The electric vehicle (EV) boom of 2020 and 2021 saw valuations skyrocket as investors rushed to bet on the future of transportation. Companies like Rivian RIVN and Lucid Group LCID were seen as prominent contenders in the race towards e-mobility. Fast forward to 2024, and the narrative has shifted dramatically. EV demand has failed to meet lofty expectations, with adoption being much slower than expected amid inadequate charging infrastructure and high price points. Adding to the uncertainty, Trump’s victory in the 2024 presidential elections has cast a shadow over the market due to his critical stance on EVs.

Both RIVN and LCID have tumbled nearly 90% from their peaks and lost 50% of their value year to date. Let’s dive into each company’s strengths and challenges to determine if either stock is worth adding to your portfolio today.

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The Case for Rivian

California-based Rivian currently offers two electric vehicles — the R1T (pickup truck) and the R1S (SUV). In 2023, the company produced 57,232 EVs and delivered 50,122 of them. Production and supply chain difficulties hit RIVN this year, because of which it lowered its 2024 production guidance to 47,000-49,000 vehicles in October, down from 57,000 units guided earlier. This also implies a contraction of 16% at the midpoint of the guidance on a yearly basis. This slowdown is concerning, as the company should ideally be in growth mode. While Rivian maintained its 2024 delivery outlook of 50,500-52,000 units, this represents only modest growth from 2023 levels.Rivian lowered its adjusted EBITDA forecast for the year, with projected losses ranging from $2.83 to $2.88 billion, compared to the prior forecast of $2.7 billion.

Despite these hurdles, Rivian’s strategic initiatives hint at potential gains in the coming years. First, the partnership with Germany’s auto giant Volkswagen VWAGY is expected to bolster Rivian’s technology base and expedite production timelines, potentially giving Rivian an edge in a market driven by technological advances. Second, Rivian is expanding its portfolio with the R2, R3 and R3X models. The R2, a midsize SUV slated for a 2026 release, is expected to be priced at $45,000—nearly half the cost of Rivian’s current R1 lineup. These more affordable models aim to capture a broader customer base, especially in budget-conscious segments.

Third, the company is streamlining its operations to improve profitability. Material costs for second-generation R1 models are projected to decline 20% over the next year, while the R2 lineup could see a 45% reduction. Rivian also aims to achieve a positive gross profit by the fourth quarter of 2024, a milestone that could mark a critical turning point for the company. Finally, a recent $6.6 billion loan secured from the U.S. Department of Energy will fund the completion of Rivian’s new manufacturing facility in Georgia. This plant is expected to bolster production capacity. But that’s not happening in the near future. Rivian expects the first construction phase to be completed in 2028.

Looking at its cash position, the company had $5.4 billion in cash and cash equivalents at the end of the third quarter of 2024, down from $7.9 billion at the end of 2023. Given Rivian’s ongoing expansion efforts and ramp-up of production, the company is expected to continue burning through cash at a significant rate in the near future. It is likely to remain unprofitable in the next few years as it works to scale its production and navigate the increasingly competitive EV market.

In the last four quarters, Rivian missed earnings estimates thrice and beat once.

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The Zacks Consensus Estimate for RIVN’s 2024 and 2025 loss per share is pegged at $4.03 and $2.48, respectively. The loss estimates have widened over the past 30 days.

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Even with the drastic downturn in its share price since its IPO, RIVN is still trading at a premium valuation. It trades at a forward sales multiple of 2.35X, higher than the industry’s 1.8X. It has a Value Score of F.

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The Case for Lucid

California-based Lucid Motors specializes in luxury electric sedans and SUVs, aiming to carve out a niche in the high-end EV market. The company delivered 6,001 units of its flagship model, the Lucid Air, in 2023, with 8,428 units produced. Through the first three quarters of 2024, Lucid delivered 7,142 vehicles, marking three consecutive quarters of record deliveries. The company's target is to produce 9,000 units this year. With just 5,642 cars manufactured in the January-September timeframe, LCID will need to ramp up production significantly.

Lucid’s growth prospects hinge on its second model, the Gravity SUV, whose production is expected to begin by year-end. Pre-orders for the " Gravity Grand Touring" model began last month, boasting 800+ horsepower and 440-mile range, starting at $94,900. A more affordable "Touring" version, priced at $79,900, will go into production in late 2025. Lucid CEO Peter Rawlinson emphasizes that Gravity’s addressable market is six times that of the Air sedan, positioning it as a potential game-changer for the company.

Lucid benefits from strong backing from Saudi Arabia’s Public Investment Fund (PIF), its majority shareholder. The PIF’s support has ensured financial stability, enabling major funding rounds and strategic deals. One notable agreement includes the Saudi government’s commitment to purchase up to 100,000 Lucid vehicles over the next decade.

LCID exited the third quarter with approximately $5.16 billion in total liquidity, including $1.89 billion in cash/cash equivalents. Subsequent to the third quarter, it raised $1.75 billion in capital, further bolstering its cash reserves, extending Lucid’s financial runway into 2026 and supporting its ambitious growth plans. Despite financial stability, Lucid faces significant challenges in sustaining growth within the niche luxury EV market. Scaling production while maintaining premium quality is no small feat, and the high-end EV space remains competitive. The company’s high cash burn and reliance on equity raises remain key risks, with potential dilution being a concern for shareholders.

In the last four quarters, Lucid missed earnings estimates on each occasion.

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The Zacks Consensus Estimate for LCID’s 2024 and 2025 loss per share is pegged at $1.25 and 88 cents, respectively. While the consensus estimate for 2024 has widened, the same for 2025 has narrowed over the past 30 days.

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Lucid’s lofty valuation raises concerns. Trading at a forward sales multiple of 5x and carrying a Value Score of F, the stock is more expensive than many peers, including Rivian.

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Conclusion

Both RIVN and LCID offer long-term potential but face near-term challenges. Rivian shows promise with upcoming affordable models and cost-reduction initiatives. However, its production guidance cut, premium valuation and persistent cash burn raise concerns. Similarly, Lucid benefits from strong backing by Saudi Arabia’s PIF and its Gravity SUV launch, but high cash burn, niche market focus and elevated valuation remain obstacles.

Investors should be prepared for continued losses and cash burn as the companies invest in their growth initiatives. Additionally, with Trump winning the election, concerns about potential shifts in EV policies are growing. Trump’s opposition to EV incentives and emission standards could impact federal support for EV makers like Rivian and Lucid.  Given the uncertainties, both stocks are better suited for risk-tolerant investors with long-term horizons, while others may want to wait for clearer signs of execution and profitability.

Both RIVN and LCID currently carry Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here

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