Tesla (TSLA) is one of the biggest electric vehicle providers on the market, but for competitors Lucid Group (LCID) and Rivian Automotive (RIVN), things currently look a little more hopeful. The data for this year confirms that the valuation of electric vehicle stocks is sure to rise for 2022, and where Tesla goes, others may follow.
Tesla (TSLA) blew fourth-quarter expectations for 2021 on the S&P 500, with share prices climbing over 14% in a day. As it stands, Tesla is now the fifth-largest company in the U.S., far outpacing other companies in the electric vehicle space.
Tesla (TSLA) as a marker of the continuing growth of the electric vehicle industry is impressive, but is it a sign of the growing success of the electric vehicle market, or is Tesla (TSLA) an outlier? What about two of Tesla’s direct competitors? Can Lucid (LCID) and Rivian (RIVN) hope to share in this success?
Lucid (LCID) and Rivian (RIVN)
Lucid Group (LCID) and Rivian Automotive (RIVN) are the two chief competitors to Tesla in the electric vehicle space, but they're also very much going against one gigantic competitor. Lucid Motors has a market cap of $74 Billion, and Rivian Automotive is also $74Billion. Tesla (TSLA) blows them out of the water with over a $1.2 trillion market cap.
Their release of new vehicles has fueled these smaller companies and their initial valuations. Lucid’s focus on high-end luxury vehicles runs counter to Rivian’s emphasis on trucks and SUVs, but as electric vehicles are a growing industry, this diversification carries promise. Another potential shot in the arm for Lucid is that their CEO Peter Rawlinson is a former chief engineer for Tesla.
Tesla (TSLA) Remains Dominant
The biggest challenge in Lucid and Rivian meeting Tesla’s valuation is in Tesla’s head start. Despite some bad press, production continues to boom for the largest EV manufacturer on the planet. In fact, in their Q4 of 2021, they delivered 308,600 electric cars, which is more than the previous record set in Q3 of 2020.
It is critical to acknowledge Tesla’s growth and success are stunning and far outpacing any competitors in the EV industry. However, that success has also opened up the EV industry as a whole to where niche competitors can potentially grow and thrive. The question remains, given the incredible success of Telsa, what about Lucid and Rivian’s own smaller operations has an appeal to investors?
So, can LCID and RIVN reach TSLA valuations?
While Lucid (LCID) and Rivian (RIVN) are not likely to achieve the valuation of their biggest competitor Telsa (TSLA) any time soon, that does not mean that they are poor investments. Indeed, with Tesla having opened up the electric vehicle market at scale, it has given smaller manufacturers a chance at significant growth.
As Lucid Group and Rivian Automotive continue to expand and increase their production of electric vehicles, the chances of their valuation climbing are high. Investors are more bullish on the EV industry overall, primarily driven by the success of Tesla. This success means that Lucid and Rivian have a chance of riding that overall swell to far greater valuations over time.
Not necessarily as high as Tesla, but then again, not every company is Tesla.