Tesla's Rise: What It Means for Nio and Rivian's Stocks

Tesla's success sets a high bar for Nio and Rivian. As Nio launches new brands and anticipates significant delivery growth by 2025, Rivian targets positive gross profit. These developments could sway investors, boosting the valuations of both stocks as they compete in the EV market.

Date: 19-01-2025

AI Rating: 6

The report highlights Tesla's successful establishment in the market as a quality electric vehicle (EV) manufacturer, setting a high benchmark for competitors like Nio and Rivian. Special emphasis is placed on the price-to-sales (P/S) ratio, which helps in assessing the value investors place on a company's sales, especially important for companies like Nio and Rivian, which have yet to turn profits.

Critical Metrics for Nio and Rivian

The report identifies significant upside potential for Nio, particularly due to its recent brand launches and expectations of doubling deliveries by 2025 to approximately 440,000 units. If Nio can indeed manage this, it will lead to substantial revenue growth, positively impacting its valuation. This implies that increased delivery numbers can improve its metrics, which in turn may enhance investor sentiment towards the stock.

Rivian, on the other hand, focuses on turning a positive gross profit despite facing production challenges. Although it currently faces a lack of new vehicle launches in 2025, proving to investors that it can achieve gross profitability will be critical for bolstering stock price and valuation. Reports indicate that Rivian has faced sustained losses per vehicle sold, highlighting the urgent need for operational improvements to increase production efficiency and reduce losses.

Investor Sentiment and Future Outlook

Currently, both Nio and Rivian are viewed as trading at cheap valuations. For Nio, the ongoing price war in China presents challenges, affecting profit margins and increasing competition. For Rivian, the absence of upcoming launches raises concerns regarding its future profitability. However, there remains hope as both companies might sway investors positively if they can demonstrate gross profit improvements or significant delivery growth. Positive gross profit for Rivian could mark a turning point in investor confidence and subsequent stock price recovery.

Stocks: TSLA NIO RIVN