This 1 statistic shows why Rivian investors should remain bullish

Electric vehicle stocks have had a rough year. Rivian (RIVN 2.87%) shares, for example, are down 40% since the start of 2024. adzeMeanwhile, the stock price fell more than 10%, wiping out about $70 billion in value.

There are several reasons for the decline in ratings. But if you’re still bullish on EV stocks over the long term, there’s one statistic you should know about. That’s perhaps the biggest reason why investors shouldn’t give up on EV stocks just yet.

That’s why EV stocks have struggled this year

Before we understand why it’s reasonable to remain very bullish on EV stocks like Rivian, it’s important to look at why these companies have struggled so far this year. The biggest problem was the gap between reality and expectations. Consumer data company JD Power, for example, was forced to cut its 2024 electric vehicle sales forecast just a few months into the year. A few months later, it again lowered its sales growth estimates.

“EV adoption is growing, but at a slower pace,” noted a JD Power representative. Digging deeper into the numbers, however, paints a more troubling picture. Tesla actually posted negative quarterly sales growth earlier this year, while Rivian’s growth rates have collapsed rapidly and are now approaching 0%. That’s a tough pill to swallow for stocks that were priced between five and 10 times sales at the start of the year.

Therefore, share price weakness for EV stocks was simply the reconciliation between high expectations and a weaker-than-expected reality for sales growth. But now that valuations have fallen sharply — Rivian, for example, now trades at 2.5 times sales — there are a few reasons why investors shouldn’t give up on EV stock just yet.

TSLA revenue data (quarterly annualized growth) by YCharts

These figures suggest that huge growth is still ahead

There is one important statistic that should keep EV investors optimistic. But before we dive into that, there are a few other numbers that suggest Rivian, in particular, is set for a bright future in the coming years. In a recent research report, JD Power Vice President Elizabeth Krear pointed out that recent weak sales growth masks an upward trend in certain electric vehicle categories. “While retail sales in the premium segment fell 13 percent — driven by Tesla’s 22 percent drop — the mass market segment grew 63 percent,” she pointed out. “This is primarily due to increased product availability, as the percentage of mainstream buyers who have viable electric vehicle alternatives increased to 56 percent from 38 percent in January.”

Therefore, in just six months, the percentage of vehicle buyers who can afford an electric vehicle has increased dramatically. But these buyers are in the mid-price mass market category. This is a segment of the market that hasn’t seen many affordable options. But that’s changing fast. In 2024 alone, the average price of a compact electric SUV has dropped by about $10,000. “As availability and affordability continue to improve in the mass market segment,” Krear said, “EVs will attract more mainstream buyers.”

For its part, Rivian is well positioned. In the next 24 months, it expects to launch three new mass-market vehicles: the R2, R3 and R3X. All of these vehicles are expected to debut at $50,000 or less, giving Rivian access to the largest and fastest growing electric vehicle market.

Over the long term, EV sales growth should continue to impress, even if there are occasional down years like 2024. That’s because of this important statistic: Only one in 10 new vehicle registrations in the U.S. is in present for an electric vehicle. Compare that to China, where one in three registrations is for an EV, or even Europe, where the figure is one in five.

Although the rate of growth may be erratic, there is no doubt that electric vehicles will continue to be adopted in the next few years. With high-end brand loyalty and a slew of new mass-market vehicles expected to hit the market soon, long-term investors in Rivian have plenty of reason to remain bullish.