Everyone wants to find the next one Tesla (NASDAQ: TSLA ). But investing in an electric vehicle (EV) is difficult. Many EV companies have gone bankrupt over the years, and it’s hard to separate the good from the bad.
Fortunately, Tesla established a clear template for success. Now, there is one EV share It looks very attractive. But only one investment strategy is likely to succeed.
This is how Tesla became a huge success
In 2006, Tesla CEO Elon Musk released “The Secret Tesla Motors Master Plan” to the public. “As you know, Tesla Motors’ initial product was a high-performance electric sports car called the Tesla Roadster,” his essay began. “However, few readers are aware that our long-term plan is to develop a range of models, including affordable family cars.”
Musk summarized the master plan for Tesla:
Today, Tesla is the greatest symbol of success when it comes to executing long-term visions. The Tesla Roadster was a success, but given its $100,000-plus price point, its market was always small.
Tesla needs to prove its manufacturing chops and show people that EVs can be cool and exciting. It used this success to design, develop and deliver two new models: the Model S and the Model X. These models were still expensive, but introduced Tesla to hundreds of thousands of new owners.
Tesla used its reputation and access to capital to launch two new mass-market models, the Model 3 and the Model Y. Both of these models, along with very affordable price points, allowed Tesla to expand its growth. revenue More than 1,000% in the last decade.
Tesla’s master plan has done wonders for its valuation. The company is currently valued at $800 billion. Another company, meanwhile, is worth just $11 billion — and yet it’s executing Tesla’s proven master plan.
Rivian could be the next big EV stock
Few EV companies look attractive when it comes to following Tesla’s template for success Rivian (NASDAQ: RIVN ).
In 2018, Rivian announced the introduction of its R1T and R1S models. Like Tesla’s previous models, the R1T and R1S were ultra-luxury, high-end, no-compromise vehicles with price points that easily exceeded $100,000 with few options. Consumer feedback has been fantastic. Consumer Reports reports that the Rivian has the highest customer satisfaction and loyalty levels of any automaker — electric or otherwise. About 86% of Rivian owners said they would buy another Rivian. No other brand scores more than 80%.
What will Rivian do with its new reputation and sales platform? What Tesla did right: Build cars that were very affordable. Earlier this year, the company unveiled three new models: the R2, R3 and R3X. All are expected to debut with starting prices under $50,000. Meeting this price point helped put Tesla on the map for millions of people. If Rivian can be implemented, it should prove very successful.
If Rivian can replicate Tesla’s success, why does it have a market cap of over $10 billion? First, its new models aren’t expected to hit the road until 2026. Secondly, the necessary production facilities are not yet complete. Third, the company is losing money at an even faster clip because of the capital intensive nature of auto manufacturing. However, management expects to reach positive gross profit by the end of 2024. Finally, Rivian is trying to compete in a market segment — electric vehicles — that has seen several bankruptcies over the years.
It’s clear that the market is skeptical of Rivian’s plans, even if it is executed on a proven model for development that has proven its ability to produce vehicles that customers want. However, the next few years will be crucial. The Rivian will likely become a household name like Tesla, resulting in a rapid expansion in its valuation.
There can be no assurance that the Company will maintain its ability to affordably tap the capital markets or rapidly acquire its manufacturing capabilities. It has to market its vehicles in a highly competitive industry. Yet it’s this uncertainty that gives patient investors a profitable entry point into Rivian stock right now. If you can be patient, Rivian’s rise will eventually mirror Tesla’s.
Should you invest $1,000 in Rivian Automotive now?
Before buying shares in Rivian Automotive, consider this:
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Ryan Wanzo No position in any of the shares mentioned. The Motley Fool has and recommends positions on Tesla. A motley fool Disclosure Policy.
The ultimate electric vehicle (EV) stock can now be purchased with $1,000 Originally Posted by The Motley Fool
2024-09-29 04:06:00