TSLA's Legacy or RIVN's Promise: Which EV Story Holds Up Better Now?

Yahoo

5 hours ago

Tesla, Inc. TSLA and Rivian Automotive RIVN are two noted names in the electric vehicle (EV) space — one is an established giant, the other a young and ambitious startup.
Tesla changed the game years ago, creating massive wealth for early investors when EVs were still a niche bet. Back then, it was the clear frontrunner in a wide-open market. But times have changed. The EV landscape is now crowded, Tesla's sales are showing signs of weakness, and its once-dominant brand doesn't shine quite as brightly. The company still holds the title of the world's most valuable automaker—by a wide margin—but it's not without problems.
Rivian, meanwhile, is still in its early chapters. This California-based company has bold plans and solid products, but it's also deep in the red, grappling with losses and high cash burn, typical of most fast-growing startups.
Over the past six months, shares of Tesla have underperformed Rivian.
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With growing uncertainty around EV policy under Trump's presidency, the road ahead could be bumpy for both players.
So, between Tesla's legacy and Rivian's potential, which stock deserves your attention now? Let's take a closer look.
Tesla's position in the EV market isn't as untouchable as it once seemed. After reporting its first-ever annual delivery decline in 2024, the company entered 2025 on shaky ground. First-quarter deliveries fell 13% year over year, with steep drops in key regions like Europe and China. Lower volumes, paired with aggressive discounting, have also eaten into profits. Automotive margins slipped to 11.3% in the last reported quarter, down from 15.5% in the first quarter of 2024.
Tesla is no longer the only game in town. Legacy automakers are stepping up their EV offerings, while newer players continue to chip away at Tesla's lead. As a result, Tesla's U.S. EV market share has dropped below 50%, down from 63% in 2022. Simply put, it's the only major EV maker with real market share to lose.
CEO Elon Musk has already lowered growth expectations. After initially guiding for 20–30% vehicle delivery growth in 2025, Tesla has pulled back and hasn't even reaffirmed the modest growth outlook. With uncertainty around global tariffs and ongoing weakness in China, investors are still waiting for clarity on this year's targets.
That said, Tesla isn't without bright spots. Its Energy Generation and Storage division has quietly become its most profitable segment, with energy storage deployments growing at a staggering 180% CAGR over the past three years. In 2024, deployments jumped 113%, and they're expected to grow by at least 50% this year too. Tesla's charging business also holds promise, supported by its 65,000+ Supercharger connectors worldwide.
The biggest wild card is Tesla's upcoming robotaxi event, set for June 22. But with the company's history of delayed rollouts and bold promises, investors should keep expectations in check as challenges around safety, regulation and the complexity of full autonomy still loom large.
Take a look at how TSLA's earnings estimates have been revised over the past 90 days.
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Rivian's growth story has hit a few bumps lately. The EV startup delivered 8,640 vehicles in the first quarter of 2025, down sharply from 13,588 units in the same period last year. Citing macro uncertainty and the potential impact of tariffs, the company trimmed its 2025 delivery forecast to 40,000-46,000 units, down from its previous guidance and below the 51,579 vehicles it delivered in 2024.
Still, Rivian isn't backing down. The company is doubling down on its long-term vision, with a key focus on its upcoming R2 model—an affordable electric SUV priced at around $45,000 (much lower than the premium R1 lineup). Set for launch in 2026, the R2 is designed to broaden Rivian's appeal and significantly reduce its production costs. The company expects this new platform to bring major efficiency gains, lower fixed costs per unit, and speed up its path to profitability.
There are already signs of improvement. Rivian reported a positive gross margin of 17% in the latest quarter — just the second time it's managed that. Some of this came from its partnership with Volkswagen, which will help co-develop Rivian's next-gen software and electrical architecture, beginning with the R2.
Operationally, things are seemingly trending in the right direction. Thanks to engineering tweaks, supply chain improvements and lower input costs, Rivian's 2024 EBITDA loss narrowed by 29% to $2.7 billion. For 2025, the company expects losses to shrink further to $1.7–$1.9 billion.
That said, cash burn remains a real concern. Rivian's cash balance fell to $4.7 billion at the end of the last reported quarter, down from $5.3 billion. Capital spending is rising. The company now expects to spend up to $1.9 billion this year, which will likely put more pressure on near-term financials as it chases scale and prepares for the R2 rollout.
Take a look at how RIVN's earnings estimates have been revised over the past 90 days.
Image Source: Zacks Investment Research
At the moment, neither Tesla nor Rivian stands out as a strong buy. Both stocks carry a Zacks Rank #3 (Hold), reflecting near-term uncertainty and a mixed risk-reward setup. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Tesla continues to generate profits and has built strong infrastructure around energy storage and charging. However, its core EV business is slowing, growth targets are in question, and high expectations around self-driving tech may take longer to play out—if at all. Its valuation already prices in a lot of future success, making the risk-reward less compelling.
Rivian, on the other hand, is a higher-risk, higher-reward play. It's still far from profitability and burning through cash, but its upcoming R2 SUV could be a game-changer if the company executes well. Scaling up production and achieving positive cash flow will be critical and challenging.
For now, both stocks require patience. But if we had to pick one based on future potential and valuation reset, Rivian edges ahead. It's a speculative bet, yes, but one with significant upside if the R2 delivers on expectations.
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This article originally published on Zacks Investment Research (zacks.com).
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