The Last EV Stock to Buy for $500 Right Now (Hint: It’s Not Tesla)

Everyone wants to invest in the next one adze. However, that is easier said than done. Tesla’s rise from struggling startup to $850 billion behemoth hasn’t always been a smooth ride. Throughout its history, many other electric vehicle companies have gone bankrupt. It’s a tough needle to pin, but if you can spot the next Tesla, huge profits can be made.

Right now, there’s a stock electric vehicle that has all the features you should be looking for, right down to executing Tesla’s proven road map for success: Rivian Automotive (RIVN -3.15%). Here’s why.

This electric vehicle stock looks like the next Tesla

How exactly does a company become the next Tesla? Fortunately, Elon Musk revealed his playbook many years ago when he talked about Tesla’s “master plan.” The whole plan could be condensed into three points:

• Build a sports car.
• Use this money to build an affordable car.
• Use that money to build an even more affordable car.

Of course, Tesla executed this plan incredibly well. It started with its expensive but supercharged Roadster model, which had a price that only attracted millionaire buyers. Although the price could not attract the mass market, it proved to everyone that electric vehicles can be cool, stylish and fun.

Once on the map, Tesla then moved on to the Model X and Model S — two models that were a little more affordable, but could easily cost $100,000 if they included certain options. These models helped bring Tesla into thousands of new cities and neighborhoods, but still prevented the company from truly mass-marketing.

However, as its master plan points out, Tesla took the revenue from those models to build even more affordable cars: the Model Y and the Model 3. These two models made Tesla the company it is today. In the 24 months since the first Model 3 deliveries, Tesla’s sales have tripled. For the Model Y, a very similar jump in sales resulted.

TSLA Revenue (TTM) data from YCharts

Right now, Rivian is about to experience a similar shift in sales. In 2021, it began deliveries of its first two models, the R1T and R1S. According to Tesla’s roadmap, these vehicles looked more like sports cars than family vehicles. Both have prices that can easily exceed $100,000 with certain options, and the company spared no expense when it came to quality components.

The point of the R1T and R1S was not to sell a large number of vehicles, but to establish Rivian as a brand that consumers could trust. And boy, did they accomplish that goal. Rivian was the only brand in a recent Consumer Reports study to achieve a perfect score when it came to customer satisfaction and loyalty. The company outperformed every other automaker in the study when it came to whether the buyer would be interested in owning another vehicle. Note that the survey included both electrical and conventional car manufacturers, making the feat even more impressive.

The next step for Rivian is to launch its mass-market vehicles, which will put it on the map in thousands of additional cities and neighborhoods. It started that step earlier this year with the announcement of its R2, R3 and R3X models — all of which are expected to debut under $50,000. If the Tesla Model 3 and Model Y launches are any indication, Rivian’s sales could explode by 1,000% or more.

Here’s how to profitably invest in Rivian shares

Now trading at 2.1 times sales, Rivian looks like a bargain compared to Tesla stock, which trades at 8.8 times sales. That’s especially true when you consider that Rivian is about to embark on the biggest sales ramp in the company’s history. However, there is a reason why stocks are priced so cheaply.

First, Rivian is still losing money. Last quarter, it lost more than $30,000 on every vehicle sold. It should be noted that prior to the release of the Model 3 and Model Y, Tesla was actually posting positive gross profits. Second, Rivian’s mass-market models aren’t expected to hit the streets until 2026 at the earliest. It could be two years or more before the mass market sales ramp begins to gain ground.

Herein lies the opportunity for patient investors. Compared to its potential, Rivian stock is clearly cheap right now. This is especially true in light of its market value, which after a recent correction has dropped to just $11 billion. It is quite possible that the company’s sales base in 2027 will be HIGH than today’s total market cap.

However, two things need to happen for stocks to skyrocket in the coming years. The company needs to turn to positive gross margins – something management has promised will happen by the end of this fiscal year. They also need to bring their mass-market vehicles to market on time and on budget.

Will these two catalysts come to fruition? Rivian’s history suggests there’s a good chance. But the EV market is riddled with historical failures. There’s a lot of downside potential here. If you’re willing to stay patient, investors who want to get in early and wait for results can have huge upside potential.