Electric vehicle (EV) stocks have had a difficult start to 2024, as industry sales growth has slowed. In addition, there are now more EV brands for consumers to choose from, as both legacy automakers and new upstarts have entered the market. Nonetheless, EV stocks still hold some strong potential over the long term.
Let's look at two EV stocks that could be the best performers through 2030.
Tesla
NASDAQ: TSLA
Key Data Points
This year hasn't been kind to EV leader Tesla (TSLA +0.73%). The company saw its first-quarter revenue decline 9% to $21.3 billion, with automotive revenue down 13% to $17.4 billion. Vehicle deliveries were down 9% to 386,810, while it also saw lower vehicle average selling prices. This led its adjusted earnings per share to plummet 47% to $0.45, while it had cash outflows of $2.5 billion.
As a result of its poor start to the year, Tesla stock is down about 28% year to date. However, Tesla is about more than EVs, and an investment in the stock is an investment in the vision of its founder, Elon Musk. The company has several initiatives that could potentially drive its stock much higher by 2030.
One of the biggest initiatives is self-driving vehicles and creating a fleet of robotaxis. Tesla has long been at the forefront of self-driving technology, and it plans to showcase its robotaxis later this year in August. A fleet of robotaxis would put the company in direct competition with Uber and Lyft, but would give Tesla the big advantage of not having to pay drivers. And when its fleet of vehicles is not in use, Musk has talked about using their computing power for AI inference to add additional revenue opportunities.
The company's energy storage business, meanwhile, has been growing robustly. Musk has long predicted that this business would grow more quickly than its automobile business as its utility-grade megapack batteries are being used in some of the largest energy storage projects in the world. The company sees this business growing at least 75% this year and to continue to grow strongly in the years to come.
However, on Tesla's last conference call, Musk predicted that its Optimus robot business could become the largest part of the company. He expects to have the humanoid robots performing useful tasks within Tesla factories by year-end and then be ready to sell externally perhaps by the end of next year.
Tesla has a lot of irons in the fire to drive growth, which is why it should be one of the best EV performers through 2030.
Rivian
NASDAQ: RIVN
Key Data Points
Rivian Automotive (RIVN 2.54%) stock has had a difficult year, down over 50% in 2024. Unlike Tesla, Rivian has seen solid revenue and vehicle delivery growth so far in 2024. In fact, revenue surged 82% in Q1 to $1.2 billion, while vehicle deliveries jumped 71% to 13,588 vehicles.
The company's problem is that it is currently selling its vehicles below the cost to make them. This shows up in the company's gross margin per vehicle, which was a negative $38,784. This is also causing the company to burn a lot of cash, with it recording negative free cash flow of $1.5 billion in the quarter.
However, Rivian is working to improve this situation by lowering the cost to make its vehicles. This includes a redesign to decrease the number of electronic control units in its vehicles as well as finding some cheaper alternative materials. It is also upgrading the technology in its manufacturing facility to improve line rate speeds. With this work, the company is looking to get to a modest gross margin profit in Q4.
Image source: Getty Images.
Also working in Rivian's favor is that Amazon is its largest shareholder, owning a stake of over 16%. The e-commerce giant also has a deal with the company to purchase 100,000 of its electric vans to be delivered by 2040.
Amazon has been slow to take delivery of these vehicles due to a lack of charging station infrastructure, but it now has completed the installation of 17,000 chargers at 120 warehouses, making it the largest operator of private EV charging stations. With the infrastructure now in place, expect order deliveries to begin to pick up.
Given its negative gross margins and cash outflows, Rivian is a speculative stock, but it has the pieces in place to turn profitable and become one of the best-performing EV stocks through 2030.
