From an operational standpoint, each Tesla(NASDAQ: TSLA) and Rivian(NASDAQ: RIVN) had choppy years in 2024. Nevertheless, Tesla’s stock skyrocketed higher, while Rivian saw its shares finish the 12 months much lower, down about 43%. A part of Tesla’s stock success last 12 months could be attributed to its late run following the election win from Donald Trump, as Tesla CEO Elon Musk was an enormous supporter of his and has turn into an advisor.
With the brand new 12 months upon us, nevertheless, let’s take a look at which stock might be set to outperform in 2025.
Similar to their stocks headed in several directions in 2024, so did their vehicle deliveries. Rivian delivered 51,579 vehicles in 2024, up from 3% in 2023, while Tesla delivered nearly 1.79 million vehicles, down from 1.81 million deliveries a 12 months ago.
Rivian’s delivery growth got here despite numerous issues through the 12 months that constrained production. Earlier within the 12 months, it shut down its manufacturing plant to implement a retooling upgrade, while late within the 12 months it bumped into component shortage issues. Tesla, meanwhile, saw its first-ever yearly decline in deliveries as the corporate faced stiffer competition and sales pressures in China and Europe.
Investors, nevertheless, brushed off Tesla’s tough 2024 with an eye fixed to the longer term. Many see the corporate’s biggest opportunity not in selling electric vehicles (EVs) but in its autonomous driving robotaxi ambitions. The corporate had an enormous cybercab event last 12 months, where it introduced a two-seat vehicle with no steering wheel or pedals. It said the vehicle would cost under $30,000 and that it plans to begin producing the vehicles before 2027. Nevertheless, the corporate has not gone into detail on the technology getting used, driving range, or safety features of the vehicles.
Tesla has not successfully been in a position to develop a totally autonomous driving automobile, and its vehicles using its Supervised Full Self-Driving (FSD) technology have been the topic of numerous high-profile accidents and investigations. Nevertheless, Musk has lobbied for the federal government to eliminate National Highway Traffic Safety Administration (NHTSA) automobile crash reporting requirements, which the Trump administration appears to support. Such a move could make it easier to get its fully autonomous driving technology approved, which could then smooth the way in which for its robotaxis.
Currently, only Waymo, owned by Alphabet, offers paid robotaxi rides within the U.S., but its technology is dearer than Tesla’s because of its use of lidar. Nevertheless, Tesla bought lidar sensors last 12 months, so whether or not it incorporates the technology to enhance performance continues to be to be seen. Nevertheless, if the corporate can develop an affordable autonomous robotaxi, it will have an enormous opportunity in front of it.
Rivian’s ambitions are much simpler than Tesla’s. First, the corporate is trying to turn into gross margin-positive, because it has been selling its vehicles for lower than the price to make them. The corporate upgraded the tooling in its factory to enhance line rates, in addition to reduced the fabric costs going into its vehicles. Its biggest achievement was switching to a recent zonal architecture, which significantly reduces the variety of electronic control units (ECUs) and wiring in its vehicles and thus lowers costs.
Its zonal architecture was also an enormous reason behind the massive investment and partnership the corporate formed with Volkswagen, which is able to get access to the technology for its own EVs. In return, Rivian is getting significant money payments, assuming certain milestones are met, which is able to help it ramp up the production of its recent R2 SUV. Rivian will look toward the inexpensive R2, expected to cost around $45,000, to present it an SUV that can have more mass appeal. The brand new SUV is anticipated to begin production in the primary half of 2026.
Image source: Getty Images.
Each Tesla and Rivian have potential catalysts in 2025. Any moves and announcements toward autonomous driving and robotaxis must be excellent news for Tesla stock. While its sales could proceed to languish overseas, I believe this might be the largest driver of the stock.
Rivian’s stock, meanwhile, should get a lift if it could get to positive gross margins and slowly improve them all year long. Because it cycles through its models built with its older technology and increases production now that its component shortage has been alleviated, this looks like a sensible goal.
In picking an investment between the 2, I’d go along with Rivian because the more speculative play. The stock was beaten down in 2024, and it should give you the chance to make progress on its gross margin goals while increasing deliveries as well. Tesla’s stock, meanwhile, already had an enormous run at the top of 2024, so it might not have as much upside on any positive news.
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Suzanne Frey, an executive at Alphabet, is a member of The Motley Idiot’s board of directors. Geoffrey Seiler has positions in Alphabet. The Motley Idiot has positions in and recommends Alphabet and Tesla. The Motley Idiot recommends Volkswagen Ag. The Motley Idiot has a disclosure policy.