Investing in the electric vehicle (EV) sector has proven to be a profitable endeavor for those who possess the right insights and timing. For example, if you had invested $1,000 in Tesla (NASDAQ: TSLA) at the time of its initial public offering in June 2010, your investment would be worth over $156,000 today. As a result, many investors are now on the hunt for the next major player in the EV market that can replicate or exceed Tesla’s success.
Despite its peak market valuation of $850 billion, many believe Tesla still offers significant opportunities for investors. One key reason is that its stock is currently trading at relatively lower prices compared to previous years. This decline comes as the company faced a drop in revenue growth earlier this year, resulting in a decrease in its price-to-sales (P/S) ratio from the mid-20s to below 10. Although this may still seem high, it marks a notable dip relative to historical values.
Interestingly, Tesla’s past has shown that severe dips in revenue growth can be followed by remarkable recoveries, particularly after introducing new models such as the Model 3 and Model Y, which have previously led to spikes in sales. However, one significant challenge currently facing Tesla is the stagnation in electric vehicle deliveries, a trend that has persisted since early 2023. Looking ahead, though, there are expectations for a turnaround, especially with the anticipated “robotaxi event,” where CEO Elon Musk is likely to emphasize the company’s ambitions in self-driving vehicles and artificial intelligence.
While Tesla remains a compelling option, those looking for the next “big thing” in the industry might want to consider Rivian Automotive (NASDAQ: RIVN). Rivian presents a different narrative with enormous growth potential. Earlier this year, the company reported staggering revenue growth rates exceeding 80% year-over-year, even as Tesla’s revenue began to shrink. Rivian’s growth has recently leveled off amid industry challenges, but the company continues to innovate, with three new models—the R2, R3, and R3X—set to hit the market by 2026, all priced under $50,000. This price point is critically important for attracting a wider customer base.
Despite the recent slowdown in overall EV sales, projections indicate a growing market, with expectations that passenger EV sales could surpass 30 million by 2027 and reach 73 million annually by 2040. Rivian’s entry into this market with well-priced vehicles suggests a promising future ahead, given its current market capitalization of only $11 billion and a P/S ratio of around 2.1, significantly lower than Tesla’s 8.8.
Investing in Rivian may come with certain risks, especially regarding the volatility as the company scales its manufacturing capabilities and markets its new models. However, for investors focusing on long-term growth potential, Rivian has many attributes to recommend it as a candidate for the next revolutionary EV stock.
Before committing any capital to Tesla or Rivian, it is wise to evaluate various opportunities within the market. The Motley Fool’s analysts have identified a selection of promising stocks that could deliver substantial returns, with several outperforming even Tesla. Investing wisely involves doing your homework and keeping an open mind about various companies entering this exciting and rapidly evolving industry.
Ultimately, whether investing in established giants like Tesla or emerging players like Rivian, the electric vehicle landscape promises intriguing opportunities for growth. By biding your time and choosing wisely, you may just find the stock that could be the next success story in the electric vehicle revolution.