The EV market is congested. Tesla (NASDAQ: TSLA) and Rivian Automotive (NASDAQ: RIVN) are the most popular manufacturers among investors as the market grows and attracts new competitors. Like each other, they introduce cutting-edge automobiles. However, their contrasts are obvious. Here's why
Manufacturing vehicles is difficult, but electric vehicles are considerably harder. Mass-producing EVs is difficult due to complex supply chains and rare earth materials. Rivian is learning the hard way that these issues make EV business profitability tough. Rivian has never made a profit, and each quarter reduces its chances of doing so.
Rivian has boosted production and reduced losses, but its expenses are growing faster than revenue. Rivian lost $40,000 per vehicle in Q4 2023. That was better than its loss of over $160,000 per vehicle in Q4 2022, but it still has a long way to go before it can topple Tesla or earn a slot in your portfolio.
What makes Tesla tall Tesla, however, is the most lucrative EV maker. In its recent report, Tesla earned nearly $7,000 per vehicle. The Chinese company BYD (OTC: BYDDY) makes $1,300 per vehicle, the next closest.
Tesla's profitability show its significant advantage over Rivian and its "competitors." Tesla has refined its supply chain and production model after 20 years in the EV market to increase efficiency and reduce expenses.
Its financial strength has helped it stand out from competition. Tesla can invest in new facilities, optimize its EV supply chain, and explore other technology ventures like autonomous driving and robotics with more than $29 billion in cash. Tesla and Rivian differ most here. Tesla is more than an EV firm. An investment in a firm that could change transportation and more.
The conclusion Rivian is a risky investment due to its lack of earnings. It used approximately 60% of its cash reserves in two-and-a-half years. Rivian may barely last two to three years at its present spending rate before needing new financing.
EV manufacturers face a long road to profitability due to their high costs. Unfortunately for Rivian, there's more competition now than when Tesla was in a similar position. Almost the only mass-market EV maker back then. Tesla is the safest bet for EV adoption investors. Tesla investments are preferable since they invest in future technology.
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