(Source : Wall Street Journal )
The Best Electric Vehicle (EV) Stock to Invest in with $1,000 Today
Everyone aspires to identify the next Tesla (NASDAQ: TSLA). However, investing in the electric vehicle (EV) sector can be quite challenging. Numerous EV companies have declared bankruptcy over the years, making it tough to distinguish the promising from the unpromising. Fortunately, Tesla has laid down a clear blueprint for success. Presently, there’s one EV stock that appears remarkably appealing, but only one investment strategy stands a chance of succeeding.
This is how Tesla became a massive success
In 2006, Elon Musk, CEO of Tesla, unveiled “The Secret Tesla Motors Master Plan” to the public. His essay began, “As you know, the initial product of Tesla Motors is a high-performance electric sports car called the Tesla Roadster. However, some readers may not be aware of the fact that our long-term plan is to build a wide range of models, including affordably priced family cars.” Musk summarized Tesla’s master plan succinctly:
Today, Tesla stands as a monumental symbol of success when it comes to executing long-term visions. The Tesla Roadster proved successful, but with a price tag exceeding $100,000, its market was always limited. Tesla needed to demonstrate its manufacturing capabilities and prove to the public that EVs could be exciting and desirable. Leveraging this success, it went on to design, build, and deliver two additional models: the Model S and Model X. While still expensive, these models introduced Tesla to hundreds of thousands of new owners.
Tesla then capitalized on its reputation and access to capital to launch two new mass-market models, the Model 3 and Model Y. With considerably more affordable price points, these two models allowed Tesla to increase its revenue by more than 1,000% over the past decade.
TSLA Revenue (TTM) Chart
Tesla’s master plan has significantly boosted its valuation, with the company currently valued at around $800 billion. In contrast, another company is valued at just $11 billion—but it’s executing Tesla’s proven master plan flawlessly.
Rivian could be the next big EV stock
Among the companies following Tesla’s successful template, Rivian (NASDAQ: RIVN) stands out as particularly attractive. In 2018, Rivian unveiled its R1T and R1S models. Like Tesla’s earlier offerings, the R1T and R1S are ultra-luxury, high-quality vehicles with price points that can easily exceed $100,000 with certain options. Consumer feedback has been overwhelmingly positive; Consumer Reports has found that Rivian enjoys the highest customer satisfaction and loyalty levels among all auto manufacturers—electric or otherwise. Approximately 86% of Rivian owners indicated they would purchase another Rivian, with no other brand surpassing the 80% mark.
What will Rivian do with its newfound reputation and sales foundation? Precisely what Tesla did: build more affordable vehicles. Earlier this year, the company announced three new models: the R2, R3, and R3X, all expected to launch with starting prices below $50,000. Meeting this price point helped Tesla establish itself among millions of consumers, and if Rivian can successfully execute this strategy, it should thrive.
If Rivian can replicate Tesla’s success, why does its market cap hover just above $10 billion? First, its new models are not projected to hit the roads until 2026 at the earliest. Second, the necessary manufacturing facilities are still under construction. Third, rapid losses persist, as vehicle manufacturing is capital intensive. However, management anticipates reaching positive gross profits by the end of 2024. Lastly, Rivian competes in a market segment—electric vehicles—that has witnessed numerous bankruptcies over the years.
Clearly, the market is skeptical of Rivian’s plans, despite its adherence to a tested growth model and the demonstration of its ability to produce vehicles that customers love. Nonetheless, the next few years will be critical. If Rivian can execute effectively, it could become as recognizable as Tesla, potentially leading to a swift increase in its valuation.
While there are no assurances that the company will maintain affordable access to capital markets or enhance its manufacturing capabilities swiftly, it must effectively market its vehicles in a highly competitive industry. Yet, this uncertainty presents patient investors with a valuable entry point for Rivian stock at present. If you can remain patient, Rivian’s trajectory could eventually resemble Tesla’s.
Should you invest $1,000 in Rivian Automotive right now?
Before purchasing stock in Rivian Automotive, consider this: The Motley Fool Stock Advisor analyst team has just identified what they believe to be the 10 best stocks for investors to buy right now… and Rivian Automotive was not one of them. The 10 stocks that made the cut could yield significant returns in the coming years. For example, had you invested $1,000 in Nvidia when it made this list on April 15, 2005, you would have $743,952 today!*
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*Stock Advisor returns as of September 23, 2024. Ryan Vanzo has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.
The Ultimate Electric Vehicle (EV) Stock to Buy With $1,000 Right Now was originally published by The Motley Fool.
https://finance.yahoo.com/news/ultimate-electric-vehicle-ev-stock-223600688.html