Despite some recent headwinds, there are still plenty of reasons to be optimistic about electric vehicle stocks. For one, sales of EVs are making gains. Last year, a record 1.3 million EVs were sold in the U.S., up 7% from the previous year.
Not everyone will want to buy one, of course. But when you're shopping for a new vehicle, the more options, the better, and EVs give consumers a unique option that many have never tried before. But which companies will benefit as EVs continue to gain more market share?
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Let's compare the automaker Rivian (NASDAQ: RIVN) and EV battery company QuantumScape (NYSE: QS) to find out.
Image source: Getty Images.
What's happening with Rivian
Rivian has made a name for itself in its short history, producing rugged EVs that have earned it a top-rating from Consumer Reports in owner satisfaction. The company's R1T pickup truck and R1S are its core products, along with a delivery van it sells to Amazon and other commercial customers.
However, the company is currently expanding its lineup. It's taking pre-orders for a smaller SUV, the R2, which will begin deliveries in early 2026. A smaller crossover R3 model will follow closely behind. Smaller and cheaper models will allow Rivian to broaden its customer base. To help fund the expansion, Rivian is using some of the funds from a recent partnership with Volkswagen. The joint venture could be worth up to $5.8 billion for Rivian in cash and loans.
However, not everything has gone smoothly for Rivian. Vehicle production for this year is expected to be flat compared to last year, per Rivian's management, and the company lost $1.1 billion in the most recent quarter. On the plus side, Rivian's losses are narrowing, thanks to some reengineering of its production last year. It's also on track to post its first-ever positive gross profit when it reports fourth-quarter results later this month.
With several new vehicles in the pipeline, narrowing losses, a new joint venture, and the company about to report its first positive gross profit, Rivian is on the right track. I think patient investors could be rewarded with this stock, but short-term volatility is to be expected.
What's happening with QuantumScape
QuantumScape makes advanced lithium metal batteries that have the potential to outperform current EV batteries. The company's solid-state batteries charge faster, are less volatile, and can improve EV range over current battery options.
The company recently sent out samples of its latest battery, the QSE-5, to potential customers and is hoping to spur interest in the model. However, it's important to emphasize that these are potential customers. To date, QuantumScape hasn't generated any revenue from sales of its batteries.
That's not to say its technology isn't promising. Volkswagen's battery manufacturing subsidiary, PowerCo, is working with QuantumScape and could eventually mass-produce its batteries in the future. The collaboration between the companies could eventually bring in royalties for QuantumScape, as well as a $130 million payment.
The good news is that QuantumScape's management says it has enough cash runway to keep its business going into 2028. But the bad news is that it's not generating any sales right now, and it could still be a while before it does.
While its battery advancements are intriguing, I don't think investors are missing out on much by waiting on the sidelines of this stock. When battery sales begin, investors will get a clearer picture of how much demand there is for its batteries (or not). Until then, putting any money toward QuantumScape is just pure speculation.
Rivian for the win
Rivian is already selling its product to customers, has new products in the pipeline, and is on its way to gross profitability. That's far more than QuantumScape can say right now. For those reasons, I think Rivian is the better EV stock to buy.
Just keep in mind that putting any money toward most EV stocks right now is a leap of faith. It could take some time for EVs to gain more mainstream acceptance, and the current political climate isn't exactly hospitable toward electric vehicles.
Should you invest $1,000 in Rivian Automotive right now?
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Chris Neiger has positions in Rivian Automotive. The Motley Fool has positions in and recommends Amazon. The Motley Fool recommends Volkswagen Ag. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
