Despite all the excitement around Rivian, Nio has the more established business

Now that electric vehicle (EV) stocks have tumbled from excessive valuations, many people are looking closer at getting exposure to the sector. Rivian Automotive$Rivian Automotive, Inc.(RIVN)$ (RIVN10.79%)and China-based Nio$NIO Inc.(NIO)$ $NIO Inc.(NIO.SI)$ $NIO-SW(09866)$ (NIO9.10%)are two popular names with investors.

That's understandable as they both have intriguing characteristics as potential investments.

Rivian had a very successful initial public offering late last year and held $17 billion in cash as of March 31. Some of that also came from early investor Amazon$Amazon.com(AMZN)$ , which also has placed an order with Rivian for 100,000 electric delivery vehicles.

Nio, which operates in the two biggest global EV markets in China and Europe, already has a large customer base and popular products. So it's worthwhile to look at which would make the better investment right now.

Valuation difference

While Nio has amarket capof $32 billion compared to about $24 billion for Rivian, there's good reason for it to be worth more to investors. While neither is yet earning profits, one way to value them right now is with aprice-to-sales (P/S) ratiobased on expected 2022 sales. And there's a big difference there.

Rivian projects it will produce and sell 25,000 vehicles this year, with two-thirds going to consumers, and the balance being its electric delivery vehicles (EDVs) for Amazon. While its consumer trucks start around $70,000, the company hasn't disclosed the selling price for its EDV. But it isn't a stretch to think the commercial vans will be sold at a lower price, while consumers on average will spend more than just the base price for its pickup truck and SUV models. The above P/S estimate is based on the assumption that the overall revenue per vehicle sold will average out to over $70,000 this year.

Looking at Nio revenue is more straightforward since it has a track record with more than 200,000 EVs sold to date. It had revenue of about $1.5 billion in the first quarter and expects similar results for the second quarter. As supply chain and COVID-19-related headwinds are expected to lessen, and new models gain traction, the second half of the year should see better results.

Knowns versus unknowns

Those recent headwinds have impacted Nio's growth trajectory in recent months, with trailing-12-month sales leveling off.

But even if revenue growth slows to a minimum this year, it remains at a solid level after several years of sharply increasing sales.

Nio has recently begun sales of the ET7, its first sedan model. The company delivered more than 1,700 ET7s in May, just a month after its initial shipments. It also will begin sales of the ET5 midsize sedanas well as a new SUV modellater this year. Management has also expressed the desire to launch a sub-brand in the future that could attract more customers at a lower price point.

Rivian and Nio both involve risks. And both have plenty of future potential. But for those looking to take advantage of the recent revaluation in the EV sector, Nio comes with the more established business, and a lower relative price.