The most exciting electric vehicle (EV) stock today may be Tesla (TSLA +0.39%). That company has a market cap above $1 trillion thanks to excitement surrounding its robotaxi division. But other EV stocks like Rivian Automotive (RIVN +2.57%) arguably fly under the radar. In fact, Rivian could be a better bet long-term than Tesla for two reasons.
NASDAQ: RIVN
Key Data Points
1. Rivian will soon compete directly with Tesla's best-selling models
Right now, Rivian has just two electric vehicle models: the R1T and the R1S. Both can cost upward of $100,000 when adding options, taxes, and other fees. Tesla's best-selling models, however, are its Model 3 and Model Y. These two models account for more than 90% of its vehicle sales. Importantly, both have starting prices under $50,000. Considering most Americans in a recent survey said they intend to spend less than $50,000 on their next vehicle purchase, getting models to market under this threshold is critical for growth.
Fortunately, Rivian expects to begin production on three new models next year, all of which should have starting prices under $50,000. This will position its vehicles to compete head-to-head with Tesla's Model Y and Model 3. Those two models were crucial for Tesla's massive historic growth. The same could ultimately prove true for Rivian's upcoming model releases.
Image source: Rivian.
2. Rivian stock is much cheaper than Tesla stock
Despite having a market cap under $20 billion, Rivian stock trades at a huge discount to Tesla. Rivian shares, for example, trade at a price-to-sales ratio of 3. Tesla, on the other hand, trades at nearly 16 times sales. There are many reasons for this valuation gap. Tesla has far better name recognition, access to capital, and growth potential when it comes to robotaxis. Robotaxis alone could be a $5 trillion to $10 trillion opportunity.
For now, Rivian is viewed more like a traditional EV manufacturer, resulting in a far lower valuation. But the company is investing heavily in artificial intelligence (AI) and self-driving capabilities. Next month, the company expects to unveil new autonomous features that could be rolled out in 2026, allowing drivers to access Level 3 autonomy. Depending on what's revealed next month, the market could quickly transform its thinking about the company's business model. No longer may the company be viewed as a manufacturing business. Instead, investors may choose to start valuing the company as a tech and AI play, leading to a significantly improved valuation.
No matter what happens in 2025 and 2026, however, Rivian remains a long-term growth opportunity. Whether it benefits from AI or continued adoption of EVs, Rivian has multiple ways to win. Shares trade at a big relative discount to Tesla, giving investors a chance to buy a growth stock at a value price.
