Comparing Promising Electric Vehicle Stocks: Lucid versus Rivian
Navigating the electric vehicle (EV) market can be a rollercoaster ride, and stocks like Rivian Automotive (RIVN 2.24%) and Lucid Group (LCID 2.57%) have felt every jolt. Over the past three years, Rivian's shares have plummeted 79%, and Lucid's have dropped an even steeper 92%. If you're bullish on the EV sector, you might share my long-term optimism. Sales of electric vehicles surged 7% in the U.S. last year, hitting 1.3 million.
But not every EV start-up will weather this storm and emerge stronger. So, which one of these two up-and-comers looks like the better investment? Let's dive in.
Lucid: Impressive Ride, Big Losses
Lucid's Air sedan has left an indelible mark on automotive enthusiasts. The Air won MotorTrend's 2022 Car of the Year in its debut year and snagged the 2024 Best Luxury EV from Top Gear. The Air even made it onto Car and Driver's coveted 2025 10Best Cars list, touting its 400-mile EPA range and standout driving experience.
Yet, even though Lucid has accomplished the near-impossible in terms of emerging as a viable competitor in the highly competitive EV market, its financials are less inspiring. The company reported a mere $200 million in revenue during Q3 (2022-Q3), with net losses expanding to an eye-watering $992 million—a significant increase from the $630 million loss in Q3 2023.
Lucid managed to deliver 2,781 vehicles during the quarter, representing a nearly 91% increase, but vehicle production was relatively stagnant with just 1,805 units, a modest 16% bump from Q3 2023.
Lucid secured an additional $1.75 billion in funding in 2022, which it claims will provide a financial lifeline "well into 2026." Beyond that, things get a bit murky. Lucid will need to significantly ramp up production and reduce costs to stay afloat.
Rivian: Production Woes and Genuine Progress
Rivian's sailing hasn't been smooth either. The company reported 2024 production and delivery figures, with just under 50,000 vehicles produced last year, a 13.5% drop from 2023, while deliveries saw a modest 3% increase to 51,579.
Rivian's management says it has overcome the component shortages that caused production snags last year. But investors should keep an eye on their future performance in this area.
The good news is that Rivian managed to reduce its cost of materials by an impressive 35% throughout its van, truck, and SUV production last year. And, management expects Rivian to achieve gross profitability during Q4 (results will be released on February 20).
While Rivian still sports hefty losses—$1.1 billion in Q4—the company's path to gross profitability, coupled with its cost-cutting measures, is a positive sign that management is focused on getting the company's financials in order.
Another factor that gives me hope for Rivian's future is its plans to release several new models catering to a wider market over the next few years. Late 2023 saw the introduction of the R2 and R3, smaller SUV and crossover vehicles, respectively. The more affordable R2 starts at only $45,000, while the R3 is expected to be priced even lower.
Diversifying its offerings beyond high-end, high-priced vehicles could help Rivian gain traction and expand its customer base, making it a more resilient, long-term investment.
Rivian: The Clear Contender
While both companies face challenges, Rivian's cost-cutting measures, strategic partnerships, and focus on appealing to the mass market make it a more compelling investment opportunity than Lucid Group. Should Rivian reach its Q4 gross profit target, it will take another step toward turning the corner on profitability, and its cost-cutting initiatives will make it a stronger competitor in the long run.
The price-to-sales ratio of approximately 3 for Rivian is significantly lower than Lucid's 9.7, giving Rivian's stock a more attractive valuation. The market for electric vehicles is still nascent and volatile, but Rivian seems better positioned to navigate its challenges and achieve sustainable growth. Just remember that, as with any EV start-up, the path forward is likely to be marked by lots of twists and turns.
Based on Lucid's mounting losses and the need for substantial production increase and cost reduction, investing in Rivian might be more financially viable. Rivian's focus on cost-cutting measures, strategic partnerships, and plans to cater to a wider market with affordable models, such as the R2 and R3, position it as a more resilient and attractive investment opportunity compared to Lucid, as suggested by its lower price-to-sales ratio of 3.
