Think Rivian Stock Is Expensive? These 4 Charts Might Change Your Mind.

Key Points

• Tesla offers an indication of just how large Rivian could become.

• The EV maker will soon have several mass-market models in production.

• Expect several of Rivian's key metrics to improve dramatically in 2026.

• 10 stocks we like better than Rivian Automotive ›

Rivian (NASDAQ: RIVN) has grown immensely since the company went public in 2021. At the time of its IPO, sales were essentially zero. Today, annual revenues are above $5 billion. That's an incredible climb in just four years.

But if you think Rivian stock has gotten too expensive while its top line has been growing, think again. It's actually one of the cheapest electric vehicle stocks on the market today -- and these four charts show why.

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Tesla's journey shows just how big Rivian can become

It can be difficult to predict just how big a company has the potential to become when it operates in a new growth market. Right now, for instance, no one knows exactly how big the artificial intelligence (AI) industry will ultimately be, which makes it harder to value many AI stocks. The AI industry, however, is just taking off. The electric vehicle industry has been on its growth journey for more than a decade.

Tesla has been one of the most successful EV companies. It has global name recognition, in part due to its famous founder, Elon Musk. But the real reason for Tesla's success has been its ability to scale up the production of electric vehicles that the mass-market consumer can afford. This was a more difficult feat than many people realize. It's also the reason why consumers today can only name one or two pure-play electric vehicle companies, and why dozens of EV makers have gone bankrupt in the attempt over the years.

Scaling up a car manufacturing business takes billions of dollars and a huge amount of infrastructure that can take a decade or more to build. The goal is a company capable of churning out vehicles by the millions at a reasonable cost per unit -- and that milestone requires huge amounts of capital, expertise, and sheer time to reach.

RIVN Revenue (TTM) data by YCharts.

Next year, Rivian expects to begin production of its first affordable vehicle, the R2 -- it's expected to debut with a $45,000 price tag. This will finally make Rivians accessible to the masses. Many investors are worried about Rivian, given its lackluster growth projections for this fiscal year.

But consider what happened to Tesla in 2015 and 2019. Its growth stagnated, only to take off again in the years that followed. What caused its growth to reignite? The introduction of Tesla's two mass-market vehicles -- the Model 3 and Model Y -- which launched in 2017 and 2020, respectively.

The looming launch of the R2 is why analysts expect more than 30% revenue growth from Rivian next year. Once the R2 is in production, Rivian will be able to focus on getting two more affordable models ready for launch: the R3 and R3X. And after it has a full lineup of mass-market models, Rivian can shift its efforts toward more rapid sales growth and start the long climb toward a revenue base that approaches Tesla's. But there are two other metrics that investors should expect big improvements on over the next 12 to 24 months.

Image Source: Getty Images.

Expect these two metrics to improve considerably in 2026

As Rivian ramps up production of its R2 model, expect both its gross margin and profit margin to improve considerably. Tesla has posted positive margins for years thanks to its much greater scale. Today, more than 90% of Tesla's revenues come from sales of its affordable Model 3 and Model Y. This indicates just how important the R2, R3, and R3X will be for Rivian. If these vehicles succeed in the marketplace, the company should gain greater operational leverage, and thus improved profit metrics across the board.

RIVN Gross Profit Margin (Quarterly) data by YCharts.

Rivian will face some headwinds and risks in the year ahead. Now that Congress and President Donald Trump have eliminated many of the federal tax credits and incentives for EVs, the higher real prices consumers will have to pay for those vehicles could cause demand to dip. The same legislation also eliminated the penalties automakers previously faced for producing fleets of passenger cars and light trucks that don't meet fuel economy requirements, and as a result, sapped the ability of EV makers to sell automotive credits earned under initiatives like the Corporate Average Fuel Economy Program.

These headwinds could cut into both Rivian's revenue growth and its margin improvements in 2026. But all the major pieces are in place for Rivian to attempt to replicate Tesla's meteoric rise over the long term. With Rivian shares now trading below 3 times sales, their valuation more than makes up for these potential short-term headwinds.

Should you invest $1,000 in Rivian Automotive right now?

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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.