When Tesla (TSLA) fell sharply in the last week, its halo hurt the entire electric vehicle stocks. EV firms
that are too small and too far behind mass production will fall further. Only the strongest firms,
including Tesla, will survive.
Nikola (NKLA), Workhorse (WKHS), and Lordstown (RIDE) are examples of firms that investors should
avoid. They have yet to bring a concept product to market.
Rivian (RIVN) has a strong product on the market. Its output constraints will increase costs and
accelerate its cash burn rate. Still, Rivian may tap the capital markets if it needs funds to operate.
Eventually, the EV truck maker will achieve economies of scale.
The upcoming global recession will hurt commodity prices. In addition, it will ease supply constraints.
Both trends will help Rivian in the medium term.
Rivian is especially attractive because it has limited competition in the market. Ford (F) has a strong
product line-up in trucks. Unfortunately, its Lightning EV is a luxury product. Customers who buy trucks
to work will avoid this product. They cannot justify buying a high-end trim just to get better-towing
capacity.
Your Takeaway
Tesla is a compelling consideration, especially after the stock’s decline. Rivian is worth watching as
shares trade in the $30- $35 range.
