Tesla vs Rivian Stock - Which is a Better Investment?
vs
Rivian Automotive, Inc.
Tesla, Inc.
Which automaker has the highest market share?
The Top Electric Car Manufacturers by Market share in the world between Jan 1-May 31 2022
Tesla
13.6%
SAIC
9.3%
Others
47.7%
BYD
8.5%
Tesla, Inc. is the world's largest EV firm and other EV makers will take years to catch
up. With more EV competitors coming to the market, the one with the most potential is
Rivian Automotive, Inc. It is nowhere as big but can scale up in the coming years.
Tesla's market dominance will decrease as new EV competitors enter the EV market.
Volkswagen
8.5%
Hyundai-Kia
6.2%
2
What is their ability to scale capacity and production?
As of now, Rivian and Tesla have about the same amount in cash and equivalents on their balance sheet. The cash could be used to
scale up production. Tesla is set to produce 1.4 million cars whereas Rivian has a goal of 25,000 cars for 2022.
Tesla expects production to rise by 50% every year with a long-term goal of producing 20 million vehicles annually with the current
production capacity being 2 million cars. Rivian's plant has a production capacity of 150,000 cars per year.
3
What about profitability?
4
Rivian Automotive, Inc.
Tesla, Inc.
10 0
0
20 0
0
30 0
00
40
0
50 0
00
Free cash flow in EUR for 2022
-4
00
-3 0
00
-2 0
00
-1 0
00
0
Tesla is selling almost a million vehicles per year and is doing so profitably. In
2021 alone, it generated $5 billion in free cash flow. Whereas, Rivian is not
projected to be profitable in the near future due to high operating costs and
overhead costs,
As Tesla heavily invests in factory capacity growth, it will start generating
economies of scale which will lead to an all-time high gross profit per year.
What is worth more, Rivian or Tesla?
: 232.80 €
: 33.95 €
Rivian was the most hyped EV stock, with its initial public offering (IPO), which was $78 a share on Nov. 9, 2021. Tesla has
been a winning investment in recent years, but its returns have stagnated recently. Even though, Rivian's shares rose after
announcements of increased production in Q2. Rivian's stock is plunging almost twice as much value as Tesla's did this
year (down 18% in 2022).
Will they face challenges?
5
Rivian and Tesla stocks have crashed due to rising raw material costs, supply chain and logistics challenges and
inflation.
However, Tesla is struggling to keep up with demand as the waitlist gets longer. As Rivian is starting deliveries, it
has higher operational costs than Tesla and overhead and labour expenditures keep on rising which will continue to
negatively impact its performance.
The verdict
Both stocks could turn out to be winners but one is riskier.
Rivian is still a young company facing big challenges like increasing production in a supply chain crisis that Tesla is more equipped for. Tesla is
more mature but remains in a growing phase and its projection for a 50% growth annually still gives a lot of room to grow in the long run.
However, Rivian will increase production in the coming years which will undoubtedly increase its net profit with higher sales just like Tesla.
In conclusion, Rivian is where Tesla was a few years ago. Betting on Rivian is attractive but speculative whereas betting on Tesla is safer but
will probably not give as high of a return as it once did.
Name: Chloe Tran
Email Address: Chloe.tran@ucdconnect.ie
Student ID: 22201976