Key points:
- Tesla sells off, but it will only be temporary
- Rivian is under pressure from first-mover competitor Ford
- The Tesla dip isn't reflective of financial fundamentals
- key point
Shortages and supply chain shortages have dominated the EV narrative lately, not helped by high growth stocks falling out of favor with investors and a wider change in safe-haven sentiment. This being said, consumer demand for electric vehicles is undoubtedly on the rise, with data trends illustrating a changing market. For start-ups like Rivian (NASDAQ: RIVN), management is really starting to feel the pressure, hinged on a difficult year ahead.Â
A lot of investors think they’ve missed the boat with Tesla, arguing that there is much higher growth potential in new, fresh-faced companies like Rivian; pointing to the ‘next Tesla’. The stark reality is a different story. Tesla isn’t running out of runway, neither is it feeling any immediate threat in competition.Â
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The company consistently outperforms the wider sector, delivering on unprecedented growth that continues to surprise analysts. Elon Musk’s Twitter buyout initially weighed on TSLA stock, but this isn’t indicative of changing sentiment towards Tesla’s sturdy fundamentals, just an immediate reaction to uncertainty regarding the financing arrangement; looming over Tesla price action.Â
It would take some strange logic to jump from Tesla to a struggling start-up like Rivian. Ford took a huge hit in Q1 thanks to a massive depreciation in Rivian’s value, the company CEO has already expressed his supply chain woes, and competition is simply too robust. The scaling of Ford’s F-150 Lightning will dwarf Rivian’s competitive capacity, its first-mover advantage should allow the company to dominate the space; leaving EV truck competitors Rivian and GM in the dust.Â
The likelihood of Rivian being a ‘big winner’ is somewhat diminished by Ford’s long-term positioning, the grueling landscape for EV start-ups and the likelihood of ongoing shortages. Those jumping from Tesla are giving way to short-term, twitter-induced panic, and the sell-off has absolutely no reflection of Tesla’s strong financial fundamentals.
