Rivian Automotive (RIVN -0.10%) and Lucid Group (LCID -1.97%) attracted a stampede of bulls in 2021 amid the buying frenzy in electric vehicle (EV) stocks. However, shares of both companies fizzled out over the past year as rising interest rates and other macro headwinds drove investors away from speculative growth stocks.

As a result, Rivian and Lucid both now trade about 80% below their all-time highs. Should you buy either of these out-of-favor EV stocks?

The differences between Rivian and Lucid

Rivian produces three vehicles: the R1T pickup truck, the R1S SUV, and an EDV (electric delivery van) for Amazon (AMZN 1.60%). Its R1 vehicles start at less than $70,000 and can travel over 300 miles on a single charge, while its EDVs have a range of about 150 miles.

Rivian has churned out 15,000 vehicles since it kicked off production last September. It originally planned to produce 50,000 vehicles this year, but it halved that target to 25,000 back in March as it struggled with supply chain constraints. It reaffirmed that full-year target in its third-quarter report. There's still plenty of pent-up demand for its vehicles. In addition to Amazon's initial order of 100,000 EDVs, Rivian has received 114,000 pre-orders for its R1-series pickups and SUVs so far.

Rivian's R1T pickup on a rocky road in a mountain setting.

Image source: Rivian.

Lucid's luxury sedan is called the Lucid Air, which comes in Pure, Touring, Grand Touring, and Dream editions. The Pure edition, which starts at about $90,000, has a range of just over 400 miles. The top-tier Dream edition, which starts at about $150,000, can reach 520 miles on a single charge.

Lucid has delivered 2,562 vehicles since it started production last September. It initially planned to ship 20,000 vehicles in 2022, but it reduced that target to 12,000-14,000 vehicles this February. It then halved that estimate to 6,000-7,000 vehicles in August as it struggled with supply chain issues. During its recent third-quarter earnings report, Lucid reaffirmed that full-year guidance and noted that it was still on track to fulfill more than 34,000 reservations.

Which company is growing faster?

Rivian's near-term goal is to ramp up its production of its R1 vehicles and EDVs. It currently has an annual production capacity of 150,000 vehicles at its main plant in Illinois, and it expects its capacity to reach 200,000 vehicles after it completes an expansion of the plant next year. By 2024, Rivian intends to open a second plant in Georgia, which could boost its annual production capacity to about 600,000 vehicles.

Rivian intends to ramp up the production of its second-generation "R2" vehicles in 2025. It hasn't revealed a clearer road map regarding those plans yet, but they might expand its reach beyond pickups, SUVs, and vans.

Lucid's AMP-1 manufacturing plant in Arizona can produce up to 34,000 vehicles annually. It expects AMP-1's phase 2 expansion, which started last July, to increase its annual capacity to 90,000 vehicles by 2023. It also recently signed a deal with Saudi Arabian investors to open a new plant in the country, which will expand its annual capacity by 155,000 vehicles.

Lucid plans to launch its next vehicle, the Project Gravity SUV, in 2024. But more importantly, it believes the Saudi Arabian deal puts it on track to deliver 500,000 vehicles by 2025 -- a full five years ahead of its original target.

Which company is more financially stable?

Rivian and Lucid will both likely remain unprofitable for the foreseeable future as they aggressively scale up their operations. Here's what Wall Street expects to happen to both companies over the next two years.

Metric (Estimated)

2022

2023

2024

Rivian revenue

$1.75 billion

$5.77 billion

$11.56 billion

Rivian net income

($7.02 billion)

($6.21 billion)

($4.49 billion)

Lucid revenue

$723 million

$2.56 billion

$4.79 billion

Lucid net income

($1.90 billion)

($2.27 billion)

($1.69 billion)

Data source: S&P Global.

We should take those estimates with a grain of salt, but those losses imply that the automaker with the stronger balance sheet is the safer investment. Rivian ended the third quarter of 2022 with $13.3 billion in cash and equivalents, and it was shouldering $3.7 billion in total liabilities, which gives it a low debt-to-equity ratio of 0.2. That manageable leverage should give Rivian more room to raise fresh cash with new loans or secondary offerings.

Lucid ended the third quarter with $1.3 billion in cash and equivalents, as well as $2.1 billion in short-term investments. But it had $3.7 billion in total liabilities, which gives it a much higher debt-to-equity ratio of 1.1.

The winner: Rivian

Rivian's enterprise value of $20.4 billion values the company at less than 2 times its potential sales in 2024. Lucid, which has an enterprise value of $21.6 billion, is still valued at 4.5 times its projected sales for 2024.

In addition to its lower valuation, Rivian is already producing more vehicles than Lucid, has a healthier balance sheet, and focuses on the more practical markets for mid-range pickups and delivery vans. It's also still backed by Amazon and Ford. Rivian is still a speculative EV stock, but I believe it's a much more promising investment than Lucid.