Rivian Just Followed Lucid's Most Criticized Growth Playbook and Investors Should Take Note

When the year began, I named Rivian (NASDAQ: RIVN) my top growth stock for 2026. The thesis was simple: Rivian's growth journey has become much more lucrative, yet the stock continues to trade at a discount to competitors like Lucid Group (NASDAQ: LCID) and Tesla across several key valuation metrics.

In the past, Rivian was viewed mostly as an electric vehicle (EV) stock. Indeed, the company now produces three electric vehicles: the R1S, R1T, and R2 SUV. But the company's future doesn't rest solely on vehicle manufacturing. Instead, Rivian has positioned itself as an artificial intelligence (AI) stock. The company expects to ramp up its AI investments so significantly that management quietly dropped its 2027 profit guidance earlier this year.

Image source: Rivian.

Overall, I'm a big fan of Rivian pushing out its profitability goals in order to invest more aggressively in AI technologies. In the future, EVs will rely heavily on self-driving software. A vehicle's ability to drive itself will fuel not only consumer purchases but also commercial opportunities such as robotaxis. If an EV maker wants to sell into both markets, it will need to have fully self-driving vehicles. AI is these companies' best chance of achieving full autonomy and, in the future, selling cars.

The catch is that Rivian has been forced to do something painful, something Lucid investors understand all too well.

Rivian must copy this painful financing option that Lucid has come to rely on

Earlier this month, Rivian revealed that it would be selling 75 million additional shares at $15.50 apiece -- a slight discount to the prevailing market price. Underwriters have the option to buy another 11.25 million shares, which would increase Rivian's total outstanding shares by around 6%.

Rivian isn't a total stranger to share dilution. Its total shares outstanding have increased by more than 30% over the past three years to help make up for an unprofitable core business. But the company has also been able to raise non-dilutive financing, including its multibillion-dollar partnership with Volkswagen.

Lucid investors haven't been as fortunate. The company's total outstanding share count has risen far faster than Rivian's in recent years, driven by high capital expenditures alongside an even more unprofitable core business.

While painful over the short term, Rivian's share sale will raise around $1.2 billion in new capital. That could be enough to scale R2 production enough to reach sustainable profitability over the next handful of years. The company has already posted a positive gross margin in recent quarters.

If R2 production scales as expected, that could narrow losses for the company significantly, enabling Rivian to maintain its higher investment into AI. And given AI is a critical long-term growth driver, Rivian's latest share dilution is a painful but reasonable mechanism for maximizing shareholder value over the long term.

Ryan Vanzo has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.