From an operational standpoint, both Tesla (TSLA 0.44%) and Rivian (RIVN +1.75%) had choppy years in 2024. However, Tesla's stock skyrocketed higher, while Rivian saw its shares finish the year much lower, down about 43%. Part of Tesla's stock success last year can be attributed to its late run following the election win from Donald Trump, as Tesla CEO Elon Musk was a big supporter of his and has become an advisor.
With the new year upon us, however, let's look at which stock could be set to outperform in 2025.
NASDAQ: TSLA
Key Data Points
Deliveries and more
Just like their stocks headed in different directions in 2024, so did their vehicle deliveries. Rivian delivered 51,579 vehicles in 2024, up from 3% in 2023, while Tesla delivered nearly 1.79 million vehicles, down from 1.81 million deliveries a year ago.
Rivian's delivery growth came despite a number of issues during the year that constrained production. Earlier in the year, it shut down its manufacturing plant to implement a retooling upgrade, while late in the year it ran into component shortage issues. Tesla, meanwhile, saw its first-ever yearly decline in deliveries as the company faced stiffer competition and sales pressures in China and Europe.
Investors, however, brushed off Tesla's tough 2024 with an eye to the future. Many see the company's biggest opportunity not in selling electric vehicles (EVs) but in its autonomous driving robotaxi ambitions. The company had a big cybercab event last year, where it introduced a two-seat vehicle with no steering wheel or pedals. It said the vehicle would cost under $30,000 and that it plans to start producing the vehicles before 2027. However, the company has not gone into detail on the technology being used, driving range, or safety features of the vehicles.
Tesla has not successfully been able to develop a fully autonomous driving car, and its vehicles using its Supervised Full Self-Driving (FSD) technology have been the subject of a number of high-profile accidents and investigations. However, Musk has lobbied for the government to eliminate National Highway Traffic Safety Administration (NHTSA) car crash reporting requirements, which the Trump administration appears to support. Such a move could make it easier to get its fully autonomous driving technology approved, which could then smooth the way for its robotaxis.
Currently, only Waymo, owned by Alphabet, offers paid robotaxi rides in the U.S., but its technology is more expensive than Tesla's due to its use of lidar. However, Tesla bought lidar sensors last year, so whether or not it incorporates the technology to improve performance is still to be seen. However, if the company can develop a cheap autonomous robotaxi, it would have a big opportunity in front of it.
NASDAQ: RIVN
Key Data Points
Rivian's ambitions are much simpler than Tesla's. First, the company is looking to become gross margin-positive, as it has been selling its vehicles for less than the cost to make them. The company upgraded the tooling in its factory to improve line rates, as well as reduced the material costs going into its vehicles. Its biggest achievement was switching to a new zonal architecture, which significantly reduces the number of electronic control units (ECUs) and wiring in its vehicles and thus lowers costs.
Its zonal architecture was also a big reason behind the big investment and partnership the company formed with Volkswagen, which will get access to the technology for its own EVs. In return, Rivian is getting significant cash payments, assuming certain milestones are met, which will help it ramp up the production of its new R2 SUV. Rivian will look toward the less expensive R2, expected to cost around $45,000, to give it an SUV that will have more mass appeal. The new SUV is expected to start production in the first half of 2026.
Image source: Getty Images.
Better investment in 2025?
Both Tesla and Rivian have potential catalysts in 2025. Any moves and announcements toward autonomous driving and robotaxis should be good news for Tesla stock. While its sales could continue to languish overseas, I think this could be the biggest driver of the stock.
Rivian's stock, meanwhile, should get a boost if it can get to positive gross margins and slowly improve them throughout the year. As it cycles through its models built with its older technology and increases production now that its component shortage has been alleviated, this looks like a realistic goal.
In picking an investment between the two, I'd go with Rivian as the more speculative play. The stock was beaten down in 2024, and it should be able to make progress on its gross margin goals while increasing deliveries as well. Tesla's stock, meanwhile, already had a big run at the end of 2024, so it may not have as much upside on any positive news.
