Rivian Just Did What Investors Despised Lucid for. How Bad Is It?

When investors are considering young electric vehicle (EV) stocks, Rivian Automotive (NASDAQ: RIVN) and Lucid Group (NASDAQ: LCID) often pop up. Both Rivian and Lucid have proved capable of developing compelling vehicles, albeit at lofty prices initially, and they have advanced EV technology and software.

More recently, Rivian achieved its first full-year gross profit in 2025, while Lucid has struggled to improve its unit economics, further separating the two in favor of Rivian. That said, Rivian just did something that Lucid investors groan about: raising capital and diluting shareholders. Does this change how investors should view the two?

History shows the trend

A little Investing 101: Shareholder dilution is simply the decrease in a shareholder's existing ownership percentage due to a company issuing new shares of stock for raising capital and employee compensation, among other factors. You can argue that investors are OK with some dilution because in theory, the company now has more capital to pursue growth, which in turn improves its investment potential.

The drawbacks are lower earnings per share and reduced voting power. That's important to remember, because shareholder dilution might have made some Rivian investors cringe recently when it announced a public offering of 75 million shares of common stock, worth roughly $1.5 billion. This added capital comes at a cost, which works out to about 6% dilution.

The good news for Rivian investors is that the young EV maker has been reserved about raising capital and diluting shareholders. That's primarily because of its large initial public offering's cash cushion, and later capital injections from joint ventures such as one with Volkswagen – also a driving force behind Rivian's full-year gross profit – and a $6.6 billion loan facility from the U.S. Department of Energy.

In the graph below, you can better see the longer-term trend between Rivian and Lucid.

RIVN Shares Outstanding (Quarterly); data by YCharts.

The graph above was cut off at the beginning of 2025 because shortly thereafter, Lucid performed a 1-for-10 reverse stock split, drastically shrinking its share count and potentially misleading investors who don't account for that (the graph could not).

A different way to look at it is to take Lucid's reported 1.644 billion shares outstanding after its public debut via a merger with a special purpose acquisition company. Adjusted for the split, that equates to a current figure of 164.4 million shares, compared to its current total of outstanding shares of about 390.26 million, giving us a total increased share count of around 137%. In comparison, Rivian's lifetime share-count increase sits at about 58%, including the recent July offering.

Is it justified?

Simply put, this is dilution. Mathematically speaking, it's simply not good news for existing investors. That said, you can put a public relations spin on it, making this capital raise fairly easy to get behind for investors.

Rivian is entering a capital-intensive stretch as it ramps up production of its recently launched R2 and builds its Atlanta, Georgia, factory. Management broke ground on it late in 2025 and will begin vertical construction this year, with R2 and R3 production expected in 2028.

Management's primary focus is a successful and (crossing fingers) a nearly flawless R2 production ramp up. This capital raise will remove any potential liquidity concerns as the automaker also accelerates investments into research and development for autonomous-driving technology.

Image source: Rivian.

It's also fair to say that Rivian has separated itself in a positive way from Lucid. The young EV maker has built more scale through volume of sales, as well as consistently improved unit economics to help drive gross profits, and it has diluted shareholders far less than one of its primary rivals.

Rivian, especially considering its history of shying away from capital raises, is at a justifiable point in time for a capital raise. As a bonus, the shares had a bit of a rally before executing this, optimizing the value raised.

Daniel Miller 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.