Rivian (NASDAQ: RIVN) stock was one of the most hotly anticipated electric vehicle (EV) IPOs this year. The company, which is yet to produce any revenues from vehicle sales, surged in value after it hit the market.
Although the shares have since lost some ground, the corporation remains one of the most highly valued operations in the space. Its market value stands at around $80bn.
By comparison, Ford, one of the world’s largest and most storied car manufacturers, has a market capitalisation of just under $80bn. Ford’s annual revenues are in the region of $150bn.
Former partners
I picked out Ford in this example after the US car giant invested around $500m in Rivian for a 12% stake in 2019 after the two parties agreed to work together. However, that agreement fell apart in November, with Ford realising it no longer needed the startup to help meet its EV ambitions.
In fact, Ford now believes it can become the second-largest EV producer in the world within the next two to three years. The company targets an annual output of 600,000 units, although that is still a long distance behind Tesla’s current annualised production rate of around one million units.
So where does this leave Rivian? It is difficult to tell. The company recently informed the market it will struggle to hit its initial target of producing 1,200 vehicles in the fourth quarter of this year.
Nevertheless, both the company and Wall Street analysts remain optimistic that reservations for its flagship electric pickup will surpass 100,000 by the first half of next year. If the business can overcome current supply chain issues, analysts argue, it may be able to ramp up production significantly as orders flood in.
The outlook for Rivian stock
Taking orders is one thing. Meeting orders is another issue altogether. Clearly, there is demand for the company’s EVs, but it is impossible to tell if this will persist for the next few years. It is also impossible to tell if the corporation will be able to satisfy this demand.
Ford and Tesla are experienced operators with a proven track record. Indeed, Ford’s global supply chain and manufacturing footprint give it the edge over Tesla and Rivian. That said, it still has some way to go before it has Tesla’s brand recognition.
Considering these factors, I think Rivian stock will still be struggling in five years. It is impossible to say where the shares will be trading in 2026. Considering the competitive environment and the amount of work the business will have to do to catch up to its larger competitors, I think the corporation will struggle. As such, I will not be buying the stock.
I would rather own a more established firm such as Tesla or Ford. Their competitive advantages will be instrumental in gaining an edge in the EV market.
Rupert Hargreaves has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
