Operationally, it’s both Tesla(NASDAQ: Tesla) and Rivian(NASDAQ: REVIN) 2024 has been a volatile year. However, Tesla stock rose significantly, while… Rivian It saw its shares end the year on a significant note, down about 43%. Part of Tesla stock’s success last year can be attributed to its late rally after Donald Trump’s election win, for which Tesla CEO Elon Musk has been a big supporter and adviser.
With the new year underway, let’s take a look at stocks that could be set to outperform in 2025.
Just as their stocks headed in different directions in 2024, so did their vehicle deliveries. Rivian delivered 51,579 vehicles in 2024, up from 3% in 2023, while Tesla delivered nearly 1.79 million vehicles, down from 1.81 million deliveries last year.
Rivian’s delivery growth came despite a number of issues during the year that hampered production. Earlier in the year, it closed its manufacturing plant to implement a retooling upgrade, while late in the year it faced component shortage issues. Meanwhile, Tesla saw its first-ever annual decline in deliveries as the company faced intense competition and sales pressure in China and Europe.
However, investors shrugged off Tesla’s difficult 2024 and looked to the future. Many see the company’s biggest opportunity not in selling Electric Vehicles (EV) But in its self-driving robotic ambitions. The company held a major cybercabin event last year, introducing a two-seater vehicle with no steering wheel or pedals. It said the vehicle will cost less than $30,000, and that it plans to start producing the vehicles before 2027. However, the company did not go into details about the technology used, driving range, or safety features of the vehicles.
Tesla has not succeeded in developing a fully self-driving car, and its cars using fully supervised self-driving (FSD) technology have been the subject of a number of high-profile accidents and investigations. However, Musk has lobbied the government to repeal the National Highway Traffic Safety Administration’s (NHTSA) car crash reporting requirements, which the Trump administration appears to support. Such a move could make it easier to gain approval for full self-driving technology, which could then pave the way for automated vehicles.
Currently, only Waymo is owned by… alphabetoffers paid robotaxi rides in the United States, but its technology is more expensive than Tesla’s due to its use of LIDAR. However, Tesla purchased lidar sensors last year, so whether or not they will incorporate the technology to improve performance remains to be seen. However, if the company can develop a cheap robotaxi, it will have a huge opportunity.
Rivian’s ambitions are much simpler than Tesla’s. First, the company is looking to become Gross profit margin-Positive, as it was selling its cars for less than the cost of making them. The company has updated tooling at its plant to improve line rates, as well as reduce the costs of materials used in its vehicles. Its biggest achievement was the switch to a new regional architecture, which significantly reduced the number of electronic control units (ECUs) and wiring in its vehicles and thus reduced costs.
Its zonal architecture was also a big reason behind the significant investment and partnership formed by the company Volkswagenwhich will gain access to its own electric vehicle technology. In return, Rivian receives a large cash payment, assuming certain milestones are met, which will help it ramp up production of its new R2 SUV. Rivian will look to the less expensive R2, which is expected to cost around $45,000, to give it an SUV with more appeal. Production of the new SUV is expected to begin in the first half of 2026.
Image source: Getty Images.
Both Tesla and Rivian have potential catalysts in 2025. Any moves and announcements toward self-driving and robotaxis should be good news for Tesla stock. While its sales may continue to weaken overseas, I think this may be the biggest driver for the stock.
Meanwhile, Rivian shares should get a boost if they can reach positive gross margins and slowly improve over the course of the year. As it transitions through models built with its legacy technology and ramps up production now that its component shortages have been eased, that seems a realistic goal.
When choosing an investment between the two, I would choose Rivian as the more speculative play. The stock is beat in 2024, and should be able to make progress on its gross margin goals while also increasing deliveries. Meanwhile, Tesla stock already had a big rally at the end of 2024, so it may not have as much of an upside on any positive news.
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Susan Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Jeffrey Seller He has positions in the alphabet. The Motley Fool has positions in and recommends Alphabet and Tesla. The Motley Fool recommends Volkswagen Ag. The Motley Fool has Disclosure policy.
