<div id="readability-page-1"><p><strong>Tesla</strong> <span>(TSLA<span> -2.19%</span>)</span> has long been the leader in the electric vehicle (EV) market, but several upstarts have also entered the picture in recent years. One of the best-positioned in the domestic market at this time is <strong>Rivian</strong> <span>(RIVN<span> 1.25%</span>)</span>. Let's consider which stock has a better chance of outperforming the other in the coming years.</p> <h2>More than just EVs</h2> <p>When it comes to the EV market, Tesla has not been fairing well lately. While some of this can be attributed to increased competition in the pure EV space and the rising popularity of hybrid vehicles, much of Tesla's recent sales slump can be laid directly at the feet of CEO Elon Musk. His foray into politics as a major donor to President Donald Trump's campaign and his leadership role at the head of Trump's &#34;Department of Government Efficiency&#34; (DOGE) angered many liberals, leading to protests and boycotts of Tesla vehicles. More recently, he got into a major spat with Trump that may have alienated him from consumers on the other side of the political spectrum as well.</p> <div><p><img src="https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-b3A9cmVzaXplJnVybD1odHRwczovL2cuZm9vbGNkbi5jb20vZWRpdG9yaWFsL2ltYWdlcy84MjI2MzUvZ2V0dHlpbWFnZXMtMjAzMjQyNDYyOS5qcGcmdz03MDA?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" width="700" height="466" original-src="https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-b3A9cmVzaXplJnVybD1odHRwczovL2cuZm9vbGNkbi5jb20vZWRpdG9yaWFsL2ltYWdlcy84MjI2MzUvZ2V0dHlpbWFnZXMtMjAzMjQyNDYyOS5qcGcmdz03MDA"/></p><p>Image source: Getty Images</p> </div> <p>Right now, the most recent publicly available Tesla sales data is from April, which was before Musk's fight with Trump. The company's sales sank by 16% in the U.S. and plunged by 50% in Europe. Meanwhile, its sales in China dropped by 9%, even as the company offered bigger incentives and discounts in the country than it had in the past and introduced its Model Y vehicle in that market. </p> <p>With Tesla sales reeling in all of its primary markets, it is pinning its hopes on its robotaxi business. The company just launched the service for paying riders in Austin, Texas. It's a small pilot program so far -- the rides are only taking place within a geofenced area, use of the service is by invitation only, and the vehicles -- all of the Model Ys, not CyberCabs -- are operating for now with a safety monitor in the passenger seat. </p> <p>Footage has already surfaced of one of those robotaxis driving briefly in a lane designated for traffic going in the opposite direction, among other reports of them violating traffic laws, so questions remain about Tesla's autonomous driving technology. Additionally, there is still the issue of whether the brand damage that Musk has caused will lead to potential customers shunning his robotaxi business, as well. </p>  <h2>A drive to profitability</h2> <p>While Musk is seemingly trying to alienate more and more of his potential consumers, Rivian is looking to take advantage. The younger EV maker has done a great job of reducing its costs and is now able to sell its popular R1 luxury SUV at a positive gross margin. It did this by both improving its manufacturing processes and completely overhauling the EV's design. Rivian lowered its material costs, but more importantly, it switched to a zonal architecture, which significantly reduces the number of electronic control units (ECUs) and the amount of wiring in its vehicles. </p> <p>That zonal architecture technology was also a big reason why the company was able to strike a partnership with (and get a large investment from) <strong>Volkswagen</strong>. The giant German automaker got access to the technology it wanted while the smaller EV upstart got a cash infusion that will help fund the production ramp-up of its new, lower-priced R2 SUV. </p> <p>This is a transition year for Rivian as it retools its manufacturing facility in preparation for the launch of the R2 SUV in the first half of 2026. The SUV is expected to start around $45,000, which is a price tag that will put it within reach of a much larger demographic than Rivian's R1 model, which starts at over $70,000 and with luxury trims can exceed $100,000. </p> <p>In January, meanwhile, Rivian received final approval for a low-cost $6.6 billion Department of Energy loan that will allow it to continue building a new manufacturing plant in Georgia. There was some concern in March that the Trump administration might try to rescind the loan, but nothing definite has happened as U.S. budget negotiations continue. That facility, if given the go-ahead, is now expected to be up and running in 2028, and should help the company gain vital scale in its manufacturing and aid it on its path toward profitability. </p>  <h2>Which stock is the better stock?</h2> <p>Both Tesla and Rivian come with risks to investors. Tesla's core business is flailing, and it's pinning a lot of hope on its nascent robotaxi business and other ventures. Rivian, meanwhile, is in the early innings of its journey and still has a long road to traverse before it can achieve profitability.</p> <p>That said, I prefer Rivian of the two stocks. The brand damage Musk has done to Tesla appears to be immense, and thus far, the company has not proven that its autonomous driving technology is completely safe. At the same time, Tesla's stock price reflects a belief that it will have some success outside of just being an EV maker.</p> <p>Rivian, on the other hand, has been hitting important milestones such as becoming gross margin positive, and is backed by two large companies: <strong>Amazon</strong>, for which it makes EV delivery vans, and Volkswagen. Between the backing of those giants and its large federal loan, Rivian should have the cash it will need to further scale up its production and become profitable.</p>                                                                            </div>

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RIVN

<p>Tesla faces challenges in the EV market, with a 16% sales drop in the U.S. and 50% in Europe, partly due to CEO Elon Musk's political involvement. In contrast, Rivian is improving its manufacturing and reducing costs, allowing it to sell its R1 SUV profitably. Rivian is also preparing to launch a lower-priced R2 SUV in 2026 and has secured a $6.6 billion loan for a new plant. While both stocks carry risks, Rivian is seen as the better investment option.</p>

- Tesla faces declining sales due to increased competition and CEO Elon Musk's controversial political involvement, leading to brand damage and consumer alienation.  
- In contrast, Rivian is improving its manufacturing processes and achieving positive gross margins, supported by partnerships with Volkswagen and Amazon.  
- While both companies have risks, Rivian's strategic advancements and financial backing position it favorably for future growth compared to Tesla's uncertain trajectory.

Better EV Stock: Rivian vs. Tesla