Why Rivian Is a Better Bet Than Tesla Right Now
The Takeaway
- Rivian’s R2 SUV launch targets mass market with $45,000 price.
- Rivian trades at 4x next year’s sales, Tesla at 14x, signaling value.
- Rivian leads in owner satisfaction, 85% would buy again, topping Tesla.
As Elon Musk shifts Tesla away from its roots into robots and robotaxis, investors hunting for the next big electric vehicle play might want to consider Rivian, which is poised for a mainstream breakout just as Tesla was 10 years ago.
Rivian’s sales are tiny—it sold just over 42,000 cars last year to Tesla’s 1.6 million. But the company this year plans to launch a more affordable vehicle that could make it a more viable option for the mass market.
That could rescue Rivian’s stock, which after a blistering public debut in the booming market of 2021, when it reached a market capitalization of nearly $100 billion, has plunged to a market value of around $25 billion. At the current value, Rivian is trading at less than four times next year’s estimated sales, well below Tesla’s 14 times.
Right now Rivian sells two types of electric consumer cars: the R1-T pickup truck and the R1-S SUV, each of which retails for over $70,000. It also sells a commercial delivery truck, a generic version of a bespoke truck it designed for Amazon, one of Rivian’s biggest shareholders. This year it will launch the R2 SUV, which its CEO, RJ Scaringe, says will sell for a starting price of $45,000.
Rivian has already established itself in some important ways. It nabbed the top spot among car brands for owner satisfaction on Consumer Reports’ latest annual survey of vehicle owners, released in December. Eighty-five percent of survey respondents who own a Rivian vehicle said they’d buy it again. BMW, in second place, garnered a similar sentiment from just 71% of owners surveyed. Tesla, at 69%, ranked fourth.
In the view of investor Hamid Shojaee, Rivian today is in a position similar to Tesla’s before it started selling the Model 3, which quickly became its top-selling car. He notes that the Model 3 was Tesla’s first vehicle priced below $70,000, and when it was released in mid-2017, Tesla stock was trading at around five times next year’s sales. Then in 2018, the Model 3 became the best-selling luxury car, which helped pave the way for Tesla’s next car in a similar price range, the Model Y, released in 2020. The success of those models ultimately helped prove Tesla was a serious competitor to traditional carmakers. (Shojaee, who also runs a financial data website for investors, first started buying Tesla stock in 2015 and rode its run until a couple years ago, after it surpassed a $1 trillion market capitalization.)
While forecasts for Rivian’s R2 sales vary wildly, Scaringe said in November that Rivian is preparing its existing production facility in Illinois to pump out up to 215,000 cars a year, including 155,000 R2s, if the plant runs at full capacity.
The company is also building a new production facility in Georgia, which it says will be up and running in late 2028, that should support additional production of up to 400,000 cars annually, split between R1s and R2s, according to Scaringe.
Shojaee is bullish, suggesting that demand for the R2 will exceed Rivian’s production capacity. The R2 will be the first real competitor to Tesla’s Model Y, he says, which sells about a million a year.
“So the question is, can Rivian sell 200,000 vehicles? That, to me, is a no-brainer. Of course it can, at a similar price point and as an alternative,” he says.
Rivian grew its top line 167% in 2023 and another 12% in 2024, to about $5 billion. Shojaee thinks Rivian can accelerate revenue growth to 50% in 2026 and maintain that rate in 2027. Most other car companies are too big to post that kind of revenue growth, he notes.
Tesla’s Slowdown
Tesla, in contrast, is hardly growing anymore after years of deceleration. Its revenue stayed flat in 2024, at $98 billion, and analysts polled by Koyfin reckon it shrank to $95 billion in 2025. Tesla said last Friday that it shipped 9% fewer vehicles last year.
While some of Tesla’s sales decline is likely due to a consumer backlash against Musk’s political maneuvers, some is also due to the disappearance of federal tax incentives that had encouraged U.S. residents to buy EVs. Whatever the cause, Rivian appears to be suffering more: Its 2025 vehicle deliveries fell 18%, it reported last Friday.
But a better way to compare Tesla and Rivian is to look at Tesla’s shipments of its luxury vehicles, the Model S, Model X and Cybertruck, which most closely resemble Rivian’s cars in production today. Those shipments fell 40% last year for Tesla. That suggests it might be losing its grip on the high-end U.S. buyer to Rivian.
The recent drop-off in demand for EVs has sparked talk that consumers, especially in the U.S., might be losing interest in the sector. One result is that traditional automakers have less incentive to invest in EV projects, as demonstrated by Ford’s decision late last year to scale back its EV plans.
But there’s reason to be optimistic about a longer-term rebound in EV demand, even without subsidies for buyers, chiefly because they are typically less costly to maintain. Basic maintenance each year for a Rivian vehicle in particular costs about one-third what it might for a car with an internal combustion engine, according to a review from ConsumerAffairs website.
Consulting firm EY predicted in a September report that although EV sales in the U.S. would drop in the near term as a result of higher tariffs, expiring incentives and legislative uncertainty, they will eventually grow to make up half of U.S. car sales—up from less than one-quarter today—by 2039.
And while Tesla is Rivian’s big rival now, Tesla’s focus on humanoid robots and robotaxis suggest the threat it poses to Rivian will shrink in the next few years. Outside the U.S., Chinese EV giant Byd could prove a fiercer competitor. (So far, high tariffs and geopolitical tensions have prevented Chinese automakers from expanding aggressively in the U.S.) But Rivian is gearing up to start selling its cars in Europe starting in the next few years, Scaringe has said, which will pit it against Byd.
The R2 also gives Rivian a path to profitability. It ran a net loss of $4.7 billion in 2024, less than in 2023 but a bit more than in 2021, which was an especially hot year for EV sales worldwide. However, the company is making progress: The quarter ended September 2025 was only the third in Rivian’s history as a public company in which it had a positive gross profit margin. It bodes well that Scaringe has said that based on current contracts with Rivian’s suppliers, the materials needed for the R2 should cost about half as much as those for the R1.
Still, it could be a while before Rivian starts generating free cash flow. The company produced just over $1 billion in operating cash in the nine months to September but spent about $1.6 billion in capital expenditures during that period. Scaringe predicted in November that Rivian’s capex spending would rise in 2026 as the company builds out its plant in Georgia.
Outside of selling EVs, Rivian could reap the benefits of its investment in developing autonomous driving software. It already sells other software tools, including electric vehicle operating systems, to Volkswagen, and it has plans to roll out a new, paid self-driving software subscription to Rivian owners early this year. Rivian isn’t alone in selling its technology, as Nvidia made clear at the Consumer Electronics Show earlier this week when it unveiled its own autonomous driving software. But Rivian can add its tech to its own vehicles, which gives it more of an upside than Nvidia.
Rivian’s software and services unit, which includes its autonomous driving software as well as tools for vehicle marketing and insurance, increased revenue over 300% in the September quarter, in which it comprised more than one quarter of Rivian’s sales.
Rivian is “going to be a $100 billion company someday, and that someday may take one year for it to come, it might take three years for it to come, but it’s probably not going to be more than that,” said Shojaee.