EV Stocks Winners and Losers: RIVN Thrives While LCID Dives

Stock Market

Sometimes it makes sense for investors to try and identify good stocks in a sector instead of making a big bet on an overarching trend. Case in point? The electric vehicle market.

Rivian (NASDAQ:RIVN), a maker of electric trucks that has the backing of Amazon (NASDAQ:AMZN), pleased investors late Tuesday by saying in its third quarter shareholder letter that it was planning to boost production. Revenue more than doubled from a year ago as well, topping forecasts. Shares of Rivian are down about 4% in midday trading, but the stock is still up about 25% over the past six months. 

It’s a much gloomier picture for Lucid (NASDAQ:LCID), the manufacturer of the luxury electric Air sedan. Lucid slashed its production outlook for this year from 10,000 vehicles to just 8,000 to 8,500. The company said it was doing so to “prudently align” with expected deliveries. Sales plummeted nearly 30% in the third quarter compared to a year ago, missing Wall Street’s consensus targets by a wide margin. Lucid shares tumbled nearly 9% Wednesday and have now plunged almost 50% since early May.

It seems that Rivian is doing a much better job of keeping costs in check… even as its ramps up production. The company said it was lowering its budget for capital expenditures in 2023 and forecast a smaller loss than previously expected. Wall Street loves that.

Rivian, Lucid Face Tough Electric Market

The EV market is a tough one for investors win in right now. Tesla (NASDAQ:TSLA) remains the undisputed leader in the U.S. EV industry, in both cars and charging networks. Just ask investors in struggling ChargePoint (NYSE:CHPT). But some rivals — pure-play EV makers like Rivian as well as traditional auto companies such as Volkswagen (OTCMKTS:VWAGY)— are starting to catch up. There are challenges for EV companies in China as well. That has hurt companies like Nio (NYSE:NIO) and has led Tesla, Lucid, Nio and others to cut prices on some of their vehicles to try and spur demand. Consumers love a price war. Investors do not.

Still, investors would be wise to focus on the long ­term.

Electric vehicles aren’t going away. Companies like Tesla and Rivian (thanks to its Amazon ties) should continue to benefit as more consumers and businesses shift away from traditional gas guzzlers.

“There has been a lot of noise and a lot of dialogue recently around EV adoption, and I want to emphatically state just how deeply convicted we are that the entire automotive industry will be transitioning to electric over the next one to two decades,” said Rivian CEO RJ Scaringe during a conference call with analysts Tuesday. 

The Bottom Line on EV Stocks Now

If Scaringe is right that an even bigger adoption of EVs is in the cards, then companies like Rivian should be able to win a decent chunk of market share. Sure, the company must contend with Elon Musk. But having Amazon, an even larger company than Tesla, as an investor and customer should help Rivian continue to generate strong revenue gains and boost its stock over the long haul.

So, investors should probably steer clear of Lucid, despite backing from Saudi Arabia’s Public Investment Fund, since the company is showing no signs of a turnaround in sales. Rivian, which has the potential to become a bigger player in EVs (particularly with delivery vans for large corporate customers), looks like the better stock to buy right now. 

As of this writing, Paul R. La Monica did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Paul R. La Monica is a veteran financial journalist with nearly 30 years experience (including more than 20 at CNN) covering the stock market and other asset classes, the economy and other corporate and business news.

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