Investing in electric vehicle (EV) companies right now can feel a little risky -- and it is -- but some companies look like better bets than others.
I've followed Lucid Group (LCID +9.97%) and Rivian Automotive (RIVN +7.84%) pretty closely over the past few years, and I've continually come back to the same observation: Rivian consistently looks like the better bet.
But why? Here's the case for Rivian coming out ahead in the EV race.
Image source: Rivian.
Rivian's leadership is more stable
RJ Scaringe founded Rivian in 2009, and he's still running the company today as its CEO. When I listen to interviews with Scaringe and hear him on the company's earnings calls, he seems to have a clear vision for Rivian, and he's made some big moves to keep it on track.
Those decisions have come in the form of retooling the internal components of its vehicles to drastically reduce costs. This set up a roadmap for releasing cheaper vehicles (more on that below), sourcing cheaper materials when tariff threats were elevated, and establishing a joint venture with Volkswagen that involves billions of dollars of investments from the automaker.
In contrast, Lucid is on its third CEO in its short history. The company just hired a new CEO, Silvio Napoli, who is an automotive outsider with experience in manufacturing and operations. The move looks mostly focused on creating a leaner Lucid with a renewed focus on ramping up vehicle production. Napoli could work out for Lucid, but the company has certainly lost some ground as it's tried to find its leadership footing.
NASDAQ: RIVN
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Rivian's diversified model lineup is already in motion
For Lucid and Rivian to truly be successful, they need to have vehicles that are cheap enough to appeal to the average car buyer. Both are on the path to this right now, but Rivian is ahead. It just started production of its smaller, crossover R2 SUV, which starts at about $58,000 right now. Over the next year or so, the company will release cheaper versions of the R2, including a base version that will cost just $45,000 by the end of 2027.
That's an important goal, considering that the average new car price is just over $49,000. Rivian isn't stopping there. An even smaller R3 hatchback -- which will likely cost around $40,000 -- has already been announced, and production could start in 2028.
Lucid is making progress on this front too, with its new midsize Earth and Cosmos vehicles. The company said that the Earth will eventually have a price tag "below $50,000." But details about how it will get there and when are slim. Earth production is expected to start late this year, but the lack of information about its new vehicles indicates that the timeline gets pushed back further.
Lucid's progress is good to see, but it's still far behind Rivian's roadmap and its execution in bringing new models to market.
NASDAQ: LCID
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There's no sure EV bet right now
I've owned Rivian stock for a few years, but I'm certainly not banking my retirement portfolio on it. Still, I think the company has a good chance of remaining at the top of the EV food chain in the U.S. if it continues on its current path.
Lucid is intriguing, and I think the company has built impressive vehicles. But until I see more stability from the company and a clearer path to cheaper vehicles, I'm comfortable betting on Rivian's horse.
