Rivian vs. Lucid: Which EV Stock is the Better Bet?

Alright, let's dive into the world of electric vehicles (EVs) and compare two high-profile companies, Rivian (RIVN) and Lucid (LCID), to determine which one is the better long-term investment. Both companies have faced challenges in the past few years, but there are reasons to be optimistic about their future prospects.

First, let's take a look at Rivian. This Irvine, California-based company focuses on creating rugged, hip, and eco-friendly electric vehicles. Rivian currently offers two primary consumer vehicles: the R1T (a pickup truck) and the R1S (an electric SUV). By 2023, the company had produced over 57,000 electric vehicles and successfully delivered more than 50,000 of them. Rivian has raised significant funding from big names like Amazon (AMZN) and Ford (F), and it's been growing rapidly, with plans to produce 100,000 electric delivery vans for Amazon.

Rivian has also been working on a new vehicle "skateboard" platform that could support future vehicles or be adopted by other companies. In its first-quarter earnings report in May, Rivian announced a strategic shift by unveiling its new R2 model. This medium-sized, low-cost vehicle will start at $45,000, making it competitive with Tesla's (TSLA) Model Y and priced much lower than the R1. This move is an essential step towards a better cost-per-vehicle conversion and a good strategy for increasing its market reach in the face of fierce competition in this space.

Moreover, Rivian hopes that lowering its conversion cost per vehicle in the second half of 2024 should lead the company to finally report a net profit in the fourth quarter of 2024, which could prove to be a near-term catalyst for the stock. However, it is important to note that Rivian continues to face significant financial challenges, particularly its high cash burn rate. In the most recent quarter, Rivian reported nearly $6 billion in cash and equivalents, a significant decrease from the $11.7 billion reported in the same period the previous year. The $1.2 billion in revenues generated in the first quarter of the year, combined with a loss from operations of $1.48 billion, is not good. This is especially true when considering that the loss from operations did not evolve compared to the same period last year when Rivian lost $1.43 billion. Therefore, Rivian is still at a stage where it is growing revenues but has not yet managed to improve its operating losses, which raises a yellow flag.

Now, let's take a look at Lucid. This Newark, California-based company focuses on luxury electric sedans and SUVs. Lucid Motors has one main consumer vehicle, the Lucid Air, which the company sold 4,369 units of in 2023. As Lucid concentrates on producing high-priced models with superior technology, the company places a strong emphasis on quality. The first Lucid Air model (the top-of-the-line Lucid model) boasted an impressive range of 520 miles on a single charge, making it the longest-range EV rated by the Environmental Protection Agency (EPA). Lucid is also working on a new electric SUV model called the Lucid Gravity, which should be launched in December of this year and will be priced at less than $80,000. In addition to the Gravity SUV program, Lucid has also announced that it plans to introduce mid-sized vehicles that should begin production at the end of 2026, representing a significant step for it to expand its addressable market.

However, Lucid's financial performance has been less impressive than Rivian's. In the third quarter of 2023, Lucid had revenue of $200 million and net losses of $992 million, an increase from the $630 million loss in the year-ago quarter. Lucid delivered 2,781 vehicles in the third quarter, a nearly 91% increase from the same period in 2022. However, Lucid's production numbers were modest, with just 1,805 vehicles made, a 16% increase from the third quarter of 2022. Lucid's stock has fallen by about 92% over the past three years, reflecting investors' concerns about the company's production, sales, and financial performance.

In conclusion, while both Rivian and Lucid have faced challenges in the past few years, Rivian appears to be the better long-term investment. Rivian's focus on cost-cutting, revenue growth, and product innovation, along with its strategic partnerships, positions it favorably for the future. In contrast, Lucid's slower revenue growth, expanding losses, and frequent need for additional funding raise concerns about its long-term sustainability. However, it's essential to remember that the EV market is still in its early stages, and both companies have the potential to grow and succeed in the long run. As an investor, it's crucial to stay informed and make decisions based on the most up-to-date information and analysis.