Rivian Vs Lucid Motors, Which EV Stock Is Better?

According to IEA data, approximately 14 million new electric cars were registered globally in 2023. This is more than six times higher than in 2018. Now, electric cars are penetrating emerging markets.

Against this backdrop, when comparing Rivian vs Lucid Motors stock, which ranks as the better investment opportunity?

Rivian Automotive

Backed by Amazon.com, Inc. (NASDAQ:AMZN) and Ford Motor Company (NYSE:F), Rivian made its public market debut in 2021. It was a big IPO, with the shares priced at $78 per share.

When the stock went public, Rivian (NASDAQ:RIVN) was quite popular among investors. The hype stemmed from the market’s eagerness to cash on the EV industry’s tailwinds but, since then, the stock has not had a smooth journey on Wall Street. It declined by 43% over the past year alone.

While the company did struggle to scale initially, production growth has been quite impressive. The company hoped that it would produce 25,000 vehicles in 2022 and ended up producing 24,337 vehicles.

In 2023, Rivian managed to top its 54,000 production target. It produced 57,232 vehicles and delivered 50,122.

On the back of those production volumes and subsequent sales, Rivian’s revenue was $55 million in 2021. It went up to $1.66 billion in 2022 and then again to $4.43 billion in 2023 but the company has not yet posted a yearly profit.

So, in spite of production volumes rising, Rivian needs further facilities to cater to demand. After the success of its R1 models, the company had plans to build its R2 midsize SUVs at a production facility in Georgia. As part of this effort, state and local governments offered an incentive package of $1.5 billion.

The construction of this plant was halted to save money. Instead, Rivian unveiled additional R3 and R3X crossover models. It expects to produce the R2 models in its existing Illinois plant.

For the first quarter of fiscal 2024, Rivian posted a quarterly revenue of $1.20 billion, representing almost 2x the amount it had recorded in the prior year’s quarter. Still, the bottom line remains in the red. 

Like many EV companies, Rivian needs cash to stay afloat and scale operations. It also has a strategic relationship with Volkswagen AG (OTC:VWAGY), which is set to infused it with much needed liquidity.

The companies intend to enter a joint venture to create next-generation software-defined vehicle platforms. In light of this, Volkswagen would invest an initial $1 billion in Rivian, with a total expected deal size of $5 billion.

Rivian’s price is sitting at 3.19x its forward sales. This is quite stretched if we compare it to the industry average. Still, Wall Street analysts still have a consensus price target of $17.56 per share on it.

Lucid Group

Lucid Group serves a niche of the EV market by making luxury vehicles. The company chose to produce its vehicles in Arizona.

Lucid (NASDAQ:LCID) went public in a SPAC merger, at which time it brought in $4.5 billion in fresh capital. But the market has not been bestowed Lucid with its favor and the share price is down 54% in the past year alone.

The company is backed by Saudi Arabia, which suggests deep pockets will continue to support its costly production efforts. For instance, this March, Lucid raised $1 billion in capital from an affiliate of Saudi Arabia’s Public Investment Fund (PIF).

Lucid Group’s financial journey has been topsy turvy. In 2021, the company posted revenue of $27.11 million. In 2022, this climbed up to $608.18 million. Then it faced a pullback when in 2023, Lucid’s revenue declined to $595.27 million. This was primarily due to changes in product mix, pricing, and incentives offered. Regardless, the company has yet to post an annual profit.

On the other hand, Lucid almost met the higher end of the 2023 annual production guidance of between 8,000 and 8,500 vehicles by producing 8,428 vehicles last year. The company embarked on a transformational phase to expand its addressable market and its vehicle lineup.

For the first quarter of fiscal 2024, the company posted a revenue of $172.74 million, reflecting a 16% increase compared to the prior year’s quarter. Like Rivian, it continues to post hefty net losses.

Lucid produced 1,728 vehicles in the first quarter and is currently on track to produce 9,000 vehicles this year. Its Q1 delivery was up 39.9% year over year to 1,967 vehicles.

In the second quarter, Lucid Group produced 2,110 vehicles and delivered 2,394, a positive sign of this beaten-down stock.

In other news, the company has deepened its relationship with Saudi Arabia. It broke ground on the next phase of their manufacturing facility in the country (AMP-2) for completely-built-up vehicles. The fact that the company has models lined up for imminent release might give the stock a boost.

Lucid Group’s price is now sitting at 9.90x its forward sales. Needless to say, this valuation does not look justified. Hence, Wall Street analysts still see a 4.1% downside in the stock.

Rivian Vs Lucid Motors Which EV Stock Is Best?

Rivian has higher upside potential relative to Lucid Motors, which analysts see as having 4.1% downside risk at this time.

Both companies are posting losses, though Lucid is arguably the company with the more sustainable future given the deep pockets of Saudi Arabia are backing it.

Still, when it comes to commercial success Rivian has outshone Lucid, which has a clear focus on the luxury segment of the market.

Overall, both companies offer merit in the EV investment realm but Tesla, the archrival in the industry, still presents the most compelling investment opportunity given the strength of its balance sheet, extensive production capabilities and many future upside optionalities, such as Optimus, FSD and autonomous taxis.

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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.