We recently compiled a list of the 7 Best EV Stocks Under $50. In this article, we are going to take a look at where Rivian Automotive, Inc. (NASDAQ:RIVN) stands against the other EV stocks under $50.
EV Sales are Growing
Since 2018, electric vehicle (EV) sales have been rapidly growing as the world tries to reach its carbon neutrality goal by 2050. According to the International Energy Agency (IEA), only 2% of new vehicles registered globally were electric vehicles, and reached 18% by the end of 2023. Even though most of these sales were concentrated in China, Europe, and the US, other markets such as India, Thailand, Vietnam, and Latin America have also been adopting the EV trend at a fast pace.
In 2024, while the high costs due to interest rates stalled EV sales a little, they are still growing at a significant pace as the sales reached 3.4 million units in Q1, compared to 2.6 million in the first quarter of 2023, according to the IEA. Furthermore, the accounting and consulting firm, PwC analyzed 21 markets and found out that in the second quarter of 2024, 37% of vehicles sold in these markets were battery-electric vehicles (BEVs), plug-in hybrid electric vehicles (PHEVs), or hybrids, marking an increase from 30% in the same period of 2023. At the same time, overall EV sales rose by 21% compared to Q2 2023, while sales of internal combustion engine (ICE) vehicles declined by 9% during the same period.
BloombergNEF’s Long-Term Electric Vehicle Outlook shows that as technology improves and battery prices drop, EV adoption is increasingly driven by consumer demand. Passenger EV sales are expected to surpass 30 million units in 2027 and reach 73 million units by 2040.
Global EV Market to Reach $63 Trillion by 2050
Despite such progress, strong policy support is still needed, as only 69% of the global car fleet is expected to be electrified by 2050 in the base case scenario, short of the 100% target in the Net Zero scenario.
Heavy trucks and other segments lag in reaching net zero and full combustion vehicle sales need to stop by 2038 to reach the goal. The report states that the global EV market could reach $63 trillion by 2050, with significant investment needed in battery production and charging infrastructure.
According to estimates by Fortune Business Insights, the global EV market is expected to grow at a compound annual growth rate of 13.8% from 2024 to 2032, and Asia is currently the dominant region with a 51.24% market share. This is the time for investors to take positions in EV stocks, as the EV market is just getting started and is poised for a lot of growth.
Our Methodology
For this article, we used the FinViz stock screener to identify over 25 electric vehicle manufacturers with a stock price of under $50, as of August 7. We narrowed down our list to 7 stocks that were most widely held by institutional investors and listed the stocks in ascending order.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A state-of-the-art electric vehicle charging at a station at a suburban mall.
Rivian Automotive, Inc. (NASDAQ:RIVN)
Number of Hedge Fund Holders: 26
Share Price as of August 7: $13.78
Rivian Automotive, Inc. (NASDAQ:RIVN) is engaged in designing, developing, manufacturing, and selling electric vehicles and related accessories. The company produces two all-electric models for consumers, the R1T, which is a pickup truck, and the R1S, an SUV.
Rivian Automotive (NASDAQ:RIVN) is also working on delivering an initial order of 100,000 specially designed electric delivery vans for Amazon.
Additionally, Rivian Automotive (NASDAQ:RIVN) offers a range of consumer services including digital financing and leasing options, telematics-based insurance, and vehicle maintenance and repair. The company operates the Rivian Adventure Network, which includes Direct Current fast chargers, and provides access to the Combined Charging Standard. It also offers FleetOS, a comprehensive fleet management subscription platform.
Rivian Automotive (NASDAQ:RIVN) is one of the best EV stocks under $50. In Q1, 26 hedge funds had investments in the stock worth $349.178 million.
Rivian Automotive (NASDAQ:RIVN) is making significant strides in the EV market as highlighted by a substantial new investment from Volkswagen. At the end of June, the company secured a major commitment from the global automotive leader, starting with a $1 billion investment.
Over the next two years, Volkswagen plans to invest up to $5 billion in Rivian Automotive (NASDAQ:RIVN). This includes a $2 billion purchase of the company’s common stock and another $2 billion for the establishment of a joint venture (JV). The JV will focus on developing advanced electrical architecture and software technology. As part of the agreement, Rivian Automotive (NASDAQ:RIVN) will license its existing intellectual property to the new venture.
The partnership could bring Rivian Automotive (NASDAQ:RIVN) an additional $4 billion if it meets specific milestones and obtains regulatory approvals. The transaction is expected to be finalized by the end of the year. This significant investment not only boosts the company’s financial position but also supports its efforts to advance EV technology and expand its market reach.
Meridian Hedged Equity Fund stated the following regarding Rivian Automotive, Inc. (NASDAQ:RIVN) in its first quarter 2024 investor letter:
“Rivian Automotive, Inc. (NASDAQ:RIVN) is a US-based manufacturer of electric vehicles, namely the R1T pickup truck and R1S SUV. They also have exposure to the commercial vehicle market with their electric delivery vans (EDVs) that are sold to companies like Amazon. The company has faced challenges amid the broader slowdown in electric vehicle demand and rising interest rates. This has contributed to Rivian underperforming expectations over the past few quarters. Rivian has also incurred losses as it continues to invest in the development of its products and manufacturing capabilities. We own Rivian in a hedged structure, which provides a significant margin of safety. Despite the near[1]term challenges, several factors provide optimism that Rivian can emerge as a long-term winner in the EV market. Rivian’s balance sheet is strong, with a substantial cash position that enables the company to continue investing in its growth and navigate through the current economic headwinds. Rivian is also unveiling the R2, which is a smaller and more affordable EV platform that will open the company’s products to a wider customer base. Lastly, Rivian’s investment in the enhancement of its production capabilities should improve the company’s manufacturing efficiency and drive a path to profitability. We continue to hold the company in a hedged structure.”
Overall RIVN ranks 5th on our list of the best EV stocks to buy. You can visit 7 Best EV Stocks Under $50 to see the other EV stocks that are on hedge funds’ radar. While we acknowledge the potential of RIVN as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than RIVN but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.