Better Stock: Lucid vs. Rivian? (Hint: Unit Economics and Gross Profits Are Key.)

Investors would certainly love to find the next high-flying Tesla stock, which made many long-term shareholders wealthy. Right now, the electric vehicle (EV) industry is slowly gaining traction after fuel economy regulations were relaxed and the $7,500 federal EV tax credit ended, and that gives investors a chance to gauge EV investments and potentially start a position before the industry accelerates forward, and eventually, it will. When comparing two young EV makers, Rivian (NASDAQ: RIVN) and Lucid (NASDAQ: LCID), one of the most important factors is gross profitability.

Here's how the two compare, and why it matters.

All about the money

Gross profitability is hugely important for young companies such as Rivian and Lucid. Gross profitability is simply how much profit a company makes after paying the direct costs to create its product or services, in this case, EVs (mostly); more on this later. It proves to investors that the core business model is sound before adding other expenses and complications. It's also important to attract more investors, which increases demand for the stock and raises its price, as they'll see the investment as more long-term viable.

While Lucid and Rivian share many similarities, gross profitability is the first major factor that separates the two.

RIVN Gross Profit (TTM) data by YCharts.

As you can see, Rivian has consistently and methodically improved gross profitability since 2023, while Lucid has wavered at best and moved in the wrong direction for about a year and a half.

Driving forces

There are three primary reasons for this separation. First, Rivian simply has more scale, although both remain at low volumes compared to traditional automakers. Rivian delivered more than double the number of vehicles in 2025 with over 42,000 vehicles compared to Lucid's almost 16,000 vehicles.

The second reason for Rivian's better gross profitability is its extensive per-unit cost cuts. The automaker has done a fantastic job removing redundant parts and even large amounts of wiring, among other things, saving thousands of dollars per vehicle. Furthermore, the company has even renegotiated with suppliers to improve unit economics.

Rivian's R2. Image source: Rivian.

Lastly, and perhaps the most important reason, is that Rivian's advanced electronics and software stack were enough to convince Volkswagen to team up in a joint venture that pays Rivian handsomely and helps split development costs. Rivian's joint venture has significantly boosted its gross profits: Consider that Rivian's second-quarter automotive gross profit was a loss of $36 million, while its software and services segment checked in at $215 million. Furthermore, the software segment's gross margin was a strong 42%.

What it all means

The biggest step a young company can take is to prove to investors that its business model can work in the long term, which means showing consistent gross profitability. Rivian has consistently improved, and its upside is solely due to its software advantage. Investors also have to consider that Rivian has been far less dilutive to shareholders than Lucid has been, making it a much better investment as things currently stand.

Daniel Miller 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.