Nio (NYSE:NIO) and Rivian (NASDAQ:RIVN) are two EV startups that hope to seize off market share in their respective Chinese and American markets to take advantage of growing electric vehicle sales.
Both of these companies are comparatively small and operate in markets dominated by much larger competitors but which is the better buy for investors looking for EV growth upside?
Nio
NIO shares have been put under pressure in the last year, selling off by over 16%. This, however, has brought the stock’s price-to-sales ratio down to a rather modest 0.8 so NIO stock has the hallmarks of being undervalued at the moment.
Nio’s overall market share in Chinese EVs is 3%, but it holds a much stronger 40% share of the market for premium EVs. It’s also worth noting that China’s EV market is currently growing very quickly. About 25% of the cars sold in China last year were fully electric, and the Chinese government has set a target of 40% by 2030.
One of Nio’s more unique selling points is its battery change feature. Rather than recharging their batteries, Nio owners can subscribe to the company’s battery-as-a-service business. This allows subscribed owners to have their batteries quickly changed at a number of Nio swap stations throughout China.
While this offers a considerable time savings and creates another avenue for Nio to earn revenue, BYD’s recently unveiled 5-minute charging system could nullify Nio’s battery swapping edge.
Unsurprisingly, BYD remains something of an obstacle to Nio’s growth. The much larger company, sometimes compared to Tesla, has surged in recent years.
Nio has been fairly successful in delivering growth despite the stock’s lackluster performance. Revenue growth has been somewhat inconsistent, but Q4 saw a 15.2% increase to $2.70 billion. Crucially, delivered increased 45% from a year earlier to 72,689.
Like other Chinese EV titans, Nio may also have considerable potential as an exporter to foreign markets. In 2023 and 2024, China was the largest vehicle exporter in the world. While the country’s momentum is expected to slow in 2025, the long-term outlook for Chinese auto exports may very well still be fairly positive.
Rivian
By at least one measure, shares of RIVN are considerably more expensive than NIO. Rivian’s price-to-sales ratio is about three times higher than Nio’s at 2.5. Rivian, does, however, have the edge in its price-to-book ratio, which is just 2.1.
Over the next 12 months, analysts expect to see RIVN shares climb by about 18% to an average price target of $14.67.
Rivian’s revenue has also increased much more consistently than Nio’s, though it’s worth noting that Nio is still posting by far the higher sales numbers of the two companies. Rivian has seen strong year-over-year revenue growth in seven of the last eight quarters. In 2024, the company delivered $4.97 billion in top line sales.
For further growth, Rivian investors are banking on the rollout of the company’s R2 SUV. This electric SUV is expected to launch early next year and will be Rivian’s first mass-market offering with an estimated starting price of $45,000. For the R2, Rivian claims to have substantially streamlined its manufacturing and significantly cut down its material costs.
Rivian’s major problem, though, is that it is a minor player in a domestic EV market that isn’t growing as fast as many anticipated. EVs still account for less than 10% of new car sales, and Rivian only accounts for about 5% of those EV sales.
Even with its persistent difficulties, Tesla still makes up a little over half of US EV sales. Hyundai, GM and Ford also outpace Rivian in terms of market share. As such, the company doesn’t have much of a competitive moat around it. When the R2 rolls out, it will also be competing more with these other EV majors by moving outside the top end of the EV market.
Despite its potential competitive difficulties, Rivian could have considerable room for future growth. In addition to the potential of the R2 for raising its sales, Rivian has partnered with Amazon to develop and produce electric delivery vans for the eCommerce giant.
Although Rivian had to pause production last year due to a parts shortage, it still expects to supply Amazon with 100,000 vans by 2030. This agreement could hold enormous value for Rivian, especially if it leads to future orders for other electric delivery vehicles.
Which EV Stock Is Best?
Over the next 12 months, analysts expect to see RIVN shares climb by about 18% to an average price target of $14.67 whereas analysts have set an average price target of $5.23, almost 40% higher.
While neither one of these stocks is exactly a conservative investment, Nio appears to be the better EV maker to buy today. Not only does the company trade at a significantly more attractive P/S ratio, but it is also generating more revenue, reporting solid delivery growth and operating in a market where EV sales are growing more quickly.
Rivian, by contrast, is relying on the success of the R2, which won’t even have a chance to contribute to its revenues prior to 2026.
While the company could very well see positive growth in the years to come as a result of new consumer vehicles and its EV delivery vehicle project, it’s still operating as a small player in a US market that has been somewhat slow to adopt EV technology.
It bears repeating that both Nio and Rivian could be fairly high-risk investments, as both have to compete with much larger, more dominant companies in their home markets.
Tesla and BYD appear to have stolen the march as the leading EV makers in their respective countries, likely making them the more competitively secure investments. Given how young the EV market is, however, there’s still likely plenty of room for companies like Nio and Rivian to carve out niches for themselves and deliver growth.
The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.
