For investors, the automotive industry isn't for the faint of heart. Intense competition, historically brand-loyal consumers, and capital-intensive manufacturing are some of the reasons the list of failed and bankrupt automakers is extensive.

However, as the world begins to adopt electric vehicles (EVs), new automakers have a rare chance to carve out their niche, and there's one big reason Rivian Automotive (RIVN -3.62%) could be a dark horse EV stock in 2023.

One big reason

Perhaps the most important reason Rivian could do well this year is an opportunity to insert itself as consumers settle into a brand. Typically, the automotive industry is extremely brand loyal, and it's difficult, but highly valuable, when automakers can make a "conquest" sale that takes a consumer from another brand.

Despite historical brand loyalty in the auto industry, early in the EV race, there seems to be more willingness from consumers to switch brands. That's a massive opportunity for a new automaker such as Rivian to get its foot in the door.

Early in 2022, when Ford Motor Company was taking reservations for its F-150 Lightning, it showed a 75% conquest rate -- a term the industry uses for a sale to consumers who aren't currently customers. Ford's overall EV business has recorded a 60% conquest rate, which again is higher than the automotive industry typically sees. While not as high as Ford's truck, General Motors also noted a conquest rate above 50% for its Chevrolet Silverado EV. 

Further, there's some evidence that U.S. EV market leader Tesla may have stubbed its toe with recent price cuts that reached as high as 20%. "I would not buy a Tesla again," One buyer told Automotive News. "That's saying a lot for me. I was a huge Tesla fan girl. I'd go with a competitor like Lucid or Rivian."

That buyer isn't alone. In fact, a survey released by Morning Consult showed that only 13.4% of U.S. adults surveyed had a favorable view of Tesla, down significantly from 28.4% a year ago. The decline coincided with Tesla CEO, Elon Musk's, recent acquisition of Twitter and previous controversial antics. 

While there isn't a definitive timeline for how long consumers will remain open to testing new brands for EVs, and one day EV segments may end up as historically loyal as traditional vehicle segments, there seems to be an opportunity right now for a new automaker. Rivian may be in the right place, at the right time, to get its foot in the door of a historically brand-loyal industry -- but that's not the only reason to like its stock this year.

Need more reasons?

Two critical factors facing most new automakers are funding operations and ramping up production. That's where investors' focus will remain in the near term for Rivian, and for now the automaker is performing better than its 70% decline in share price over the past year would suggest.

Rivian produced 7,363 total vehicles during the third quarter, which was a solid 67% sequential increase from the second quarter. During the fourth quarter, its production topped just over 10,000 vehicles. It also began its second manufacturing shift, which added to production volume but has yet to reach full optimization, leaving room for production growth in 2023.

Further, as of Nov. 7, the company's R1 preorder backlog was over 114,000 units -- that figure is net of any deliveries and cancellations. That figure is also in addition to the 100,000 initial order of electric vans from Amazon.

Just as important as its production ramp-up and backlog of orders, the company ended the third quarter with nearly $14 billion in cash, cash equivalents, and restricted cash --– excluding capacity under its revolving-credit facility. That level of cash has management confident it can fund operations with cash on hand through 2025.

The bottom line

There are many potholes and speed bumps on the road for young automakers, but already Rivian has driven through a year of economic uncertainty, rising interest rates, and microchip shortages hindering supply chains.

Rivian has cash on hand to fund operations, demand for its products with a backlog of orders, and is continuing to ramp up production including a second shift that's getting up to speed.

The automaker also has a unique opportunity in the historically loyal automotive industry to get its foot in the door with early EV adopters that seem to be more open to trying new vehicle brands. For all of these reasons, Rivian could certainly be a dark horse EV stock in 2023.