Why This EV Stock Is Poised to Race Past the Competition

Stocks to buy

With Tesla (NASDAQ:TSLA) slow-walking the production of its Cybertruck and Rivian’s (NASDAQ:RIVN) deliveries zooming higher, RIVN stock is poised to jump. Its launch of a more affordable SUV and gross margin increases are also likely to help the start-up long term.

Additionally, Rivian’s EVs have generally received excellent reviews. Amazon (NASDAQ:AMZN) has widely deployed its delivery vans which bodes very well for the long-term outlook of RIVN stock and its ability to beat the competition.

The Slow Walking of the Cybertruck and Tesla’s Declining Brand Power

On October 19, Tesla CEO Elon Musk strongly implied that the production of the automaker’s Cybertruck, which has already been delayed for many years, will ramp up slowly. Specifically, Musk stated that he was trying to “temper expectations” on the speed of the EV’s production. Apparently, manufacturing the EV will be difficult for Tesla, and the company will not meet its manufacturing goal of 250,000 SUVs annually until 2025.

Given Musk’s statements and Rivian’s significant first-mover advantage over Tesla, I believe that the company is unlikely to have any meaningful competition from the EV giant for at least another year. By that time, RIVN will be so entrenched as a leading EV maker that it’s unlikely to take much of a hit.

Tesla’s EV sales plummeted in the US to 50% last quarter, down from 64% in Q3 2022. In light of that large decline, I believe that the automaker’s brand has taken a hit. Part of the Tesla brand’s weakening may have been caused by Musk’s controversial, anti-censorship stance on X, formerly known as Twitter. Additionally, allegations of malfunctioning EVs’ parts could have played a role. Regardless of the reasons, however, the erosion of Tesla’s dominance is clearly great news for Rivian – and RIVN stock.

Soaring Deliveries,  Gross Margin Gains, and a More Affordable SUV

Rivian delivered 15,564 EVs in Q3, a 23% jump from Q2. The demand for this company’s EVs is strong and growing, along with its production. The fact that the company’s backlog now extends to the end of next year is also worth noting.

Scheduled for a 2026 release, Rivian’s R2 SUV will cost between $40,000 and $60,000. The SUV should enable the company to greatly expand its customer base, potentially boosting RIVN stock within the year.

Rivian’s loss per vehicle sank to $32,600 in Q2, down from as high as $157,600 in Q2 2022. CEO R.J. Scaringe said in September that he expects the company’s margins to continue rebounding going forward.

Excellent Reviews and Amazon’s Large Scale Adoption

As I’ve noted in past articles, Rvian’s EV have generally received excellent reviews. For example, Car & Driver gave its 2024 R1T pickup truck five stars. The publication rated it above Ford’s (NYSE:F) F150 Lightning and General Motor’s (NYSE:GM) GMC Hummer EV and Chevrolet Silverado EV.

Finally, showing confidence in Rivian’s delivery vans, Amazon (NASDAQ:AMZN) recently disclosed that it’s now utilizing over 10,000 of the EVs. This is a huge, 100% gain over the last four months.

The Bottom Line on RIVN Stock

Given Rivian’s strong growth and the tremendous demand for its EVs, I believe that the stock’s current market capitalization of $16.2 billion is many times below its long-term potential.

On the date of publication, Larry Ramer held a long position in RIVN. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Larry Ramer has conducted research and written articles on U.S. stocks for 15 years. He has been employed by The Fly and Israel’s largest business newspaper, Globes. Larry began writing columns for InvestorPlace in 2015. Among his highly successful, contrarian picks have been PLUG, XOM and solar stocks. You can reach him on Stocktwits at @larryramer.

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