Once worth more than $140 billion, Rivian Automotive (RIVN 0.18%) has had a steep fall from grace. Now more than 80% off its all-time high, anyone who bought the stock at the top is deeply in the red. While this might have been an expensive learning experience for some investors, the stock could be nearing an attractive entry point.

At the beginning of its time as a public company, investors envisioned Rivian as the next Tesla (TSLA -0.08%) but quickly were dealt a loss. As harsh as the fall was, Tesla has experienced multiple 50% plus drops as well. Is this vision dead? Or is Rivian in a prime position to perform now that the stock isn't as overhyped?

Two Rivian R1T trucks.

Rivian R1T and R1S. Image source: Rivian.

A different customer base

Rivian has two models available to the public, the R1T (a truck) and the R1S (an SUV). These vehicles start at $67,500 (R1T) and $72,500 (R1S) but can quickly rise to nearly $100,000 with a few options. On the flip side, Tesla's two cheapest models, the 3 and the Y, start at $46,990 and $62,990, respectively. These cater to different budgets, so the two electric vehicle (EV) manufacturers might not be the best comparison.

Additionally, Rivian is focused on providing vehicles that appeal to the adventuring consumer rather than the average suburbanite. By focusing on an area no EV company has penetrated, Rivian is positioning itself to gain a solid foothold in the industry.

Tesla did something similar with its first product, the Roadster, which was solely performance-based. In 2009, the vehicle's base cost was $109,000 and could reach $128,500 with the faster Sport model. Tesla began with one expensive niche and then expanded into other areas. Rivian appears to be following the same road map, as it has some more vehicles on the horizon.

CEO R.J. Scaringe plans to launch six models by 2025. While no one outside Rivian knows what type of models these will be, they could include some lower-priced versions, or the company could enter an entirely different segment.

It also has its electric delivery van, and Amazon has already ordered 100,000 of the vehicles. This is another market that no manufacturer has tackled yet, potentially giving Rivian another first-mover advantage in a particular niche. If Amazon likes its vans, other deliver companies like UPS and FedEx may follow suit and purchase electric delivery vans before other companies can get into the market.

Electric Vehicle Van for Amazon being manufactured.

An Amazon electric van being built by Rivian. Image source: Rivian.

While Rivian isn't focused on the same customer base as Tesla, it's operating on a similar playbook.

Similar financials

Rivian was founded in 2009, and it took 12 years for the company to produce its first vehicles. Tesla started in 2003 and delivered vehicles in 2008, just five years later. While Tesla beat Rivian to the punch for its first production vehicle, both share a similar theme in their earlier stages: awful financials.

In its first report as a public company in the second quarter of 2011, Tesla reported revenue of $58 million and a net loss of $59 million. Rivian exceeded that in its first-quarter 2022 report, with revenue of $95 million and losses of $1.6 billion. But this isn't a fair comparison as Tesla was three years into production during its first public quarter, versus just over two production quarters for Rivian.

Person in front of Rivian R1S.

A Rivian R1S. Image source: Rivian.

One significant difference between the two was on their balance sheets. Tesla held $319 million in cash in its first public quarter, enough to last just over five quarters of operation. Rivian held $16.4 billion on its balance sheet as of March 31, enough to last 10 quarters at its current burn rate. As a result, Rivian is better positioned than Tesla was in terms of finances, so Rivian could have an easier production start-up than Tesla did.

With more than 90,000 orders for its R1 lineup and 100,000 van orders, Rivian has a notable customer base waiting for products. These orders alone will give outside investors reason to own the stock, regardless of what the price is doing. With Rivian reaffirming its 2022 production guidance for 25,000 vehicles, it should narrow its losses provided it doesn't greatly increase its expenses, giving the company more time to operate with its current cash hoard.

Rivian is following Tesla's playbook, albeit with a different audience. Whether it can execute and grow its manufacturing capabilities to match Tesla is an entirely different story. If Rivian stays in its adventure-based audience niche and doesn't expand its lineup with cheaper offerings, it's unlikely Rivian can find a wide enough audience to match Tesla's customer base.

I'm a fan of Rivian's products, but the stock just isn't suitable for me. It isn't wrong to own the stock as a speculative position, but I think there is too much risk as a long-term investment. Should they reach manufacturing scale and expand their product lineup, I could see myself owning Rivian stock someday. However, at Tesla's current valuation, it is the better EV stock to purchase.