the market the company is going into. Trucks and SUVs are usually a high-margin business in the auto industry, and there are essentially no competitors today in the electric truck and SUV space, which is a great place to enter the market. 

Tesla has big expectations, too

As much as Rivian's valuation is being questioned now, investors should look at Tesla's valuation equally as skeptically. You can see below that Tesla doesn't even trade in the same stratosphere as General Motors, Ford, or Toyota. There are reasons for that, like Tesla's self-dealership model and its higher margin, but this is one of the most valuable companies in the world, and it's hard to see how the EV manufacturer isn't priced for perfection, just like Rivian. 

TSLA PS Ratio Chart

TSLA PS Ratio data by YCharts

There are a number of reasons Tesla has garnered the valuation it has today. The company's $10,000 self-driving technology is often seen as a high-margin growth driver. Energy storage is another potential growth driver. But at the end of the day, it's investor enthusiasm driving Tesla stock to the valuation it has today. And that's just as risky as Rivian's valuation today. 

The winner is... 

I think it's worth keeping in mind that Rivian's market capitalization is about one-tenth Tesla's right now. So, if it can generate more than one-tenth of Tesla's profits in the future, it could be a better investment. 

I mentioned that Rivian expects to be producing 200,000 vehicles annually by the end of 2023. Ironically, Tesla seems to be on a pace for about ten times that at 2 million vehicles, based on 1.3 million deliveries expected in 2022 and 50% growth that Elon Musk has targeted. So, Tesla's market cap is ten times Rivian's and its unit deliveries should be around ten times Rivian's in two years. Based on this metric, the companies are fairly evenly valued. 

And this is where I actually give Rivian a leg up in this competition. Rivian is selling trucks and SUVs, which traditionally have had far higher margins than cars, which is where Tesla focuses. Rivian's smaller-capacity base also means that growth will be easier to come by. For example, to double capacity, Rivian will need to add one more manufacturing plant while Tesla may need to build three or four more plants to double production. 

Neither of these stocks are value stocks by any means, and I'm not buying either stock given their sky-high valuations today. But between Rivian and Tesla, I actually think Rivian is a better buy today, and it's a stock I'll be keeping on my watchlist if the value gets a little more reasonable. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.