Should I forget Tesla shares and buy this US stock instead?

Tesla has an Amazon-backed rival. Should investors change horse?

| More on:
A woman in jeans and a casual jumper leans on her car and looks seriously at her mobile phone while her vehicle is charged at an electic vehicle recharging station.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

It's 2023, so most Australians, and probably all investors, would be familiar with US electric vehicle and battery manufacturer Tesla Inc (NASDAQ: TSLA) and its shares by now.

Tesla has made massive gains in market share with its electric vehicles, both in Australia and around the world. According to Drive, the Tesla Model Y was the fourth-highest-selling car in Australia in July 2023, and was the second-highest-selling model for June.

But the Tesla share price has been accelerating even faster than the company's car deliveries. Tesla stock is up 131% in 2023 so far, as well as up a whopping 953.6% over the past five years.

For lucky investors who have held Tesla shares for many years, these gains have been very welcome indeed. But today, Tesla is a US$782.4 billion company. As such, it's arguably unlikely (though not impossible) that investors will enjoy a similar level of prosperity over the next five years.

So perhaps electric vehicle fans should look elsewhere for the 'next Tesla'. A leading candidate for that moniker might be Rivian Automotive Inc (NASDAQ: RIVN).

Are Rivian shares the 'next Tesla'?

Rivian is an early-stage US-listed electric vehicle company. Perhaps its biggest claim to fame is the endorsement of US e-commerce behemoth Amazon.com Inc (NASDAQ: AMZN). Amazon owns a 17% share of Rivian and even has an exclusive contract with the company for electric vans.

As it stands today, Rivian has a market capitalisation of US$23.3 billion. That means that Tesla is currently more than 33 times larger than Rivian by market cap.

That might imply that Rivian is the stock that has the most growth potential. The company has indeed been making impressive strides. Our Fool colleagues in the United Kingdom report that Rivian delivered just 920 vehicles in 2021. But by last year, this had exploded to 20,322, and the company is estimated to sell 50,000 vehicles this year.

However, Tesla is still leaps and bounds ahead of Rivian in this department. 2021 saw Tesla deliver 936,172 vehicles. But this year, it's estimated that Tesla will crack 1.8 million deliveries. 2024 could see this number rise even further if the company's long-awaited Cybertruck model proves a hit.

So Rivian does look like an exciting company to be sure. But, personally, I'm still sticking with investing in Tesla. In Tesla, we have a company that has proven runs on the board when it comes to stellar growth. Plus, Tesla has some of the best brand recognition in the world, whereas I'd bet that most Australians wouldn't have heard of Rivian.

Sure, Rivian stock might indeed rocket over the next few years. But it might also buckle under the competitive pressures of the global car market. That's not a choice I'm prepared to wager on right now.

Motley Fool contributor Sebastian Bowen has positions in Tesla. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Tesla. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on International Stock News

Smiling man working on his laptop.
International Stock News

Which 'other' US AI stock is soaring this week?

This US AI stock is following Nvidia's footsteps in more than one way.

Read more »

Legendary share market investing expert and owner of Berkshire Hathaway Warren Buffett
International Stock News

Warren Buffett meets AI: Is Berkshire Hathaway prepared for technological disruption?

Berkshire Hathaway's portfolio may contain underappreciated AI-associated risks.

Read more »

A man looking at his laptop and thinking.
International Stock News

Nvidia stock is still a great buy — but when should investors sell shares?

Here are three solid reasons for investors to consider selling shares of the artificial intelligence (AI) chip leader.

Read more »

Three exuberant runners dash towards the camera. One raises her arms in triumph; another jumps in the air with arms raised. The third runner gives a satisfied smile.
International Stock News

Why Tesla stock jumped today

Tesla investors seem to want to keep CEO Elon Musk happy.

Read more »

A woman holds a soldering tool as she sits in front of a computer screen while working on the manufacturing of technology equipment in a laboratory environment.
International Stock News

Prediction: This will be Nvidia's next big move

The GPU leader's next big growth catalyst isn't being talked about much by investors -- yet.

Read more »

streaming stocks represented by woman watching tv on tablet
International Stock News

Why Apple stock popped (again) Wednesday morning

Wall Street is increasingly bullish on the iPhone maker's plans for artificial intelligence (AI).

Read more »

Boral share price divestment Banknote ripped in half
International Stock News

Is Nvidia stock a buy after the 10-for-1 stock split?

Shares in this artificial intelligence titan have become significantly cheaper, but its massive market cap remains the same.

Read more »

Woman relaxing and using her Apple device
International Stock News

Why Apple stock popped Tuesday morning

Wall Street is bullish on the iPhone-maker's plans for artificial intelligence (AI).

Read more »