Most electric vehicle (EV) stocks saw their share prices swing wildly in 2024. Some companies saw their valuations soar, while others experienced sharp declines. Following a roller-coaster year, two EV stocks in particular now look like bargains.
The two companies below clearly have sizable upside potential. But you'll want to understand the risks involved before jumping in.
This EV stock should double its sales in 2025
If you're looking for maximum growth, get acquainted with Lucid Group (LCID -1.66%).
Lucid is one of the smaller publicly traded EV manufacturers operating today, with a sales base that is less than 1% the size of Tesla's. This small size comes with a lot of challenges, the biggest of which is financial. Over the years, many EV start-ups have gone bankrupt despite a promising start. That's because starting an electric vehicle company is extremely capital-intensive. It requires billions of dollars to design a vehicle, ramp up the necessary manufacturing facilities, actually produce the vehicle, and then ship the output to customers, handling any warranty or customer service claims along the way. Plus, this entire process can take a decade to fulfill from start to finish, requiring extreme patience from its investor base that provides the capital to keep the company afloat.
These scale challenges do come with a major advantage: Lucid's biggest days of growth are still ahead of it. Over the last two quarters, Lucid's revenue grew by roughly 70% and 90% respectively year over year. Over the next 12 months, analysts predict sales will jump 118%, crossing the $1 billion mark for the first time in company history.
The company's Gravity SUV just began its sales ramp-up last month, while management intends to launch three new midsize mass-market vehicles in the coming years. Lucid will need to retain the trust of the market to keep capital flowing while it ramps up its sales base. But if it can sustain itself financially, the next few years should see the company's sales grow by leaps and bounds.
RIVN Revenue (TTM) data by YCharts
My top pick for this year and beyond
If I had to bet on one EV stock over the next several years, it would be Rivian Automotive (RIVN -1.11%).
Unlike Lucid, Rivian has already proven capable of expanding its sales base significantly. Last year, annual sales topped $5 billion for the first time, although a recent sales dip has pushed it under that mark for the latest trailing-12-month period. This pullback in growth has caused the company's price-to-sales multiple to compress well below the competition. But if you're willing to stay patient, you can lock up a fantastic valuation before Rivian experiences another sales spurt.
RIVN PS Ratio data by YCharts
Currently, Rivian is stuck in a period of stagnating growth. Its two luxury models -- both of which can cost upward of $100,000 with certain options -- have reached temporary market saturation. Without additional new models, particularly more affordable models, Rivian is struggling to find ways to grow, especially given the slowing growth in demand across the EV sector as a whole last year.
Next year, the wait for growth could be over. Not only will Rivian have updated generations of its luxury lineup ready for consumers, but it also expects to launch three new models -- all priced below $50,000 -- that will see the company tap the mass market for the first time. Plus, Rivian recently secured a multibillion-dollar partnership with Volkswagen, infusing the company with much-needed cash to help it survive until next year's inflection point.
To be sure, Rivian isn't just a buy for January. It'll take years for this story to play out. However, the company's meager valuation and clearly defined catalysts in 2025 make this an attractive option for risk-tolerant, long-term growth investors.
