This Contrarian Play Could Be Your Best Investment of 2026

Investor sentiment about electric vehicle (EV) stocks has been cautious in late 2025, due to slowing global EV sales and declining North American EV sales after the expiration of U.S. tax credits. Yet, one of these stocks can still emerge as an attractive contrarian play for 2026, and that is Rivian Automotive (NASDAQ: RIVN).

Image source: Rivian.

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Improving financials

In the third quarter, Rivian's revenue increased 78% year over year to $1.56 billion, driven by higher vehicle deliveries and expanding software and services revenue. The company delivered 13,201 vehicles and is on track to hit the delivery target of 41,500 to 43,500 cars in fiscal 2025, despite the softer EV demand environment.

Rivian expects to achieve breakeven gross profit in fiscal 2025. The company is seeing improvement in unit economics, as the cost of goods sold per vehicle was $96,000 in the third quarter, significantly lower than the higher unit costs of prior years.

Rivian also exited the third quarter with a $7.1 billion cash balance and expects additional capital of up to $2.5 billion from its joint venture transaction with Volkswagen. The company is also partnering with the Department of Energy for a loan of up to $6.6 billion. Hence, the company has sufficient funds to finance its future growth initiatives.

R2 catalyst

The company's upcoming R2 midsize SUV is also a major catalyst for 2026. With a base price of around $45,000 per vehicle, the R2 will be priced below R1 vehicles and below the average new vehicle price of just over $50,000 in the U.S. Hence, R2 will expand Rivian's customer base and increase delivery volumes in the coming quarters.

Baird analyst Ben Kallo expects R2 deliveries to commence in the late second quarter of 2026, and then a steady ramp-up in the second half of 2026. Full-year 2026 deliveries are expected to be 65,300 vehicles, of which 15,100 are estimated to be R2 vehicles.

Rivian shares trade at just 4.7 times sales, which is also reasonable. Hence, considering the many tailwinds, the stock can be a smart pick now.

Manali Pradhan, CFA has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.