Electric Vehicle Stocks Have Huge Potential, Who Will Win in the End?

电动汽车股票潜力巨大,最终谁会胜出?
Published on: Jul 23, 2024
Author: Amy Liu

The electric vehicle sector has seen its ups and downs recently. To make a profitable investment in this area, it’s crucial to differentiate potential winners from the growing list of failed electric vehicle companies. When investing in electric vehicle stocks, one must understand precisely what it takes for a company to succeed in the coming years and how strong their financial position is to sustain operations.

Looking ahead to 2030, one particular electric vehicle stock stands a high chance of performing exceptionally.

If you want broad exposure to the electric vehicle industry, you could consider investing in a diversified electric vehicle ETF. However, this approach comes with its challenges, primarily due to significant variations in the products offered by different industry participants.

In this industry, it is also capital-intensive, with significant differences among these companies in capital acquisition. As a more mature competitor, Tesla is creating profits and operating cash flow. Take, for example, Lucid (LCID), with a market value of only 9 billion dollars. From the perspective of operating cash flow, it is experiencing losses, with annual losses in the tens of billions of dollars.

In terms of high growth potential and reliable long-term capital acquisition, few electric vehicle stocks can compare to Rivian Automotive (RIVN). The stock’s price-to-sales ratio is 3.3 times. In comparison, Tesla’s price-to-sales ratio is 9.1 times, while Lucid’s price-to-sales ratio is 13.4 times. However, when you delve deeper, you will find more to appreciate.

In addition to a relatively attractive valuation, Rivian also enjoys the industry’s best customer loyalty. Despite having only a few models on the market, it has received the J.D. Power award for the most satisfying ownership experience and has been recognized as one of the most popular automotive brands by Consumer Reports. Approximately 86% of vehicle owners have stated that they would purchase a Rivian again.

In the past 12 months, Rivian has achieved approximately $5 billion in sales. The company still incurs a loss of $39,000 per vehicle produced, an improvement from the previous year’s $67,000 loss per vehicle. These losses reflect Rivian’s relatively smaller scale. The company delivers approximately 14,000 vehicles per quarter, whereas Tesla delivers nearly 400,000 vehicles per quarter.

Despite the current losses, Rivian’s growth potential is evident. With a range of more affordable models set to be released in 2025 and 2026, alongside ongoing fundraising efforts, Rivian appears to be an excellent electric vehicle stock for patient, growth-oriented investors.

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