Compared to other electric car stocks, Rivian (RIVN 1.83%) shares are undeniably cheap. Tesla stock, for example, trades at 15.8 times sales. Lucid Group, a struggling EV competitor, trades at 3.3 times sales. Yet Rivian -- a promising EV maker with an exciting few years ahead of it -- trades at just 2.9 times sales.
From this perspective, Rivian stock looks extraordinarily cheap, especially following the recent correction. But does that make shares a buy? You might be surprised by the answer.
NASDAQ: RIVN
Key Data Points
Don't compare other EV stocks to Tesla
The valuation gap between Rivian and Tesla is huge. The same is true for Lucid's valuation versus Tesla's. And while relative valuation techniques are still useful in this context, you'll need to take this valuation gap with a grain of salt.
For years, Tesla has been one of the largest EV makers in the world, particularly in key markets like the United States. The company has universal name brand recognition, with existing manufacturing capabilities that smaller competitors can only dream of.
All this provides Tesla with a steep capital advantage. The company doesn't need to worry about financial insolvency and can afford to dedicate billions of dollars per year for growth opportunities.
I'm very encouraged by Rivian's efforts to move into self-driving technology and artificial intelligence (AI). But when it comes to the sheer financial ability to scale up autonomous and AI capabilities, Tesla is significantly ahead of Rivian. Even big tech firms like Alphabet -- the parent company of Google that operates the popular Waymo autonomous taxi service in parts of the U.S. -- can easily outspend Rivian in these categories. This gives Tesla and participating big tech firms a considerable advantage in lucrative markets like robotaxis, which some experts believe could eventually be worth $5 trillion to $10 trillion globally.
In short, don't buy Rivian shares simply because they are miles cheaper than Tesla stock. The valuation gap is largely warranted. But that doesn't mean Rivian isn't an attractive buy at these prices. In fact, 2026 could be a pivotal year for Rivian's growth trajectory, even though its current valuation doesn't fully reflect this year's potential.
Image source: Rivian.
Rivian should exceed expectations in 2026
A major factor behind Rivian's discounted valuation has been its stagnating growth. When Rivian stock traded at a price-to-sales ratio of 8 and above, sales were growing by 50% or more annually. In recent quarters, that growth rate has flatlined, leading to a sharply lower valuation.
RIVN PS Ratio data by YCharts
I expect growth rates to pick up considerably in 2026 following the release of Rivian's first mass-market vehicle: the R2. This will be the first of three new models, all priced under $50,000, that the company expects to release in 2026 and 2027. When Tesla released its first affordable models -- the Model Y and Model 3 -- growth rates surged. The same should prove true for Rivian.
Right now, analysts expect sales growth of just 6% in 2026 for Rivian. This seems very conservative for a company about to release its first affordable model. For reference, Tesla's two affordable models now account for more than 90% of its vehicle sales. When shipments begin for the R2, great potential exists for Rivian's growth rates to surprise, likely leading to a sharply improved valuation.
