Better EV Stock: Rivian vs. Tesla

Before Tesla (NASDAQ: TSLA), electric vehicles (EVs) were just something that hobbyists played with. Now, however, every major automaker and a significant number of EV-focused producers compete in the EV space.

This is the backdrop in which Rivian (NASDAQ: RIVN) is operating as it tries to ride Tesla's coattails, with a business focused on EV trucks. Is it a better choice today than Tesla?

Huge achievements have been made

Building an industrial business from the ground up is a massive feat. The cost of developing a working product and then building the manufacturing assets to mass produce it are huge. Doing this in the highly competitive and highly regulated world of cars is even more impressive, but that's exactly what Tesla did when it created an electric-vehicle business from scratch.

Image source: Getty Images.

Being the first to market has given the company a distinct advantage. It has a brand known the world over, the business is globally diversified, and it has produced a profit at the bottom of its income statement on a regular basis.

That said, Tesla isn't just a car company anymore, since it operates various businesses under the Tesla umbrella, including robots, solar power, and battery storage technology. If you're looking for a pure-play EV stock, you'll have to look elsewhere.

Then there's the not-insignificant issue of Tesla CEO Elon Musk. He is, to be polite, a polarizing figure. The stock often moves dramatically, based on Musk's comments and life decisions.

That's an idiosyncratic risk that more conservative investors might prefer to avoid. In fact, pushback against Musk's life decisions appears to be at least partly responsible for sales weakness at Tesla. Deliveries fell 13% year over year in the second quarter of 2025.

Rivian is an an earlier stage and less controversial

The big-picture truth is that Tesla has done some incredible things, and its stock price has rocketed higher over time. But now, it's a highly volatile investment that also happens to be facing business headwinds, some of which have been created by the CEO's non-Tesla endeavors. You'll likely need to have a high conviction in both Elon Musk and Tesla to step into the stock today.

This is why it's good that there are other options in the EV space. Rivian is an interesting alternative because it's still in the early stages of its development as a business. But it has reached some important milestones.

For example, it has an award-winning truck offering and has achieved material production scale. In addition, it has achieved a gross profit, a key step on the way to generating positive earnings.

Moreover, Rivian has several important partners. The list notably includes Amazon, which has long purchased the company's delivery vehicle, and Volkswagen, which is providing Rivian funding in exchange for access to its technology. With around $7 billion of cash on its balance sheet, Rivian likely has more-than-enough money to keep moving forward with its business plans.

The next big goal for Rivian, meanwhile, is right out of the Tesla playbook. First, Rivian introduced a high-end truck model and, next year, it's looking to bring out a version (the R2) meant for the mass market. The hope is that an expanded customer market will increase sales and allow the company to spread its costs over more vehicles. That, in turn, should push the company even closer to turning a sustained profit.

Which is the better EV option?

Both Tesla and Rivian come with material risk, so more conservative investors probably shouldn't buy either one. That said, if you're willing to take on some risk, Rivian could be on the cusp of an important upturn in its business prospects.

Given the support it has from some well-heeled partners, Rivian's chances of success seem more likely every quarter. The EV maker probably won't have the upside potential that Tesla once provided, but it likely has more long-term appeal than Tesla does right now.

Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon and Tesla. The Motley Fool has a disclosure policy.