HomeBusinessRivian Automotive vs. Nikola Corporation

Rivian Automotive vs. Nikola Corporation

Rivaans (NASDAQ: RIVN) And Nikola (NASDAQ:NKLA) were once two of the hottest electric car stocks on the market. Rivian went public in November 2021, rising from its IPO price of $78 to an all-time high of $172.01 a week later. Nikola went public by merging with a special purpose acquisition company (SPAC) in June 2020, and shares of the combined company opened at $37.55 on its first day of trading before more than doubling a week later to all-time high of $79.73.

But today, Rivian shares trade at about $9 and Nikola shares are worth less than $1. Nikola even recently proposed a reverse stock split to raise its share price above the $1 threshold and thus avoid the risk of the stock being delisted.

Rivian's factory in Normal, Illinois.

Image source: Rivian.

Both EV companies ran out of energy after missing their original production targets, incurring huge losses and wasting huge amounts of money. But could any of these unloved EV makers recover in the coming years?

The differences between Rivian and Nikola

Rivian is currently selling the R1T pickup, the R1S SUV and a custom electric van for its top investor Amazon (NASDAQ: AMZN). It plans to begin mass production of its lower-end R2 SUVs in late 2026 and then roll out its sportier R3 and R3X SUVs in late 2026 or early 2027. It must supply 100,000 electric vans to Amazon by 2030.

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Nikola produces battery-powered and hydrogen-powered electric semi-trucks. Initially it only sold battery-powered trucks (BEVs), but last year it rolled out its first hydrogen fuel cell trucks (FCEVs). It is also building a network of hydrogen charging stations through a partnership with EV charging infrastructure company Voltera.

Rivian initially attracted a lot of attention because it was backed by Amazon Ford. Ford subsequently liquidated most of its stake in Rivian, but Amazon remains the largest lender.

Nikola was not backed by comparable tech or auto giants and suffered shocking setbacks after its public debut. Its founder and former CEO Trevor Milton was convicted of securities and bank fraud in October 2022, and last year it temporarily suspended BEV sales after several of its trucks caught fire. To boost its liquidity, the company diluted its shareholders last year by roughly doubling the number of shares so it could raise more money through secondary stock issuances. Rivian struggled with a few safety-related recalls, but didn’t face as many existential problems as Nikola.

Which EV manufacturer produces more vehicles?

When Rivian went public, it predicted it would produce 50,000 vehicles by 2022. But it ultimately cut that forecast in half to 25,000 vehicles as it faced supply chain constraints, producing only 24,337 vehicles for the year.

In 2023, Rivian overcame its supply chain issues and produced 57,232 vehicles. That acceleration was partly driven by the proprietary Enduro drive unit, which reduced production costs and dependence on third-party components. But in 2024, the company expects to produce only about 57,000 vehicles as it faces macro headwinds, stiff competition from other EV makers and a closure of its main plant in Illinois for “several weeks” to streamline production and introduce new integrate technologies.

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Analysts expect Rivian’s revenue to rise 11% to $4.9 billion in 2024 as Rivian narrows its net loss to $4.6 billion from $5.4 billion. It will remain unprofitable for the foreseeable future, but aims to achieve a positive gross margin in the fourth quarter of this year. At the end of 2023, the country still had almost $10.5 billion in total liquidity, and its reasonable debt-to-equity ratio of 0.8 gives it plenty of room to raise fresh money.

Before Nikola went public, it said it could deliver 600 BEVs in 2021, 1,200 BEVs in 2022 and 3,500 BEVs in 2023. It also planned to deliver 2,000 FCEVs in 2023. But in reality, Nikola didn’t deliver any in 2021 single vehicle. and delivered only 131 BEVs in 2022. In 2023, it delivered just 114 trucks – 35 of which were FCEVs.

For 2024, analysts expect Nikola’s revenue to more than quadruple to $170 million as it cuts its net loss from $966 million to $470 million. However, to achieve that goal, the company must significantly increase its deliveries. That could be a challenge, considering it ended 2023 with just $465 million in unrestricted cash. However, the debt-to-equity ratio of 0.8 (which was lowered by doubling the number of shares) could give the country some room to raise new money through new debt issues.

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The clear winner: Rivian

Both EV stocks look cheap: Rivian and Nikola trade at just two and six times this year’s sales, respectively. However, Rivian’s higher production numbers, clearer roadmap for the future and stronger balance sheet all make Rivian a much better buy than Nikola, which has repeatedly disappointed its investors with its anemic production numbers and quality control issues. Amazon’s decision to stick with Rivian while other investors fled also suggests that downside potential is limited.

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Leo Sun has positions in Amazon. The Motley Fool has positions in and recommends Amazon. The Motley Fool has a disclosure policy.

Better EV Stock: Rivian Automotive vs. Nikola Corporation was originally published by The Motley Fool

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