On March 13, Rivian Automotive (RIVN 1.34%) reached a new all-time intraday low of $13.13 per share. The stock's fall from grace from one of the most valuable automakers in the world to being worth about a one-fourth of Ford or General Motors has been nothing short of breathtaking.

However, it could also present a buying opportunity for long-term investors. The same can be said about Nio (NIO 1.76%) stock, which is down 86% from its all-time high. Here's why Rivian and Nio are two growth stocks worth considering now.

Two people have a picnic next to a Rivian R1T electric pickup truck.

Image source: Rivian Automotive.

Rivian stock: now we're talking

Daniel Foelber (Rivian Automotive): Rivian's sell-off is excellent news for investors who have been waiting for its valuation to come down before buying. Two factors are typically needed for a stock price to go up: investor optimism and a strong performance by the company. Rivian's valuation was so high that it left little room for the stock price to go up. And in this case, a lot of room for it to go down.

Its performance has also been weaker than expected, as Rivian is burning through cash and it has crashed headfirst into supply chain issues. To be fair, 2022 brought a bit of bad luck for Rivian as the company tried to juggle its manufacturing expansion while building its R1T electric pickup, R1S electric SUV, and electric delivery van (EDV). While its execution could have been better, there's no denying the company was fighting an uphill battle throughout last year.

The good news is that Rivian has likely turned the corner in terms of supply chain challenges. On its fourth-quarter 2022 earnings call, management noted its optimism toward successful cost cuts and positive gross margins in 2024. But slowing the cash burn will be a challenge, as Rivian is forecasting production of 50,000 units per year, which is double what it produced in 2022. To put this goal into perspective, consider that Rivian is expected to crank out one finished vehicle every 10 minutes or so this year. 

There have been exciting EV companies that have gone public in the last few years. But none of them have offered quite as good of a risk/potential reward as Tesla's (NASDAQ: TSLA) stock. Rivian's sell-off has changed that. With a market capitalization now of just over $12 billion -- and $12 billion in cash on the balance sheet (plus another $1.3 billion from its convertible bond offering) -- Rivian's valuation is looking more and more reasonable. 

I could see Rivian stock going a lot higher or a lot lower from here. It could go a lot lower if it doesn't fix its costs, misses its production goal, doesn't hit positive gross margins next year, or simply fails to prove that it can make money. However, it could also go a lot higher if it has a good year and charts a path toward sustained hypergrowth and profitability.

While investors should always focus on the long-term investment thesis, there is no denying the importance that 2023 will bring for Rivian. It is not an exaggeration to say that this year and next could make or break the investment thesis. And for that reason, the best approach for Rivian stock could be to own a small position and then add to the position if the investment thesis is bridging the gap between expectations and reality.

Buy when others are fearful

Howard Smith (Nio): Nio is far from being the leading EV company in China right now. But an investment in the stock shouldn't have to come with that aim. Tesla and Warren Buffett-backed BYD (OTC: BYDDY) are dominating the world's largest automotive market right now. 

Nio's home market continues to grow quickly, though. The China Passenger Car Association (CPCA) just released updated auto sales numbers, and the transition to electric vehicles is readily apparent. Overall passenger vehicle sales dropped 20% year to date compared to the first two months of 2022, but sales of electric vehicles are growing. 

BYD was China's best-selling passenger car brand in February with its lineup of new energy vehicles (NEVs) that include both fully electric and plug-in hybrid models. China's NEV sales actually grew 60% in February and accounted for almost 32% of passenger vehicles sold.

So why is Nio stock tumbling when electrified passenger vehicle sales are accelerating as gasoline-powered car sales are dropping in China? The answer comes from Nio's fourth-quarter and full-year 2022 update. In its business outlook for the first quarter, management said it expects deliveries of up to 33,000 vehicles. That's compared to over 40,000 units it delivered in the fourth quarter.

That's particularly concerning with the EV market growing, as mentioned above. But there are many reasons vehicle deliveries can fluctuate. As shown below, Nio's sales haven't gone up in a straight line. And even the disappointing outlook will represent year-over-year growth of about 25%. 

Line graph showing Nio monthly vehicle deliveries.

Data source: Nio. 

Its growth has shown that consumers like its products. That is critical, of course. And the company is expanding into Europe, which is the second-largest EV market behind China. Nio doesn't have to be the leader in China or Europe to be successful. 

Though it remains a very speculative investment, those who believe the EV transition is here to stay might want to allocate some investment money into Nio while sellers have brought the stock to multi-year lows. 

Two stocks with a lot of risk -- and potential reward

The sell-off in Rivian and Nio stock is painful but is also an exciting opportunity to scoop up shares at a far better price than even a few months ago. Both companies have their challenges, but they also have a ton of upside if they can hit their targets.

The EV industry should continue for decades to come, making now a good time to build a diversified portfolio of EV stocks like Rivian and Nio.