As Elon Musk shifts Tesla's strategic focus away from its core automotive business towards robotics and autonomous taxis, investors seeking the next big opportunity in the electric vehicle sector might consider Rivian Automotive, Inc.—a company that, reminiscent of Tesla Motors a decade ago, appears poised for a breakthrough into the mainstream market. Rivian's current sales volume remains modest, having sold just over 42,000 vehicles last year, a stark contrast to Tesla's 1.6 million units sold during the same period. However, the company plans to launch a more affordable model this year, potentially positioning it as a viable contender for the mass market. The key highlights are Rivian's R2 SUV, targeting the mass market with a starting price of $45,000; its current valuation, trading at just 4 times next year's expected sales compared to Tesla's multiple of 14, highlighting a valuation advantage; and its leadership in owner satisfaction, with 85% of owners indicating they would buy again, a figure that surpasses Tesla's. This strategic move could potentially rescue Rivian's stock price. After a spectacular debut during the 2021 EV boom that saw its market capitalization approach $100 billion, Rivian's value has since plummeted to around $25 billion. At its current market cap, Rivian is valued at less than 4 times its expected sales for next year, significantly lower than Tesla's 14-times multiple. Currently, Rivian sells two consumer EV models: the R1T pickup truck and the R1S SUV, both with retail prices exceeding $70,000. Additionally, the company sells a commercial delivery van, a generalized version of the vehicle custom-designed for its major shareholder, Amazon. This year, Rivian will launch the R2 SUV, which its CEO RJ Scaringe has stated will start at $45,000. Rivian has already established a strong foothold in several key areas. Last December, Consumer Reports released its latest annual owner satisfaction survey, ranking Rivian at the top among automotive brands. A remarkable 85% of Rivian owners said they would buy the brand again; BMW ranked second with only 71% of owners giving the same feedback, while Tesla came in fourth with 69%. From the perspective of investor Hamid Shojaee, Rivian's current situation bears a striking resemblance to Tesla just before the launch of its Model 3—a vehicle that later became Tesla's bestseller. He points out that the Model 3 was Tesla's first model priced below $70,000, and when it launched in mid-2017, Tesla was valued at about 5 times its expected sales for the following year. By 2018, the Model 3 became the best-selling luxury sedan, a success that paved the way for the similarly priced Model Y in 2020. The triumph of these models ultimately proved Tesla's capability to compete with traditional automakers. (Shojaee, who also runs a financial data website for investors, began buying Tesla stock as early as 2015 and held it until after its market cap surpassed $1 trillion several years ago.) Although market forecasts for Rivian's R2 sales vary widely, Scaringe stated last November that Rivian is retooling its existing production facility in Illinois, which, at full capacity, could achieve an annual output of up to 215,000 vehicles, including 155,000 units of the R2 model. Scaringe also revealed that Rivian is constructing a brand new manufacturing plant in Georgia, expected to commence operations by the end of 2028. The new facility could have a maximum annual capacity of 400,000 vehicles and will produce both the R1 and R2 series. Shojaee remains optimistic about Rivian, believing that demand for the R2 model will exceed the company's production capacity. He asserts that the R2 will be the first true competitor to the Tesla Model Y, which sells approximately 1 million units annually. "The crucial question is, can Rivian sell 200,000 vehicles? In my view, the answer is obvious. With comparable pricing and competitive positioning, they certainly can," he stated. Rivian's revenue grew by 167% in 2023 and increased by another 12% in 2024, reaching approximately $5 billion. Shojaee believes Rivian's revenue growth rate could accelerate to 50% by 2026 and maintain that level into 2027. He notes that most other automakers are too large to achieve such high revenue growth rates. In contrast, Tesla, after years of decelerating growth, has nearly stagnated. Its revenue remained flat at $98 billion in 2024, and analysts surveyed by the financial data platform Koyfin predict Tesla's revenue will decline to $95 billion in 2025. Tesla announced last Friday that its vehicle deliveries fell by 9% year-over-year. The decline in Tesla's sales may be partly attributed to consumer backlash against Musk's political maneuvers, as well as the expiration of federal tax incentives that previously encouraged EV purchases in the US. Regardless of the cause, Rivian appears to have been hit even harder—the company's data released last Friday showed a 18% year-over-year drop in vehicle deliveries for 2025. However, a more appropriate comparison between Tesla and Rivian should reference the delivery figures for Tesla's luxury models (Model S, Model X, and Cybertruck), which are most comparable to Rivian's current production vehicles. Deliveries for these premium Tesla models plummeted by 40% last year, a sign that Rivian may be eroding Tesla's market share in the US high-end automotive segment. The recent slump in EV demand has sparked debate, with some suggesting that consumers, particularly in the US, might be losing interest in electric vehicles. One consequence of this trend is reduced motivation for traditional automakers to invest in EV projects—exemplified by Ford's decision to scale back its EV plans at the end of last year. Nevertheless, even without purchase subsidies, long-term EV demand has room for recovery, primarily because EVs generally have lower ongoing maintenance costs. According to evaluation data from the consumer advocacy website ConsumerAffairs, the annual basic maintenance cost for a Rivian vehicle, for instance, is only about one-third that of a gasoline-powered car. A report released by consulting firm EY in September predicted that, despite headwinds from tariff increases, expired subsidies, and legislative uncertainty likely causing a short-term dip in US EV sales, EVs will eventually account for half of all US car sales by 2039, up from less than a quarter currently. Although Tesla is currently Rivian's primary competitor, its threat may diminish over the coming years as it pivots towards humanoid robots and autonomous taxis. Outside the US, Chinese EV giant BYD could pose a more formidable challenge to Rivian. (So far, however, high tariffs and geopolitical tensions have hindered Chinese automakers from making significant inroads into the US market.) But Scaringe has indicated that Rivian is preparing to enter the European market within the next few years, where it will compete directly with BYD. The launch of the R2 model also charts a potential path to profitability for Rivian. In 2024, Rivian's net loss reached $4.7 billion, an improvement from 2023 but slightly higher than in 2021—a year of exceptional global EV sales. Nonetheless, the company's operational health is gradually improving: in the third quarter of 2025, Rivian achieved a positive quarterly gross margin for the first time since its IPO, marking only the third profitable quarter in its history. A significant positive is Scaringe's statement that, based on current supplier contracts, the raw material cost for producing the R2 is approximately half that of the R1 models. Despite this, Rivian may still need some time to achieve positive free cash flow. In the nine months ending September 2025, the company's operating cash flow was approximately $1 billion, but capital expenditures during the same period reached $1.6 billion. Scaringe predicted in November that Rivian's capital expenditures would increase in 2026 as construction progresses on the new Georgia plant. Beyond selling electric vehicles, Rivian stands to benefit from its investments in autonomous driving software. The company has already begun selling several software products, including its EV operating system, to Volkswagen, and plans to launch a new paid subscription service for autonomous driving software to Rivian owners early this year. Indeed, selling technology externally is not a unique strategy—Nvidia unveiled its own autonomous driving software earlier this week at CES. Unlike Nvidia, however, Rivian can deploy its self-developed technology on its own vehicles, offering greater growth potential. Rivian's Software and Services division—which encompasses autonomous driving software, vehicle marketing tools, and insurance services—saw its revenue surge by over 300% year-over-year in Q3 2025, and it now contributes more than a quarter of the company's total revenue. Shojaee stated, "Rivian is inevitably going to become a $100 billion company. This could happen in one year, or it might take three years, but it likely won't take longer than that."
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