EV Stocks Face-Off: TSLA vs. RIVN vs. ARVL

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The three EV stocks: Tesla (NASDAQ:TSLA), Rivian (NASDAQ:RIVN), and Arrival (NASDAQ:ARVL), all have developed electric vehicles that end users have found highly appealing, and all three are effectively using technical innovations to reinforce their EVs and manufacture them more efficiently. TSLA, largely because of the foresight and innovation of CEO Elon Musk, has grow to be highly successful, and it’s now clear that the corporate will proceed growing very rapidly while remaining one among the sector’s most profitable corporations for the foreseeable future. But I consider that RIVN and ARVL will likely also survive and thrive over the long run.

Consequently, the shares of TSLA, RIVN, and ARVL are all price buying. But since each poses very different levels of risk and their potential rewards vary greatly, investors should determine which of the EV stocks to purchase and the way much of every to buy based on their very own risk tolerance and investment styles.

Within the sections below, I’ll evaluate each of the EV stocks’ risk-reward ratios and explain why I consider that each one three EV stocks will ultimately reward investors.


Tesla (TSLA)

Source: Roschetzky Photography / Shutterstock.com

Heading into the disclosing of Tesla’s fourth-quarter earnings results on Jan. 25, many on the Street thought that the demand for the corporate’s EVs was dropping an excellent deal. Prompted by Tesla’s price cuts and Musk’s controversial, free-speech approach at Twitter, those fears turned out to be completely unfounded.

Indeed, after the automaker reported stronger-than-expected fourth-quarter results on Jan. 25 that featured a 59% year-over-year jump in its net income and a slight increase in its net operating margin, it’s evident that Tesla’s profitability is definitely surging. Meanwhile, on the demand front, its Automotive revenues and its total sales each soared 51% YOY.

And addressing the fears concerning the demand for Tesla’s EVs, Musk said, “Demand far exceeds production, and we actually are making some small price increases in consequence,” He also stated that the corporate’s demand this month had reached record levels.

Further, the firm’s CFO, Zachary Kirkhorn, indicated that Tesla had cut its prices within the U.S. primarily to make more of its EVs eligible for the country’s latest EV tax credits. And Musk noted that TSLA’s production costs at its Berlin and Austin factories were dropping as their production rates increased.

Also, consistent with my predictions, TSLA is generating significant sales from its autonomous-driving software and its Supercharger network. And price noting is that the revenue generated by its energy storage products reached record levels last quarter. These offerings are helping to diversify the corporate’s sales and boost its margins.

Meanwhile, the corporate continues enhancing its EVs with multiple latest software releases. For instance, last quarter, it began enabling videoconferencing through its touchscreen and allowing drivers to view their EVs’ interior cameras using their mobile phones. Finally, as I’ve identified in previous columns, its latest, full-size truck looks poised to be very successful.

The underside line is that Tesla’s brand, growth, and profitability remain extremely strong, leaving the firm well-positioned to proceed posting robust financial results for the foreseeable future. Consequently, TSLA stock poses minimal risk, and I expect the shares to climb significantly in the approaching months and years.

At the identical time, nonetheless, the market capitalization of TSLA stock already exceeds $500 billion, and the automaker is facing growing competition. Due to this fact, the shares are prone to jump at most 100% over the following two or three years.

Consequently,  TSLA is one of the best among the many three EV stocks for more conservative investors.

Rivian (RIVN)

rivn stock sign outside the company's HQ in Silicon Valley

Source: Michael Vi / Shutterstock

For several reasons, Rivian could be very well-positioned. Due to the automaker’s concentrate on making delivery vans, it faces much less competition than other EV start-ups like Lucid (NASDAQ:LCID) and Fisker (NYSE:FSR). That’s just because so many more EV makers are specializing in the patron luxury EV market than on developing EVs for corporations.

Also boosting Rivian’s prospects is its association with Amazon (NASDAQ:AMZN). Specifically, the e-commerce giant has ordered 100,000 of RIVN’s delivery vans and invested over $1.3 billion in RIVN. Consequently, AMZN is prone to use its (quite) considerable power, influence, and funds to make sure that Rivian succeeds.

One other influential backer of Rivian is George Soros, the multi-billionaire investor, who owned 16.36 million shares of RIVN as of Sept. 30. Given Soros’ tremendous influence throughout the Democratic Party, he’s prone to help the automaker obtain government contracts and other favors from Washington and the governments of blue states.

And providing Rivian with one other vital, positive catalyst, the automaker’s flagship consumer EV, its R1T pickup truck, has received superb reviews from vital publications that concentrate on automobiles. For instance, Motor Trend named the R1T its Truck of the Yr for 2022, while the driving force gave the EV an ideal 10 out of 10 rankings.

And like Tesla, Rivian continuously uses software updates to reinforce its EVs.

Mitigating the danger posed by RIVN stock, Rivian successfully produced over 24,000 EVs and delivered greater than 20,000 of them last yr.

But alternatively, the market capitalization of RIVN stock is comparatively low (in comparison with Tesla, for instance) $16 billion. Given Rivian’s huge potential and the undeniable fact that its market capitalization doesn’t anticipate an excellent deal of success for the automaker, the shares could easily soar from 300% to 500% over the following two or three years.

In light of Rivian’s current situation and outlook, I feel that RIVN is best suited to investors whose level of risk tolerance is best described as “medium.”

Arrival (ARVL)

Person holding cellphone with webpage of electric vehicle manufacturer Arrival Ltd (ARVL) on screen in front of logo. Focus on center of phone display. Unmodified photo.

Source: T. Schneider / Shutterstock.com

Not one, but two huge corporations have expressed interest in Arrival’s EVs, while a serious automaker and a big delivery company have invested some money in ARVL.

UPS (NYSE:UPS), the massive American package-delivery company, ordered 10,000 electric vans from  Arrival and invested within the EV startup. It didn’t reveal the amount of cash that it provided to ARVL.

Meanwhile, in a project that has since been out on hold, Uber (NYSE:UBER) and Arrival agreed to collaborate on developing a brand new ride-hailing EV called the Arrival Automobile. Finally, the large South Korean automaker, Hyundai, invested 85.6 million euros in ARVL.

The investments in Arrival and the foremost, impressive partnerships that it has launched validate the attractiveness of its technology and its EV designs. Also showing that the corporate knows what it’s doing, its electric van and bus each received certification from the EU last yr, and the corporate began testing its electric van on the UK’s public roads last yr.

Meanwhile, FleetOwner explained that:

Arrival’s core components are very modular, meaning all of them plug-and-play and fit throughout the 10 by 10 skateboard style design grid. This approach empowers robotic assembly. A variety of the core components also crossover throughout Arrival’s vehicle portfolio leading to standardization crucial to keeping long run ownership and maintenance costs low.

Using an intriguing approach to manufacturing, ARVL plans to maintain its production costs very low by utilizing many robots and constructing many comparatively small factories.

Like Rivian, ARVL should profit from its powerful partnerships and its concentrate on industrial EVs, which should enable it to face much less competition than consumer EV makers.

Arrival, nonetheless, needs to lift more cash to perform its medium-term goals and is currently seeking to raise additional funds. Compounding the uncertainty posed by ARVl, the corporate, with the intention to benefit from America’s EV tax credits, has largely abandoned its UK factory and is specializing in making EVs in Charlotte, North Carolina. Nonetheless, its Charlotte factory won’t be ready to provide EVs until next yr.

Nonetheless, given the strength of the corporate’s technology and partnerships, I consider ARVL will succeed.

Furthermore, the market capitalization of ARVL stock is just $250 million. Consequently, this stock could easily jump 10 times to fifteen times over the following two or three years as ARVL gets back on its feet and proves its skeptics flawed.

Then again, given the corporate’s current seek for money, it is sort of dangerous and only suitable for corporations with high amounts of risk tolerance.

On the date of publication, Larry Ramer held long positions in TSLA, RIVN, and ARVL . The opinions expressed in this text are those of the author, subject to the InvestorPlace.com Publishing Guidelines.

Larry Ramer has conducted research and written articles on U.S. stocks for 15 years. He has been employed by The Fly and Israel’s largest business newspaper, Globes. Larry began writing columns for InvestorPlace in 2015. Amongst his highly successful, contrarian picks have been PLUG, XOM and solar stocks. You’ll be able to reach him on Stocktwits at @larryramer.

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