Tesla’s robotaxi launch in Austin is grabbing headlines, but savvy investors looking beyond the glare should keep a close eye on Rivian Automotive (NASDAQ: RIVN). While Rivian has flown under the radar lately, it’s quietly setting the stage for a potential breakout that could rival Tesla’s meteoric rise in the electric vehicle (EV) space.
Why Rivian Is the Underdog Worth Watching
Rivian shares currently trade at a steep discount compared to EV peers like Tesla and Lucid Group. To put numbers on it, Rivian’s price-to-sales ratio sits at just 2.7, whereas Lucid trades at 7.1 and Tesla at a hefty 11.5. This valuation gap reflects investor skepticism, and to some extent, it’s justified given Rivian’s slower sales growth in 2024 and Tesla’s dominant capital position and innovative ventures like robotaxis.
However, the narrative is poised to shift dramatically by 2026. That’s when Rivian plans to ramp up production of its R2 midsize SUV, priced attractively around $45,000. Following closely will be the R3 and R3X models—also midsize SUVs but with even lower price points. This expansion could more than double Rivian’s current lineup, opening the floodgates to tens of millions of potential new buyers who have been priced out until now.
The Margin Story: From Cost-Cutting to Scale
Beyond just sales volume, Rivian’s gross margins are expected to improve significantly. The company has already achieved a 34% reduction in manufacturing costs for the R1 model by streamlining production in preparation for the R2. While the recent removal of federal regulatory credits may pressure margins in the short term, the long-term outlook points to stronger, normalized margins driven by economies of scale and operational efficiencies.
What This Means for Investors Now
Rivian’s stock is trading near multi-year lows, presenting a rare entry point before these catalysts kick in. Investors who jump in now could benefit from both the anticipated sales surge and improving profitability starting in 2026. This is not just a speculative play; it’s a strategic position in a company on the cusp of scaling its product offering and capturing a broader market segment.
Unique Insight: The Affordability Factor Will Be a Game-Changer
Here’s a crucial insight we haven’t seen emphasized enough: Rivian’s move to introduce more affordable midsize SUVs could be a defining moment for the EV market. According to a recent report by McKinsey, affordability remains the biggest barrier to EV adoption in the U.S., with 60% of potential buyers citing price as a primary concern. By targeting the $40,000-$45,000 price range, Rivian is positioning itself to tap into the largest segment of vehicle buyers—a segment Tesla’s higher-priced models have only partially penetrated.
What Should Advisors and Investors Do Differently?
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Reassess EV Portfolios: Many portfolios are heavily weighted toward Tesla and Lucid. It’s time to diversify EV exposure by adding Rivian, especially given its undervaluation and upcoming product expansion.
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Focus on Long-Term Growth, Not Just Immediate Sales: Rivian’s slower growth in 2024 might deter short-term traders, but long-term investors should focus on the 2026 product launch timeline and margin improvements.
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Watch for Production Milestones: Keep a close eye on Rivian’s R2 production updates in early 2026. Meeting or exceeding production targets could trigger a significant rerating of the stock.
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Consider Supply Chain and Raw Material Trends: With global EV supply chains still recovering from disruptions, investors should monitor how Rivian manages costs and materials. Successful navigation here will be a competitive advantage.
What’s Next for Rivian?
If Rivian executes on its production and cost-cutting plans, it could become a dominant player in the affordable EV SUV market by 2027. This shift will force competitors to rethink pricing strategies and product offerings, potentially sparking a new wave of innovation and competition.
In contrast, Tesla’s robotaxi ambitions, while exciting, face regulatory and technological hurdles that could delay widespread adoption. Rivian’s pragmatic approach—focusing on accessible, scalable vehicles—might just win the race for the mainstream EV consumer.
Final Takeaway
For investors hungry for the next big EV opportunity, Rivian offers a compelling risk-reward profile. The company’s current undervaluation, combined with its strategic product expansion and improving margins, makes it a prime candidate for outsized gains in the coming years. Don’t let the current quiet phase fool you—Rivian is gearing up for a major growth spurt that could reshape the EV landscape.
Sources:
- McKinsey & Company, “The Future of Electric Vehicles: Market Trends and Consumer Insights,” 2024.
- MarketWatch, “Rivian’s Production and Cost-Cutting Initiatives,” April 2025.
- Tesla and Lucid Financial Reports, Q1 2025.
At Extreme Investor Network, we believe that true investing success comes from seeing beyond the headlines and positioning early for the trends others overlook. Rivian might just be the quiet giant ready to roar.
Source: 2 Reasons Why Now Is the Time to Buy Rivian Stock