Some electric vehicle (EV) makers have faced obstacles over the past year. In the U.S., regulatory changes have made an impact. But even beyond that, it is an increasingly crowded industry. Further, many consumers remain hesitant to get on the EV bandwagon due to concerns about charging-station availability, among other stumbling blocks. Despite all that, technological advances could drive greater EV adoption over the medium term and beyond. Two companies worth considering to capitalize on this growth are BYD (BYDDY -3.41%) and Rivian (RIVN -3.12%). Here is more on these two notable EV players.
Image source: The Motley Fool.
1. BYD
Last year, BYD became the top-selling EV company, taking the crown from Tesla. However, the China-based company lost that title in the first quarter. What's more, BYD is facing significant challenges. Stiff competition in its home market is leading to declining sales volume.
Here's the good news for investors: BYD is aware of its issues and has a plan to turn things around. Part of the company's goal is to export the strategy that made it so successful in China to other places. BYD became one of the top EV companies in China -- the largest market in the world -- thanks to its vertically integrated approach, differentiated battery technology (it was originally a battery maker), and focus on offering affordable, mass market vehicles that saw significant adoption.
OTC: BYDDY
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BYD has been aggressively expanding into other countries. The company plans to sell 50% of its cars outside of China by 2030. That would be a massive change for a company that, in 2024, sold about 90% of its cars in Mainland China. Provided BYD can achieve the goal of 50% of sales abroad and attract a reasonable share of various international markets, deliveries could jump along with the company's revenue and profits.
The U.S. may not be one of those countries BYD targets, as the company's imports would be subject to significant tariffs. The company is performing well in other countries, though, including Germany, where it is one of the fastest-growing brands. The challenges BYD faces in the U.S. market highlight just one of the risks its international expansion strategy could encounter, even in countries with friendlier import laws. However, if BYD can reach its goals by 2030, the stock could deliver excellent returns through then.
2. Rivian
Rivian is entering an important period in its history. The company said it would launch the R2, a mass-market model that's cheaper than its previous models, during the second quarter. This could help make the company's brands far more popular. Rivian is also ramping up its efforts to get to level 4 autonomy. This would allow the company to get in on the potentially lucrative market for autonomous vehicles, notably through a deal it signed with the ride-hailing giant, Uber.
NASDAQ: RIVN
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Rivian's launch of the R2 will help along those lines, since more cars on the road means more data to train its self-driving software. By 2030, Rivian could be a much transformed company if it can capture a decent share of the large midsize SUV EV market and make significant headway in launching robotaxis. Rivian could also license its self-driving software to other companies, an initiative that would generate high-margin revenue.
Now, it's important to note that Rivian faces significant risks, particularly as it prepares to take on Tesla in the midsize SUV market. The company's deliveries also declined last year as it dealt with expiring EV tax credits toward the end of 2025 in the U.S. The company projected that deliveries would improve this year, so perhaps a rebound is already underway. Rivian could deliver outstanding returns over the next five years if it can maintain its momentum.
