When it comes to electric vehicles, Tesla leads the class. Over the years, other automakers have entered the electric vehicle space hoping to cash in on this industry, and many have. With this influx of competition, analysts predict the disappearance of Tesla’s grip on the electric vehicle market. However, these predictions have not yet come true.
The biggest Tesla competitor making waves right now is Rivian. Investors love the stock, but it is still working to increase its production capacity and has yet to turn a profit as a small company. But does that mean you should avoid Rivian stocks?
Here’s a direct comparison of these two companies to help you better understand where to invest your money.
Rivian’s Recent Earnings Report
Rivian (RIVN), a maker of electric pickup trucks, recently released its highly anticipated second quarter results.
The R1 model net backlog was approximately 98,000 vehicles from customers across the United States and Canada as of June 30, 2022. The average daily restocking rate in the second quarter of 2022 increased from the first.
Amazon’s first electric drive vehicle (EDV) order from Rivian was for 100,000 vehicles. Amazon announced the expansion of its bespoke electric vehicles to cities across the country in July 2022. Rivian’s collaboration is crucial to Amazon’s goal of achieving net zero carbon emissions by 2040.
Additionally, Rivian was able to perfect the features and layout of the EDV through close development cooperation involving Amazon and its delivery drivers. Rivian honed these features during an extensive series of test rollouts beginning in early 2021.
The total number of vehicles manufactured by Rivian in 2022 is approximately 8,000 at the end of the second quarter. Additionally, Rivian reiterated that the company is on track to meet its 2022 production projection of 25,000 net units manufactured.
Second quarter sales were $364 million. However, Rivian was not expected to be profitable in the second quarter of 2022 and disclosed an adjusted deficit of $1.62 per share. Rivian ended the second quarter of 2022 with over $15.4 billion in cash, cash equivalents and restricted cash.
Domination of Tesla Powerhouse EV
With a focus on sustainable energy solutions, Tesla is the world’s largest electric vehicle company. Elon Musk is the founder of Tesla, who started the company in 2003. Every automaker is targeting Tesla in the auto industry, which is hardly surprising given how quickly Tesla has become the poster child for the industry. electrification.
Analysts have previously argued that incumbent automakers will soon take Tesla’s electric vehicle market share and reduce its global supremacy. For many years, Tesla has dominated the electric vehicle industry in the United States. Still, analysts predict Tesla’s market dominance will decline as new EV competitors enter the U.S. market.
For now, the US electric vehicle market is still heavily dependent on Tesla. The automaker’s order rate has increased significantly in several parts of the United States due to the recent spike in gasoline prices. As a result, Tesla is ramping up production at its Fremont factory and launching operations at its Gigafactory in Texas. While some of the additional manufacturing is for export, Tesla still expects expansion in the United States.
New registration figures further reveal that Tesla continues to largely dominate the U.S. electric car market. In the first quarter of 2022, Tesla sold around 564,000 cars, while in the second quarter it sold around 254,695, significantly outpacing rivals like Rivian.
Tesla vs. Rivian: Sales and Revenue Trends
Rivian built 4,401 automobiles and delivered 4,467 during the second quarter of 2022, generating sales of $364 million. In the second quarter, Rivian also posted negative gross profit of $704 million due to high labor and overhead costs. These costs arise because Rivian manufactures low-level vehicles on production lines intended for higher volumes.
This dynamic will continue in the short term. Yet, as we saw earlier, the company expects to strengthen as production levels rise faster than future increases in labor prices and overhead.
An increase in overhead and labor expenses reduced gross profit by $301 million in the second quarter of 2022. Rivian expects these items to continue to negatively impact operating performance .
Throughout the quarter, inflationary pressures influenced the company’s cost of materials, which the company believes will continue to have an impact. Total operating expenses in the second half of 2022 increased to more than $1 billion from $580 million in the same period a year earlier.
Also in the second quarter of 2022, Rivian recorded non-cash stock-based compensation expense of $229 million and depreciation and amortization costs of $34 million in operating expenses.
Overall, investments in people, equipment and vehicle initiatives accounted for the majority of Rivian’s year-over-year increase in operating expenses in the second quarter of 2022 Research and development cost in the second quarter of 2022 totaled $543 million, up $394 million from the same period last year.
Due to these higher operating costs, Rivians’ total loss for the second quarter was more than $1.7 billion, compared to $580 million in the same period last year.
In the second quarter of 2022, Tesla had GAAP net income of $2.3 billion and non-GAAP net income of $2.6 billion. The company has also seen exciting achievements in some of its new factories.
Gigafactory Berlin-Brandenburg achieved a major milestone by producing more than 1,000 automobiles in a single week while maintaining positive gross profit in the quarter. Tesla delivered the first vehicles equipped with 4680 cells and rechargeable structural batteries to customers in the United States from its Austin plant.
To maximize production, Tesla continues to invest in expanding factory capacity. The company’s energy business also made significant progress in the second quarter, with increased volumes and superior unit economics leading to record gross profit. Additionally, consumer demand for Tesla’s storage items continues to outpace the manufacturing rate.
In the second quarter, the company’s total sales rose 42% year-on-year to $16.9 billion. Tesla’s operating profit grew year on year to nearly $2.5 billion in the second quarter, driving an operating margin of 14.6%.
Comparison of Rivian and Tesla balance sheets
Rivian’s total current assets were valued at approximately $15.7 billion in the second quarter of 2022, while its total non-current assets were $4.4 billion. In the second quarter, Rivian’s total current liabilities were $1.7 billion, while its total non-current liabilities were $1.4 billion. Total investor equity is $1.6 billion.
On the other hand, Tesla’s relatively short cash, cash equivalents and marketable securities at the end of the quarter increased $902 million sequentially to $18.9 billion in the second quarter. The increase was primarily due to free cash flow of $621 million, slightly offset by loan repayments of $402 million.
By the second quarter, Tesla had converted about 75% of its Bitcoin transactions to fiat cash. Conversions added $936 million to the balance sheet in the second quarter.
Rivian Automotive Inc. has a consensus price target of $50, with a high estimate of $83 and a low estimate of $27, according to the 15 analysts who provide 12-month price estimates. The median estimate is up +53.61% from the previous price of $32.55.
The 36 analysts who provide 12-month price projections for Tesla have a consensus target of $1,000, with a high figure of $1,580 and a low estimate of $250. The consensus estimate reflects a +12.36% increase from the previous price of $890.
Conclusion on Rivian and Tesla
The prevailing view among the 42 financial analysts surveyed is to buy Tesla stock. The company had maintained a stable buy rating due to Tesla’s outstanding performance in the first half of 2022, when it achieved higher sales and net profit.
Rivian, on the other hand, reported a net loss of $1.7 billion in the second quarter of 2022, compared to a loss of $580 million the previous year. These significant losses in the second quarter were mainly due to higher operational costs.
In short, Rivian is where Tesla was five to ten years ago. But only time will tell if Rivian’s future profitability and share price will perform similar to Tesla’s.
In order to profit from Rivian, Tesla and EV stocks, AI is the technology of choice, and Q.ai takes the guesswork out of investing.
Download Q.ai today to access AI-powered investment strategies. When you deposit $100, we add an additional $50 to your account.