Better EV Stock: Rivian vs. Nio

While electric vehicle (EV) continue to draw investor interest, they are no longer trading on hype alone. Instead, investors are picking stakes in companies that demonstrate growing demand, scaling production, improving margins, and limited dilution risk.

Two key contenders are U.S.-based Rivian Automotive (NASDAQ: RIVN) and China-based Nio (NYSE: NIO). Both EV companies offer solid products and offerings, but one of them seems better positioned for the next couple of years. Let's see which one.

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Rivian

Rivian is transforming from a premium EV player to a mass-market EV contender. Its upcoming R2 vehicle is designed as a midsize, five-seat mass-market SUV to compete in one of the most significant U.S. volume segments, most directly with Tesla's Model Y.

Management has highlighted a targeted starting price for the R2 of $45,000, below the U.S. average new vehicle price of just over $50,000, and it's slated for launch in the first half of 2026. This could significantly expand the company's addressable market. The company also expects the R2 to become gross-profit-positive on a per-vehicle basis by the end of 2026.

Rivian is also evolving into an automotive technology and software player. The multibillion-dollar joint venture with Volkswagen is expected to provide Rivian with $2.5 billion in capital over the next couple of years. In return, Rivian is licensing its software-defined vehicle architecture to a global automaker. This can eventually turn software and services into a significant, high-margin revenue stream for Rivian.

Rivian is already manufacturing and delivering vehicles at a significant scale. The company produced 42,284 vehicles and delivered 42,247 vehicles in 2025. The company also posted a positive consolidated gross profit of $24 million and a cash balance of $7.1 billion in the third quarter. Hence, the company has the financial flexibility to prepare for the R2 launch.

Nio

Nio is operating at a much larger scale than Rivian and delivered 326,028 vehicles in 2025. The company has also seen a strong start to 2026 with deliveries jumping 96.1% year over year to 27,182 vehicles in January 2026. Nio aims to grow deliveries by 40% to 50% in 2026, which translates into 456,000 to 489,000 vehicles. The scale can improve margins and demand, which is essential to survive in China's highly competitive EV market.

Nio is building a broad EV ecosystem to expand its presence in its primary Chinese market and international markets. This includes three distinct EV brands: the premium Nio, the mass-market Onvo line, and the entry-level Firefly vehicles. The company has also built a dense battery-swap network to earn battery-as-a-service revenue as its vehicle fleet grows. According to Astute Analytics, Nio dominates the global EV battery swapping market with over 2,300 battery-swapping stations worldwide.

Despite the impressive strategy, Nio faces challenges due to intense competition and policy shifts in China. Tesla, BYD, and many Chinese players are slashing prices to capture market share. The company's fixed costs are also high due to elevated research and development (R&D) spend, battery swap stations, and multibrand marketing.

The better pick: Rivian

While Rivian is smaller in scale than Nio, it could be a better pick in 2026. The R2 roadmap offers a clear path to top-line and bottom-line growth. Nio's progress is also real, but investors will have to see continuous volume and margin gains despite increasing difficulties in the Chinese market.

Manali Pradhan, CFA has no position in any of the stocks mentioned. The Motley Fool recommends BYD Company and Volkswagen Ag. The Motley Fool has a disclosure policy.