12.6 C
New York
Monday, March 4, 2024

Forget Rivian: Buy These Magnificent EV Stocks Instead

Forget Rivian: Buy These Magnificent EV Stocks Instead

Among the many companies trying to claim their place in the electric vehicle (EV) market are Rivian Automobile (NASDAQ:RIVN). Focusing on making SUVs and trucks suitable for outdoor enthusiasts, as well as commercial vans for businesses, its 2021 public debut was one of the most anticipated in decades. Raising nearly $12 billion, it was the most valuable project initial public offering (IPO) for an American company since Meta in 2012.

But since then, it’s safe to say that the hype has dissipated. Its stock is down more than 80% as it tries to navigate the tough challenges that come with mass production of electric vehicles. Although it is showing signs of improvement, Rivian has yet to turn a profit. Unable to generate revenue, the company saw its cash flow reduced by more than 50% in just two years. If things don’t change quickly, the company will face an uncertain future.

For now, Rivian remains a risky bet for investors looking for exposure to the electric vehicle market. Maybe one day the company will change the situation, but for now, there are better options for investors in the electric vehicle sector. Let’s look at two of them.

Forget Rivian: Buy These Magnificent EV Stocks Instead

Image source: Getty Images.

The undisputed champion

We can’t talk about electric vehicles without mentioning You’re here (NASDAQ:TSLA). In a short time, it has become the world’s most valuable automaker and synonymous with the EV movement. Tesla’s main strength lies in its exceptional ability to mass produce cost-effective electric vehicles. As a result, the company not only makes the most electric vehicles in the world today, but also has one of the strongest financial positions in the industry, even as profit margins have declined. recently taken a hit.

With its strong financial resources, Tesla is strategically positioned to capitalize on the booming electric vehicle market by expanding its production capabilities with the construction of new factories around the world. Yet its most attractive long-term value proposition has nothing to do with electric vehicles.

Investing more than $1 billion in research and development in the third quarter alone, Tesla is advancing technologies such as artificial intelligence, robotics, energy storage solutions and autonomous driving. Although some investors might favor Rivian because of its perceived long-term potential, the reality is that Tesla is far from peaking.

The new challenger

Less known than more popular companies like Tesla or Rivian, BYD (OTC: WILL) is a remarkable emerging player in the electric vehicle market. Originally established as a battery maker in the 1990s, BYD has leveraged this expertise to become the leading automaker in China and potentially compete with Tesla for the world’s top spot.

The past year has been particularly remarkable for BYD. Having manufactured more than a million electric vehicles in the first three quarters of the year, BYD closely trails Tesla’s production figures of just 23%. Amid this rise, BYD’s year-to-date profits soared 142% from the previous year, to more than $3 billion. Even more remarkably, BYD’s gross profit margins even exceeded those of Tesla, climbing to 22%.

Similar to Tesla, BYD has yet to reach its true potential. Building on its success in the competitive Chinese market, the company aims to enter new markets. With new factories being built in Brazil and Thailand and deliveries beginning in Mexico, BYD’s range of vehicles at different price points gives it an advantage in emerging economies. As BYD expands beyond China, don’t be surprised if one day BYD overthrows Tesla as the EV champion.

The final verdict

It may not be entirely fair to pit a newcomer like Rivian, with only five years of experience in the car manufacturing industry, against seasoned professionals like Tesla and BYD, who have been at it for more than of two decades. But this experience is precisely why Tesla and BYD are the smarter choices.

Starting a business is challenging, and jumping into the world of electric vehicles presents even more obstacles with complicated supply chains and high costs. That’s why it makes more sense for investors to focus on veterans like BYD and Tesla. Maybe Rivian will find its place one day. If so, I will happily consider adding it to my portfolio. But for now, Tesla and BYD are much better options for investors looking to capitalize on the growing electric vehicle market.

Should you invest $1,000 in Rivian Automotive right now?

Before buying Rivian Automotive stock, consider this:

THE Motley Fool Stock Advisor The analyst team has just identified what they think is the 10 best stocks for investors to buy now…and Rivian Automotive wasn’t one of them. The 10 selected stocks could produce monster returns in the years to come.

Equity Advisor provides investors with an easy-to-follow plan for success, including portfolio building advice, regular analyst updates, and two new stock picks each month. THE Equity Advisor The service has more than tripled the performance of the S&P 500 since 2002*.

See the 10 values

*Stock Advisor returns December 18, 2023

Randi Zuckerberg, former director of market development and spokesperson for Facebook and sister of Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. RJ Fulton holds positions at Tesla. The Motley Fool holds positions and recommends BYD, Meta Platforms and Tesla. The Mad Motley has a disclosure policy.

Forget Rivian: Buy These Gorgeous Electric Vehicle Stocks Instead was originally published by The Motley Fool

Source link

Latest stories