Tesla (TSLA -1.11%) and BYD (BYDDY 4.08%) are the leaders in electric vehicles (EVs). It's a burgeoning market, but prosperity isn't a given -- a reality that Rivian Automotive (RIVN 6.10%) is slowly coming to terms with these days.
Taking a closer look at where Rivian stands now and its future plans helps illustrate why Tesla and BYD remain the top choices for those looking to ride the wave of the EV industry's growth, while cautious investors may want to steer clear of Rivian for the time being.
Image source: Getty Images.
Despite progress, Rivian still faces an uphill battle
First let's delve into Rivian's current standing. This will provide a benchmark for Tesla and BYD.
Scaling up production and delivering vehicles is the name of the game in the EV industry. From this perspective, Rivian is making commendable progress. In Q4 2023, the company disclosed that it had manufactured 17,541 vehicles and delivered 13,972. Both those numbers are up more than 70% compared to last year. Over the entirety of 2023, it produced 57,232 vehicles (up 135%) and delivered 50,122 (up 147%). Not too shabby!
But while the company has made improvements to scale production, it has yet to generate any real profits as expenses have soared. As of Q3 2023, Rivian reported a net loss of more than $1.3 billion. Thia means that for every vehicle it sold, it lost $33,000. Without any income, its initial cash position of $19.9 billion in 2021 is now down more than 60% to under $8 billion.
There is reason to be cautiously (emphasis on cautiously) optimistic about Rivian. It's undeniably on the right track in increasing production, and a future megafactory in Georgia that would increase production nearly 10-fold could be a game changer. However, until more tangible results come about, like turning a profit, these developments remain nothing more than hopeful. If something doesn't change, and fast, Rivian's future looks bleak.
The tale of the tape
Now, let's look at Tesla and BYD. As with Rivian, I will break down production and deliveries first.
At this point, it's like clockwork for Tesla to break records, and this past year was no different. In Q4 2023, the company produced 494,989 vehicles and delivered 484,507. In 2023, vehicle deliveries grew 38% from last year to 1.81 million, while production grew 35% to 1.85 million, both new records for yearly totals.
Then there is the Chinese-based BYD, considered the second-best EV maker but quickly closing the gap on Tesla. In 2023, BYD built more than 3 million vehicles. However, 1.57 million of these cars were electric-only models, as the company still produces hybrid vehicles that use gasoline to increase driving ranges. Still, BYD's car production is up more than 70% this year, and when hybrids are accounted for, total production rose by 62% from last year.
Beyond sheer production and delivery numbers, financial prowess sets Tesla and BYD apart. As of Q3, Tesla boasted net income of more than $1.8 billion and gross profit margins just shy of 18%, while BYD raked in $1.4 billion and achieved margins around 22%. In stark contrast, Rivian has lost more than $10 billion in just over two years with profit margins hovering near a negative 35%.
RIVN Net Income (Quarterly) data by YCharts
Where the rubber meets the road
Arguably, the most compelling value propositions of Tesla and BYD are their future growth trajectories. Tesla is not only constructing new factories to increase production but also exploring several technological frontiers such as artificial intelligence, autonomous driving, and robotics. Each of these endeavors holds the potential to generate new revenue as the technology becomes refined and integrated into society.
While BYD is less active on the technological innovation front, the company still holds significant future upside. Thanks to its perfection of the EV supply chain, BYD can manufacture a vehicle in as little as 18 months and sell it for as little as $11,000. As the company expands beyond China into Southeast Asian and Latin American markets, it will likely find new levels of success as its suite of cost-friendly models can cater to consumers even in emerging economies.
As for Rivian, its future prospects appear uncertain at best. Although it plans to build a megafactory in Georgia, there are considerable risks as these projects are often susceptible to additional unforeseen costs and delays. By focusing solely on this project, Rivian is taking a big gamble without having established a proven business model.
