Rivian and Nio: Emerging Investment Opportunities Amidst EV Industry Challenges

The text highlights investment opportunities in Rivian Automotive and Nio, two EV stocks poised for a rebound despite industry challenges, and explores their transformative strategies and potential catalysts for growth.
SummaryThe text discusses investment opportunities in Rivian Automotive and Nio, two electric vehicle (EV) stocks that have dropped significantly in 2024 despite the overall market reaching new highs. Both companies are facing challenges due to industry headwinds like reduced subsidies and increased competition from China. However, they are at pivotal moments with promising catalysts. Nio, a luxury EV maker in China, is rebounding with increased deliveries and the introduction of a new sub-brand, Onvo, which could rival Tesla’s Model Y. Rivian, known for its high-end electric trucks and SUVs, is transitioning to offer a more affordable model, the R2, with support from a new partnership with Volkswagen. The piece concludes by advising potential investors to consider other top stock picks recommended by The Motley Fool, indicating that Rivian was not among their current top 10 selections.

Hidden Opportunities in a Soaring Market

Have some funds to invest but feel there are no bargains left as stock market indices reach unprecedented highs? It’s time to turn your attention to stocks that have missed the rally and appear ripe for a rebound. Rivian Automotive and Nio are two such examples, with both seeing their shares plummet by 45% in 2024.

While the global demand for electric vehicles (EVs) is on the rise, the industry has encountered several obstacles, including reduced subsidies, high interest rates, and intensified competition from China. Companies like Rivian and Nio have faced additional challenges, which have collectively driven their stock prices down. The silver lining is that both manufacturers seem to be at a pivotal moment, with promising catalysts on the horizon that could propel their shares upward. Let’s delve into why now might be the opportune time to invest in these stocks.

Nio: A Challenger to Tesla

Neha Chamaria (Nio): Nio, a leading luxury EV manufacturer in China, holds a strategic advantage over U.S. automakers trying to penetrate the world’s largest EV market. However, a recent price war in the Chinese EV sector forced companies, including Nio, to slash prices and offer discounts to stay afloat.

Unfortunately, these developments coincided with Nio’s model upgrades to a new platform, amidst already low production and delivery rates. As a result, Nio’s margins plummeted, and its stock took a nosedive, dropping over 50% in the first half of 2024.

Despite these setbacks, Nio’s recent figures provide a beacon of optimism. With the upgrades complete, Nio’s deliveries surged by 91% sequentially to 57,373 units in the second quarter. During the same period, vehicle sales soared 81% sequentially to approximately $2.2 billion, vehicle margins increased from 9.2% to 12.2%, and net loss reduced slightly to around $694 million.

With expectations for stable deliveries and margins, Nio’s stock has more potential upside than downside. The company plans to deliver between 61,000-63,000 EVs in the third quarter and aims to boost its margin to 15% by year’s end.

Nio is also entering the mass EV market with its sub-brand, Onvo, and anticipates the launch of its first model, the L60 SUV, shortly. The L60 is set to rival Tesla’s popular Model Y in China, offering a lower price and additional features. Onvo’s debut could serve as a significant catalyst for Nio’s stock in the months ahead.

Rivian: Navigating a Transition

Howard Smith (Rivian): Many EV companies have faced challenges this year due to peak interest rates and heightened competition, leading to stunted sales growth for some and a complete halt for others. Consequently, Rivian’s shares have dropped by 45% in 2024.

However, Rivian is at a transformative juncture that might turn the sharp stock decline into a lucrative long-term opportunity for investors willing to embrace risk. Let’s explore what could improve in the near future.

Rivian has been advancing its EV technology with a second generation of its fully electric pickup truck and SUV. Yet, the R1T and R1S models mainly appeal to high-net-worth EV buyers, with second-quarter revenue indicating an average selling price of nearly $83,000 for the 13,800 vehicles delivered.

The company is moving toward offering a more affordable fully electric SUV. The R2 model is set to debut in early 2026 with a starting price of $45,000. Crucially for investors, Rivian is expected to have adequate capital to capitalize on R2’s revenue potential, thanks to a new partnership with Volkswagen that includes a significant capital infusion.

Volkswagen plans to invest $1 billion in Rivian through a convertible bond, with intentions to convert it into Rivian common stock eventually. The German automaker may invest an additional $4 billion to acquire more Rivian shares and establish a joint venture for EV technology development.

The joint venture is anticipated to form before the year’s end, potentially sparking investor interest in Rivian as it prepares to produce the R2 SUV. Now might be the time to consider adding shares before these catalysts take effect.

Is Rivian Automotive a Wise Investment Now?

Before deciding to invest $1,000 in Rivian Automotive, consider the following insights:

The Motley Fool Stock Advisor analyst team has recently identified what they believe are the 10 best stocks for investors currently, and Rivian Automotive did not make the list. The 10 selected stocks are expected to yield substantial returns in the upcoming years.

For context, when Nvidia was recommended on April 15, 2005, a $1,000 investment would have grown to $710,860 by now.*

The Stock Advisor service offers investors a straightforward path to success, complete with portfolio-building guidance, regular analyst updates, and two new stock picks each month. Since 2002, Stock Advisor has outpaced the S&P 500’s return by more than fourfold*.

See the 10 stocks ›

*Stock Advisor returns as of September 17, 2024

Margaret "Maggie" Turner
Margaret "Maggie" Turner

Margaret "Maggie" Turner: The Television Chronicle

Margaret Turner, affectionately known as Maggie, is a veteran journalist whose illustrious career in TV entertainment news spans over three decades. At 50, her keen insights and nuanced understanding of the television industry have made her a respected figure among colleagues and readers alike. With her signature brown hair and an ever-present twinkle in her eye, Maggie brings both warmth and wisdom to her work.

Maggie's story begins in the bustling city of Chicago, Illinois, where she spent her formative years captivated by the power of storytelling. From a young age, she was drawn to the screen, fascinated not only by the stories themselves but by the cultural conversations they sparked. This passion led her to Northwestern University, where she pursued a degree in Journalism, setting the stage for a lifelong dedication to the craft.

Over the years, Maggie has built a robust portfolio, contributing to leading entertainment magazines and websites. Her writing is celebrated for its depth and clarity, often exploring the intersections of television, society, and technology. Maggie's ability to anticipate trends and provide context has earned her a loyal readership that values her thoughtful analysis.

A strong advocate for diversity in media, Maggie frequently uses her platform to highlight underrepresented voices and stories in the television industry. Her commitment to inclusivity has not only influenced her work but also inspired a new generation of journalists to prioritize diverse narratives.

Beyond her professional achievements, Maggie is a passionate traveler, finding inspiration in the cultures and stories she encounters around the world. Her travel experiences often find their way into her writing, adding a rich, global perspective to her commentary.

At home, Maggie enjoys a serene life with her husband, David, a renowned architect, and their two golden retrievers, Lucy and Charlie. An avid reader, she finds solace in her expansive home library, where she can often be found curled up with a good book or drafting her next piece.

Maggie Turner is more than a journalist; she is a storyteller at heart, committed to capturing the ever-evolving world of television with grace and insight. Her career continues to inspire those around her, proving that the art of storytelling remains as vital and transformative as ever.

Articles: 25

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