The best EV stock to invest $1,000 in right now

It’s not easy being in the electric vehicle (EV) market right now. Sales so far in 2024 have missed expectations, with some manufacturers withdrawing plans to expand their electric vehicle lineups. But if you’re a long-term investor, now could be your best chance in years to put some money to work. Of all the EV stocks, one in particular has my eye right now.

The EV train crashed

A few years ago, the market couldn’t get enough of EV stocks. adze Stocks, for example, were testing new highs while both Lucid Motors and Rivian Automotive (RIVN 1.88%) they were making public in great anger. Since those highs, however, ratings have fallen sharply. The price-to-sales ratio for Tesla has compressed by almost a third. Lucid and Rivian, meanwhile, have seen their valuation ratios drop by 90% or more, though that collapse is partly due to a sizable jump in sales since both companies went public.

The problem is clearly industry-wide. But despite a brief period of sales decline for Tesla earlier this year, most manufacturers have continued to see rapid sales growth throughout this period. So what is the problem?

It’s a classic problem of reality versus expectations. “Electric vehicle (EV) sales momentum is slowing globally, and hybrids (HEVs) and plug-in hybrids (PHEVs) are proving more competitive than originally thought,” concludes a recent research report from Goldman Sachs. The report specifically blames limited charging networks, high interest rates and capital costs, and uncertainty around government subsidies for slowing growth rates.

Rivian’s declining sales growth paints this picture well. A year ago, quarterly sales growth exceeded 100%. However, in its most recent quarter, sales growth was just 3.3%. Sluggish growth has crushed the entire industry, much of which traded at premium valuations.

But if you’re just looking to get into EV stocks, now might be the best opportunity in years.

TSLA data by YCharts

Now seems like the time to bet on Rivian

Although the market conditions are not as favorable at the moment, this could be an excellent opportunity for long-term investors. As Goldman Sachs research shows, massive growth is still expected after growth slows in 2024. “Despite the current slowdown in EVs,” its research concludes, “our baseline scenario still sees EV sales volume increasing by 21% year-on-year in 2024″. And looking even further, electric vehicle sales will eventually overtake conventional vehicle sales within the next decade.

Why, then, has Rivian’s sales growth fallen to just 3.3%? Because it does not have the necessary models to reach the mass market category. In the long term, this mid-budget vehicle category will fuel most of the industry’s growth. And right now, Rivian did zero models that are considered mass markets. But that’s about to change.

Earlier this year, the company announced three new models that will debut under $50,000: the R2, R3, and R3X. Data from Consumer Reports suggests that Rivian has one of the highest perceived quality and loyalty rates in the industry, even when including non-EV brands. So when the new Rivian models hit the market in 2025 and 2026, it’s reasonable to expect rapid uptake, similar to what Tesla was able to do with the Model 3 when it instantly became the best-selling plug-in electric car in world for three consecutive years. .

Image source: Goldman Sachs

The road ahead for Rivian will not be without its challenges. It will have to spend billions of dollars to increase the production of its new models. And it will need to maintain its reputation for quality and brand loyalty. But if it can execute on its timeline, Rivian could become a household name in a few years.

From 2017 to 2021, Tesla’s sales skyrocketed from $7 billion to over $50 billion, largely on the back of its mass-market models: the Model 3 and Model Y. With a current sales base of about 5 billion USD, don’t be surprised. to see an inflection point for Rivian in 2025 or 2026, with sales growth equal to Tesla’s historical precedent. Patient shareholders willing to wait can lock in today’s depressed valuation.