Better Electric Car Stocks : Rivian Automotive Versus Nikola Inc.

Rivian (NASDAQ Resonance Symbol: RIVN)respond in singingNikola (NASDAQ: NKLA)Once two of the hottest electric car stocks on the market, Rivian went public in November 2021 and saw its IPO price soar from $78 to an all-time high of $172.01 a week later, while Nikola went public in June 2020 as the name of a Special Purpose Acquisition Company (SPAC), which opened at $37.55 on its first trading day and more than doubled to an all-time high of $79.73 a week later. A week later, it more than doubled to an all-time high of $79.73.

But today, Rivian's stock is trading at about $9, while Nikolai's shares are worth less than $1. Nikolai even recently proposed a stock split for Antibria to get its stock price over the $1 threshold to avoid the risk of having the stock delisted.

Both of these EV companies have failed to meet their initial production targets, have suffered heavy losses, and have been depleted of cash. But can these two underappreciated electric car makers recover in the coming years?

The difference between Rivian and Nikolai.

Rivian currently sells the R1T pickup truck, the R1S SUV, and for its top investors, the R1S SUV.Amazon (NASDAQ: AMZN)Customized electric delivery trucks. The company plans to begin mass production of the low-ambient R2 SUV in late 2026, followed by the sporty R3 and R3X SUVs in late 2026 or early 2027. by 2030, the company will need to deliver 100,000 electric delivery vans from Amazon.

Nikola produces battery-powered and hydrogen-powered electric semi-trailers. It initially sold only battery-operated electric trucks (BEVs), but last year introduced its first hydrogen fuel cell trucks (FCEVs). It has also established a network of hydrogen charging stations through a partnership with electric vehicle charging infrastructure company Voltera.

Rivian initially attracted a lot of attention because it was supported by the likes of Amazon andFord (name)The backing of Ford. Ford later liquidated most of its stake in Rivian, but Amazon remains its biggest backer.

Nikola is not backed by any comparable tech or auto giants and has suffered a shocking post-IPO setback. Founder and former chief executive Trevor Milton was convicted of securities and wire fraud in October 2022, and the company temporarily suspended BEV sales last year after several of its trucks caught fire. In an effort to increase liquidity, the company diluted its shareholders' shares last year, roughly doubling the number of shares in order to raise more cash through a secondary stock offering.Rivian has also suffered a few safety-related calls, but it hasn't had as many survival issues as Nikolai.

Which electric car manufacturer produces more cars?

When Rivian went public, it predicted that it would produce 50,000 cars by 2022. But due to supply chain constraints, it ended up cutting that in half to 25,000 for a full year of 24,337 vehicles.

In 2023, Rivian overcame supply chain issues and produced 57,232 vehicles. This acceleration is due in part to its self-developed Enduro microdrive device, which reduces production costs and reliance on third-party parts. But in 2024, Rivian expects to produce only about 57,000 vehicles as it grapples with macro headwinds, stiff competition from other EV makers, and the shutdown of its main Illinois plant for "a few weeks" to streamline production and nameplate new technologies.

Analysts expect Rivian's revenues to grow 11% to $4.9 billion in 2024, and net loss to fall from $5.4 billion to $4.6 billion. The company will remain unprofitable for the foreseeable future, but it aims to achieve positive gross margins in the fourth quarter of this year. By the end of 2023, the company's total liquidity will still be nearly $10.5 billion, and its 0.8 carry ratio gives it plenty of room to raise new cash.

Before its launch, Nikola said it could deliver 600 BEVs in 2021, 1,200 BEVs in 2022, and 3,500 BEVs in 2023, and it planned to deliver 2,000 FCEVs in 2023.But in reality, Nikola did not deliver a single vehicle in 2021, and only 131 BEVs in 2022.In 2023, it only delivered 114 trucks, of which 35 were FCEVs. In 2023, it delivered only 114 trucks, 35 of which were FCEVs.

Analysts expect Nicola's revenues to more than quadruple to $170 million and its net loss to fall from $966 million to $470 million in 2024, but it will need to dramatically increase deliveries to achieve this. This could be a challenge considering the company only has $465 million in unrestricted cash at the end of 2023. However, its 0.8 gearing ratio, which has been reduced by doubling the number of shares, may give it some room to raise new cash by issuing new debt.

The clear winner, Rivian.

Both electric car stocks look cheap: Rivian and Nikola are trading at just two and six times this year's sales, respectively. However, Rivian's higher production rates, clearer roadmap for the future, and stronger balance sheet make it a better buy than Nikola, which has repeatedly disappointed investors with low production rates and quality control issues. Amazon's decision to hold on to Rivian while other investors fled suggests the company's downside potential is limited.

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John Mackey, former chief executive officer of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors.Leo Sun owns shares of Amazon.The Motley Fool owns shares of Amazon.The Motley Fool recommends Amazon.The Motley Fool has a disclosure policy.

Better Electric Car Stocks: Rivian Automotive Versus Nikola Corporation was originally published by The Motley Fool.