Navigating the EV Slowdown: Why Rivian and BYD Could Be Long-Term Winners
The electric vehicle revolution has hit a speed bump. After years of explosive growth, rising interest rates, subsidy cuts, and fierce competition have cooled the market's fervor. Yet, the long-term trajectory remains clear: the transition from internal combustion engines is not a matter of if, but when. For investors with a multi-year horizon, navigating this consolidation phase is key. Two companies, Rivian and BYD, stand out not merely as survivors, but as potential leaders poised for the next bull run.
Rivian, the American upstart, embodies the sector's current growing pains. After a high-profile IPO in 2021, it grappled with production hell, delivering about half its initial 2022 target. While output rebounded in 2023, macroeconomic pressures squeezed volumes again in 2024. The company now forecasts a conservative 40,000-46,000 deliveries for 2025 as it battles to achieve profitability.
However, the roadmap to recovery is taking shape. Analysts project a revenue CAGR north of 30% through 2027, driven by critical catalysts: the upcoming, more affordable R2 SUV, a new manufacturing plant in Georgia, and a strategic $5 billion joint venture with automotive giant Volkswagen. For a stock trading at a deep discount to sales, these near-term milestones could reignite investor confidence.
On the other side of the globe, BYD presents a contrasting picture of scaled execution. Originally a battery manufacturer, the Chinese behemoth has seamlessly evolved into the world's largest seller of EVs and plug-in hybrids. Its decisive 2022 move to abandon pure gasoline cars now looks prescient. BYD's secret weapon is vertical integration, particularly its in-house Blade Battery (LFP) technology, which offers cost and safety advantages.
The numbers speak volumes: annual vehicle sales catapulted from 427,302 in 2020 to 4.27 million in 2024. While growth rates are naturally moderating as the company matures, analysts still expect steady double-digit increases in revenue and earnings through 2027. Trading at a modest earnings multiple, BYD represents a play on global EV adoption with a proven manufacturing and technological edge.
Investor Perspectives
"The volatility is a feature, not a bug, of investing in this space," says Michael Chen, a portfolio manager at Horizon Capital. "Rivian's partnership with VW validates its tech, and BYD's integrated model is a formidable moat. This is a classic 'tortoise and hare' scenario for the next cycle."
Sarah Jenkins, an independent retail investor, is more skeptical: "Rivian is still burning cash and missing targets. Calling it a 'top stock' feels like wishful thinking while Tesla and Chinese rivals are slashing prices. The hype has far outpaced the operational reality."
"Ignore the quarterly noise," advises David Park, a veteran auto industry analyst. "The EV story is a decade-long marathon. BYD has shown it can produce quality at scale profitably. Rivian, if it executes on the R2 and leverages VW's expertise, has a viable path. These are strategic bets on specific competencies within the broader transition."
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Leo Sun has no position in any of the stocks mentioned. The Motley Fool recommends BYD Company and Volkswagen Ag. The Motley Fool has a disclosure policy.
Navigating the EV Slowdown: Why Rivian and BYD Could Be Long-Term Winners was originally published by The Motley Fool