Which EV is the Next Tesla?

Elon Musk may be controversial. But as the leader of the CEO, he’s a miracle worker.

Defying all odds, Musk turned Tesla (TSLA) into a new one of the most profitable and technologically advanced car companies in the world.

Others saw opportunity and jumped into the electric vehicle space. Not all survived. And many struggle to stay afloat.

A recent surge in shares of these beaten down companies brought eyeballs from financial pros to one company in particular, Rivian (RIVN).

Rivian had been one of the few bright spots, producing high-end pickup trucks since late 2021.

Yet, this latest revival appears to be nothing more than a dead cat bounce.  

Rivian’s Business

Founded by Robert “RJ” Scaringe in 2009, Rivian manufactures its EVs in Normal, Illinois, and multiple facilities across the US, Canada, and England.

The company’s product portfolio comprises electric vehicles, batteries, accessories, and a range of services including EV charging and insurance. 

Rivian sets itself apart through a combination of performance, utility, and adventure in EVs. Featuring a “skateboard” platform, Rivian’s vehicles can handle various terrains and climates, and the technology can be licensed by other companies interested in producing EVs. Like Tesla, Rivian sells its vehicles directly to consumers, bypassing traditional dealerships.

Revenue is broken down as follows:

• Vehicle sales: Sales of its electric vehicles, such as the R1T pickup truck, the R1S SUV, and the Amazon delivery van. 
• Services: Revenue from providing services related to its vehicles, such as charging, insurance, maintenance, and software updates. 
• Other: Other revenue sources that are not directly related to its vehicles or services, such as merchandise or partnerships

Rivian’s vehicles are priced competitively with other premium electric vehicles in the market, ranging from $67,500 for the R1T base model to $77,500 for the R1S base model.

Source: Rivian Website

Amazon was an early investor with $700 million in equity in February 2019. By September, Amazon had ordered more than 100,000 electric delivery vans from Rivian.

Rivian went public in late 2021, raising almost $12 billion.

Financials

Source: Stock Analysis

Rivian supposedly has an order backlog over 100,000 deep, not including Amazon’s order.

Growth is only constrained by manufacturing. 

The company will live and die by how quickly it can scale production and achieve economies of scale.

Rivian currently burns $5.5 billion in cash from operations each year on top of roughly $1.2 billion in annual Capex.

Management believes they have enough cash to go through 2025 with a bit more than $11 billion in cash on hand.

Valuation

Source: Stock Analysis

Unsurprisingly, none of the EV companies are profitable save Li Auto (LI), the Chinese car company.

So, we’re left to compare most of these stocks on a price to sales basis. And in that regard, RIVN is the best of the American companies, though still very expensive.

Growth

Source: Seeking Alpha

With sales going from essentially zero to anything, the initial revenue growth numbers don’t provide a great picture of the current situation. However, it’s worth noting that LI sees growth north of 50% annually, a goal for RIVN when it becomes more established.

Our Opinion 2/10

We can’t recommend a stock that doesn’t have a clear pathway to profitability.

Elon at least explained his vision and turned a profit, albeit briefly, early on.

We don’t see that here and wouldn’t want to risk an investment.

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