Rivian vs. Lucid: Who’s Best Positioned to Steal Tesla’s Thunder?

Key Points

• Tesla has slumped by 15% this year amid production issues, political pushback, and a growing threat from Chinese EV makers.
• This could create an opportunity for American EV firms like Rivian and Lucid, although the regulatory environment is likely to be challenging.
• Rivian's major partnership with Volkswagen and its improving financials bode well, but it still struggles with profitability; Lucid's SUV is an important marketability move, but the company still lacks affordable options.

Tesla Inc. NASDAQ: TSLA shares have recovered somewhat since April 2025 but remain down about 15% year-to-date (YTD). The largest car company in the world by market value has experienced analyst downgrades in recent weeks. It also faces the possibility of weak Q2 deliveries amid a weeklong Cybertruck and Model Y production pause. Perhaps most concerning for the Elon Musk-led EV firm, Chinese rival BYD Co. surpassed Tesla in global battery electric vehicle sales for 2024, and European EV sales in April of this year.

With Tesla facing mounting challenges and Chinese EV companies on the rise, investors may be wondering if there are American rivals that may be able to capitalize on an opportunity to capture additional market share. Two of the prime candidates are Rivian Automotive Inc. NASDAQ: RIVN and Lucid Group Inc. NASDAQ: LCID. Though analysts are cautious about both of these firms (as well as Tesla) given a less-favorable regulatory environment, they view both Rivian and Lucid as having some upside potential, while analysts expect Tesla shares to continue to fall in the near term.

Rivian's Big Wins With Volkswagen and Car Operating Systems May Not Outweigh Profitability Concerns

Shares of Rivian have been on a bumpy ride in the last year, reaching as high as more than $18 each in July 2024 and as low as under $10 last fall. While the stock is up about 4% YTD, investors should note it is still well under the level at which it traded from its IPO in 2021 through the end of 2022.

Rivian achieved positive gross profit in each of the two most recently reported quarters, a landmark for a company that has struggled to balance production costs, management of finances, and growth efforts in the past. The firm seems to be achieving greater operational efficiency, allowing it to scale more effectively while reducing costs where possible.

The company's joint venture with Volkswagen, launched last summer and called Rivian and Volkswagen Group Technologies, is also likely to continue to boost Rivian's efforts. Not only will it provide billions in funding, but the venture will also open up access to Volkswagen's distribution network and give Rivian a key partner in continuing to refine its operations.

Finally, while Tesla has distinguished itself not only for its EVs but also for its battery tech and related services, Rivian is also finding a niche outside of vehicles themselves. The company now receives a majority of revenue from its software and services business, positioning it as a leader—and a potential key partner—in the car operating system space. Still, while overall profitability remains elusive, it's understandable that investors have been reluctant to push RIVN shares over the $17 threshold so far in 2025.

Lucid's SUV Is a Key Step Toward Building a Customer Base, But Affordable Models Are Also Needed

Shares of Lucid have fallen about 27% YTD, which may be either a warning sign or a potential buy opportunity. One factor that may suggest the latter is Lucid's efforts to expand its product lineup.

As one of the smaller EV makers in the United States, Lucid has only recently broadened its offerings to include an SUV—previously, it only carried the Air sedan. By some estimates, SUVs account for nearly 60% of new vehicle sales domestically, meaning that Lucid's Gravity SUV stands to capture customer interest to a degree that its Air may not.

Another area in which Lucid has struggled is affordability. The company does not currently offer an affordable model to compare with Tesla's Model 3 or Model Y, which together make up the large majority of Tesla's sales. Analysts have anticipated sub-$50,000 models from Lucid for some time, though an exact release date remains to be seen. Still, investors might expect a bump to LCID shares when that announcement comes, as it will suddenly open up Lucid's customer base to include millions of new potential buyers.

One big concern surrounding the launch of new models is Lucid's cash reserves, which sit at under $2 billion. Manufacturing vehicles is an expensive endeavor, and it's very likely the company would need to source additional capital before beginning production on a line of affordable models. Whether the Gravity SUV can support these efforts remains to be seen. For this reason, Lucid may be a company for investors to watch over the longer term. If it's able to overcome these challenges, the current price point may look like a significant buying opportunity in hindsight.