We recently compiled a list of the 8 Best EV Stocks To Buy Right Now. In this article, we are going to take a look at where Rivian Automotive, Inc. (NASDAQ:RIVN) stands against the other EV stocks.
After a swift rise in the EV industry over the years, we saw a slowdown in its progress, especially in Europe and the USA. Nevertheless, it is just a matter of time before the technology takes over the traditional internal combustion engines (ICE).
While the growth has been slowing in the western part of the world, China has been working tirelessly to become the global leader in the EV industry. In a podcast episode of Everything Electric Show on October 20, Ford CEO Jim Farley discussed the ongoing transformation in the automotive industry.
He noted that while EV adoption continues to grow worldwide, significant changes have occurred regarding market dynamics. He emphasized China’s dominance in EV production, with 70% of global EVs manufactured there. A rapidly expanding sub-segment in China is electric vehicles with extended range (e-rev), which use a small combustion engine to power the batteries for longer trips.
This shift is reshaping global supply chains, brand preferences, and jobs, with geopolitical factors further influencing the industry’s future. Farley noted that these changes have become clearer over the past year.
We also discussed the country’s dominance in our article about small-cap EV stocks to invest in. Here is an excerpt from the article:
“While the growth in the US and Europe is slowing down, China is picking up a significant pace and dominating the EV landscape. According to a World Economic Forum report, Chinese EVs are much cheaper than their Western counterparts, with an average price of $34,400, compared to $55,242 in the U.S. The price gap is driven by lower labor costs, favorable government subsidies, and more affordable battery sourcing.
Chinese automakers now produce more than half of the world’s EVs and are using their cost advantages to potentially dominate the global market. As Chinese brands gain scale and expertise, their competitive pricing could allow them to challenge Western automakers.”
Read Also: 7 Best Delivery Stocks To Invest In Now and 10 High Growth Non-Tech Stocks That Are Profitable in 2024.
US Racing Against China’s Dominance
The United States government acknowledges the potential of EVs in the future of mobility and is trying its best to push for its development. On July 11, the Department of Energy (DOE) announced $1.7 billion in grants aimed at converting 11 auto plants in eight states to produce electric vehicles and components.
Reuters reported on October 22 that U.S. Energy Secretary Jennifer Granholm announced that the DOE is working quickly to finalize $1.7 billion in grants. The funds include $500 million for GM’s Michigan plant and $334.8 million for Stellantis’ Belvidere plant, with additional funds for the latter’s Indiana facility.
According to another Reuters report from September 23, Monroe Capital LLC announced plans to launch the Drive Forward Fund LP, aiming to raise up to $1 billion to provide loans to smaller auto suppliers transitioning from internal combustion engine vehicles to EVs.
The White House supports this initiative, emphasizing that it will offer affordable capital to help small and medium-sized auto manufacturers refinance, grow, and diversify and will benefit over 250,000 workers.
Moreover, new U.S. tariffs on Chinese EVs and stricter emissions regulations are pushing automakers to adapt their supply chains. Monroe CEO Ted Koenig highlighted the fund’s importance in cultivating growth and innovation among suppliers struggling to secure financing for EV production.
Our Methodology
For this article, we identified over 30 EV manufacturers using the Finviz stocks screener and narrowed our list to 8 stocks most widely held by institutional investors. The stocks are listed in ascending order of their hedge funds which was taken from Insider Monkey’s Q2 database of 912 elite hedge funds.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A state-of-the-art electric vehicle charging at a station at a suburban mall.
Rivian Automotive, Inc. (NASDAQ:RIVN)
Number of Hedge Funds Holders: 37
Rivian Automotive, Inc. (NASDAQ:RIVN) is an American electric vehicle manufacturer founded in 2009, known for producing electric SUVs, pickup trucks, and delivery vans. Its noteworthy products include the R1T pickup truck, which began deliveries in late 2021, and the electric delivery van (EDV) developed for Amazon.
The company has also announced a joint venture with Volkswagen in June to develop advanced electric vehicle architecture and software. This partnership aims to lower costs and accelerate innovation, with new vehicles expected by the end of the decade. Volkswagen plans to invest $5 billion in Rivian, starting with a $1 billion loan convertible into stock.
Despite facing production issues due to a component shortage, Rivian (NASDAQ:RIVN) produced 13,157 vehicles and delivered 10,018 in Q3. It lowered its annual production forecast to 47,000-49,000 vehicles but expects deliveries to reach 50,500-52,000.
On October 21, The Fly reported that RBC Capital cut its price target for Rivian (NASDAQ:RIVN) from $15 to $14 while keeping a Sector Perform rating on the stock. This change is part of a larger report on car companies’ expected results for the third quarter. The whole sector has been struggling lately, and while analysts have reduced their predictions, there’s a chance they might lower them even more because of a gloomy economic outlook. For Rivian, a lower number of deliveries in Q3 could mean the company will change its profit expectations for the fourth quarter. Concerns have also grown about Rivian’s deal with VW after VW issued a profit warning.
Despite the rating, the analyst price target still shows an upside of nearly 40% from current levels on October 22.
Overall RIVN ranks 4th on our list of the best EV stocks to buy. While we acknowledge the potential of RIVN as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than RIVN but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.