Shares of Rivian Automotive (RIVN 6.67%) languished for most of 2025. From Jan. 1 to Nov. 1, the company's stock price barely budged, although there were sporadic ups and downs along the way. Over the past month or so, however, shares have skyrocketed in value by more than 40%.
I have been urging investors to take a closer look at Rivian stock all year. In many ways, the company appears to have the potential to become the next Tesla. Even after the latest price spike, shares still appear to be a long-term buy for several reasons, the most significant of which is expected to see serious progress in 2026.
Investors finally realize Rivian is an AI stock
Take a quick look at Tesla's valuation and you'll realize that its stock is priced at a huge premium to nearly every other electric vehicle (EV) stock. It trades at a price-to-sales ratio of around 17. Rivian, meanwhile, trades at just 4.2 times sales.
There are many reasons for Tesla's premium. The company has a huge capital advantage, plus the best brand recognition in the industry. But it also has a leading position in robotaxis, a market that some experts believe will eventually be worth more than $5 trillion.
NASDAQ: RIVN
Key Data Points
The robotaxi market looks like a high-tech business. But it's much more than that. Investors have been betting on autonomous-driving stocks for more than a decade.
Progress has been slow. Cameras and detection devices cost a lot of money, and real-world testing has been limited due to safety and regulatory concerns. But artificial intelligence (AI) has vastly accelerated the timeline in recent years.
"There is a massive leap in AI happening right now, and it is resulting in smarter end-to-end AI systems that can learn much more efficiently, are interpretable, and can generalize to every possible scenario on the road," said Raquel Urtasun, the CEO of Waabi, a company that specializes in self-driving technology. "These advances result in autonomous vehicles with superhuman capabilities that will enhance road safety and transform transportation as we know it."
Tesla has wisely invested heavily in AI, and investors have been keen to reward it for its efforts. In general, AI stocks have performed very well in 2025, so being lumped into that category has created direct gains for shareholders.
For most of the year, Rivian was not considered an AI stock. But I repeatedly pointed out how Rivian was also investing heavily into AI, just like Tesla. Rivian scheduled an AI day in early December, and shares seemingly started rising based on expectations.
Executives largely delivered, with fresh updates on hands-free highway assist, point-to-point navigation, eyes-off alerts, and personal level 4 autonomy. Expect the EV maker's AI progress to continue to strengthen in 2026. But there's a catalyst I'm even more excited about over the near term.
A Rivian pickup outside company headquarters. Source: Rivian
Rivian will finally compete with Tesla next quarter
Tesla has many vehicle models on the market. But its cheapest two models -- the Model Y and Model 3 -- account for more than 90% of its vehicle sales. To compete directly with Tesla, EV makers must have several impressive models priced under $50,000.
Thus far, few companies have achieved this feat. Most competing EVs are either too expensive or are priced cheaply with lackluster features and relatively minimal range.
Rivian currently has only two models on the road: the R1S and R1T. Both are priced above $70,000, significantly above what most consumers are willing to pay. But next quarter, production is expected to begin on the R2, its first model priced under $50,000. Two more models will follow: the R3 and R3X, both expected to be priced under $50,000.
Within a few months, Rivian could go from being a niche luxury automaker with AI upside to a legitimate Tesla competitor. More vehicles on the road give it more real-world data, further strengthening its AI.
Even after the recent share price run-up, Rivian still has a market cap of less than $30 billion. Compare that to Tesla's $1.5 trillion valuation, and the long-term upside in Rivian stock becomes clear.
