Monday kicked off the new trading year with a bang as the S&P 500 burst through to a fresh all-time high. Yet the most striking story was Tesla's (TSLA -8.78%) blowout fourth-quarter 2021 and full-year production and delivery results. The company beat expectations, and its share price rose over 14% on the day. 

As the fifth-largest company in the U.S. with a market cap of $1.2 trillion, is it time to sell Tesla after the big day? Or does the company's stock deserve to be higher?

Rivian EVs

Image source: Rivian Automotive.

A stock run-up of epic proportions

Tesla gained $144 billion in market cap on Monday, which is roughly the combined value of Lucid Group (LCID 2.10%) and Rivian Automotive (RIVN 2.34%). Lucid and Rivian receive their fair share of criticism for being extremely expensive stocks since both companies have negligible revenue, unclear production roadmaps, and will most likely be unprofitable for several years. Yet were Tesla's better-than-expected production and delivery numbers really so impressive that they warrant the company to gain that much value in a single day? Yes and no.

Tesla delivered over 308,000 cars in Q4, which was 45,000 more cars than expected. That's more than the 20,000 cars Lucid expects to deliver in all of 2022. Rivian hasn't outlined exact production figures for 2022. Despite having a current production capacity of 150,000 vehicles per year, Rivian delivered just 386 trucks and SUVs in the third quarter of 2021.

Investing in a growth story over quarterly performance

Lucid and Rivian shouldn't be valued on their near-term production targets. Rather, these businesses are valued based on what they could become over time. To their credit, both companies have proved they have impressive technology and have carved out their own niches in the EV market. Lucid is taking a stab at the high-end luxury sedan market with industry-leading range and horsepower. Rivian is targeting the outdoorsy and adventurer market with powerful trucks and SUVs built for rugged terrain. To say that Tesla's quarterly delivery beat is worth the same as these two electric car companies is a stretch.

The Tesla recalls are overblown

Another story published alongside the Tesla production and delivery numbers is the forced recall concerning 475,000 Tesla vehicles. Recalling a Tesla vehicle for an ongoing battery or self-driving problem would be serious. However, that's not what these recent recalls are for.

According to the U.S. National Highway Traffic Safety Administration reports, the recall is simply for defective Model 3 backup cameras and Model S trunk latches. What's more, Tesla estimates that only 1% of the 356,309 Model 3s involved could have these defects. For the Model S, it's a similar story, as 14% of the 119,009 vehicles involved are estimated to be defective. Add it up, and that's just 20,224 cars that are estimated to be impacted from this recall, not nearly half a million.

To fix the problem, Tesla Service will inspect the issue and customers may be eligible for reimbursement through Tesla's General Recall Reimbursement plan. Recalls sound scary, but this one was overblown.

Where to go from here

When investors buy shares of a company, they are ultimately saying they think the stock's current market cap is a fair price. Buyers who were willing to pay 14% more for Tesla stock on Monday were essentially validating the company was worth $144 billion more from the news. In this vein, a 50/50 split of Lucid and Rivian stock could be a better buy.

In its Q3 earnings report, Rivian said it raised $13.7 billion from its initial public offering. Lucid reported $4.8 billion in cash during its third quarter but has since landed $1.75 billion from convertible senior notes due in 2026. In sum, both companies have ample dry powder to fund a rapid production ramp.

While it's unlikely either will become the next Tesla, a distinct advantage Lucid and Rivian have over Tesla's early days is investor support and cash. When Tesla wasn't profitable or cash flow positive (a position Lucid and Rivian are likely to be in over the medium term), it had few choices other than to dilute its stock even as its share price fell. Today, investor sentiment and the auto industry, in general, are very optimistic about the future of EVs, suggesting Lucid and Rivian are just the tip of the EV stock iceberg.

Despite its high valuation, it's probably not a good idea to sell Tesla's stock now in hopes of locking in the best returns. Tesla hasn't even begun production at its Germany or Texas 'gigafactories.' Demand is stronger than ever, as the tailwinds of the EV industry gain momentum. Tesla is set up to have another big year in 2022 and keep the momentum going. As the industry leader, Tesla could certainly be included in a basket of EV stocks for investors taking that approach. And that's probably a smart strategy. With so many options to choose from today, other EV stocks offer more upside than buying just Tesla stock at current levels.