Many electric vehicle makers went public over the past two years. However, several also disappointed their early investors with ongoing delays, cancellations, and reduced production targets.

EV makers that went public by merging with SPACs (special purpose acquisition companies) also frequently presented bullish long-term forecasts before shipping a single vehicle. When investors realized they couldn't fulfill those promises, their shares collapsed. Rising interest rates exacerbated that sell-off by crushing speculative, unprofitable, and overvalued stocks.

Rivian's R1T pickup.

Image source: Rivian.

As a result, the red-hot EV sector turned ice cold. However, a handful of promising EV companies -- which had actually started to mass produce thousands of vehicles -- were also tossed out with the bathwater.

Two of those stocks are Rivian (RIVN -2.52%), which went public through a traditional IPO last November, and Polestar (PSNY -5.65%), which went public by merging with a SPAC this June. I'll explain why both of these EV makers are faring better than most of their peers, and if either stock is still worth buying in this tough market.

Why are Rivian and Polestar standout EV plays?

Rivian and Polestar both stand out in the crowded EV sector because they're backed by established automakers. Rivian -- which produces electric pickups, delivery vans, and SUVs -- is backed by Ford. Its other top investor is Amazon, which ordered 100,000 electric vans to be fully delivered by 2030.

The Polestar 2 sedan.

Image source: Polestar.

Polestar's top investor is Geely's Volvo, which previously operated Polestar as a high-end brand for gas-powered and hybrid performance vehicles. Volvo spun off Polestar as a stand-alone brand five years ago to develop its own electric vehicles. It currently produces electric sedans, but it will launch its first SUV this October.

Rivian and Polestar also shipped thousands of vehicles as other EV makers are still struggling to ramp up their production. Rivian has manufactured approximately 8,000 vehicles since its production started last September, and it plans to produce 25,000 vehicles this year. In addition to its initial order from Amazon, it's received about 98,000 preorders for its R1 pickups and SUVs, which start at $73,000 and $78,000, respectively.

Polestar shipped 29,000 vehicles last year. The Polestar 2, an electric sedan that starts at about $50,000, accounted for most of those shipments. It discontinued its older, higher-end Polestar 1 sports car earlier this year. It delivered 21,185 vehicles in the first half of 2022, and it expects to achieve 50,000 deliveries this year as it rolls out its Polestar 3 SUV.

Which company will grow faster over the next few years?

Rivian generated just $55 million in revenue last year, but analysts expect it to generate $1.82 billion in revenue this year. They expect that figure to soar to $12.19 billion by 2024 -- which would represent a compound annual growth rate (CAGR) of 159% -- as it ramps up its production and gradually fills Amazon's order of electric vans.

However, they also expect Rivian to lose billions of dollars each year, and for its annual net loss to only narrow slightly from $6.73 billion this year to $4.85 billion in 2024. Rivian ended the second quarter of 2022 with $15 billion in cash, cash equivalents, and restricted cash, but those steep losses will likely drive it to raise fresh funds over the next few years.

Polestar generated $1.34 billion in revenue in 2021. Analysts expect its revenue to rise 77% to $2.37 billion this year, then grow at a CAGR of 123% over the following two years to reach $11.8 billion in 2024. They expect that acceleration to be driven by the launch of the Polestar 3 this year and the introduction of another SUV, the Polestar 4, in 2024.

It's also expected to stay unprofitable, but analysts expect its net loss to narrow from $1.07 billion this year to $269 million in 2024. However, Polestar only held $1.38 billion in cash and equivalents at the end of the second quarter -- so it will also likely need to take on more debt or sell more shares to fund its ongoing expansion.

The valuations and verdict

Rivian and Polestar will both remain out of favor as rising interest rates punish unprofitable companies. Rivian still trades at 18 times this year's sales, and that high price-to-sales ratio will make it unappealing as investors continue to favor value over growth throughout this bear market. Moreover, Rivian already trades at nearly three times the $12.19 billion in revenue it might generate in 2024 in a best-case scenario. 

Polestar trades at five times this year's sales and less than one times its best-case sales estimate for 2024. That lower valuation arguably makes it a safer play than Rivian. More importantly, Polestar is still on track to deliver twice as many vehicles as Rivian this year -- and it will likely rack up lower net losses per vehicle than Rivian for the next three years.

Rivian and Polestar are both growing faster than many other fledgling EV makers. But in this tough market, Polestar's cheaper valuations and narrower losses clearly make it the better EV stock to buy.