Better EV Stock: Rivian vs. Tesla

Electric vehicle (EV) stocks are fighting an uphill battle right now, as EV sales growth has slowed in the U.S., rising costs have affected automakers, and EV tax credits ended last year.

But the long-term potential for EVs remains intact, and an estimated 25% of global automotive sales will come from EVs by 2030, according to Goldman Sachs Research. Not all companies will benefit equally, of course, so it's worth taking a look at two key players -- Tesla (NASDAQ: TSLA) and Rivian (NASDAQ: RIVN) -- and how they might fare as the EV market continues to take shape.

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Tesla is losing ground and pivoting away from EVs

Tesla CEO Elon Musk said in 2024 that people should view his company as an artificial intelligence or robotics company rather than an automotive company, and Tesla is taking some big steps now to make that transition.

Tesla is in the process of pivoting away from EVs and toward autonomous vehicles and robotics, with Musk saying recently that his company will stop production of its once-popular Model S and Model X and shift production plants to making its humanoid robot, Optimus. It's not an entirely ludicrous move, given that autonomous vehicles (AVs) could be worth $2 trillion by 2030 with humanoid robotics reaching an estimated $5 trillion by 2050, according to Morgan Stanley Research.

But it's a huge gamble nonetheless. And Tesla isn't exactly in fantastic financial shape as it undergoes this new challenge. The company's annual revenue fell for the first time in Tesla's history last year, and its operating income tumbled 38% to $4.3 billion. Making matters more difficult for the company is that it's ramping up spending to transition to robotics and AVs, with capital expenditures of $20 billion this year -- up 135% from last year.

Tesla has defied the odds in the past, so I'm not counting the company out of succeeding in its big transition. But given that sales are falling and costs are rising -- with Tesla itself saying it's moving away from EVs -- it's difficult to recommend Tesla stock as a good buy right now.

Why Rivian is the better EV stock

I've owned Rivian stock for the past several years, and since I bought it, it's been a pretty wild ride. And it's likely that there's further uncertainty ahead.

Rivian produced 42,284 vehicles in 2025, down 14% from the year before, while revenue rose by 8% to nearly $5.4 billion. The company has reported a few quarters of gross profit, but it's been mostly unprofitable as it has grown its vehicle lineup.

But despite all the ups and downs, Rivian has managed to retool its manufacturing to cut costs, pivot to new suppliers to adjust to tariffs, and begin manufacturing its new, lower-cost R2 vehicle (with deliveries starting this year).

Rivian's management deserves a lot of credit for keeping the ship straight through multiple storms. I don't think calmer waters are ahead quite yet, but one thing that could help would be a successful launch of the Rivian R2. Customers often cite the high cost of EVs as a reason not to buy them, and the sub-$50,000 R2 could be exactly what Rivian needs to attract mass-market buyers.

Considering Rivian is about to launch what could be one of the most important vehicles in its short history, and that Tesla is shifting away from its electric vehicle roots, I'm sticking with Rivian as the better EV stock to buy now.

Chris Neiger has positions in Rivian Automotive. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.