Rivian, Nio, and Polestar may thrive as Tesla tumbles.
Because the Trump administration’s “Liberation Day” tariffs rattle the markets, it would look like a horrible time to spend money on electrical automobile (EV) shares. These larger tariffs may disrupt provide chains, drive up labor and part prices, and make EVs rather more costly.
Shares of Tesla, the bellwether of the sector, have already dropped 40% this yr. That decline may be attributed to its slowing gross sales, shrinking margin, Elon Musk’s polarizing work with the Trump administration, and rising tariffs.
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But Tesla’s ongoing points may symbolize alternatives for smaller EV makers. I consider three of these underdogs — Rivian (RIVN -2.99%), Nio (NIO -7.62%), and Polestar (PSNY -9.67%) — deserve some extra consideration on this chaotic market.
Rivian
Rivian sells the R1T pickup, R1S SUV, and customized electrical supply vans. It plans to launch its subsequent automobile, the cheaper R2 SUV, in 2026. Its deliveries surged 147% to 50,122 automobiles in 2023 however rose simply 3% to 51,759 automobiles in 2024, because it handled provide chain constraints, stiff competitors, and a brief shutdown of its Illinois plant.
For 2025, Rivian goals to ship solely 46,000 to 51,000 automobiles because it shuts down its Illinois plant once more for extra upgrades forward of its R2 launch subsequent yr; grapples with extra part shortages; offers with the aftermath of the fires in Los Angeles, considered one of its prime markets; and braces for the Trump administration’s incoming tariffs.
That outlook appears dim, however Rivian’s gross margin really improved from damaging 188% in 2022 to negative-24% in 2024, and it anticipates a “modest” gross revenue in 2025. These enhancements had been pushed by its decrease manufacturing prices, the enlargement of its higher-margin software program and providers enterprise, and its gross sales of its personal regulatory credit to different automakers. It will not flip worthwhile anytime quickly, however that progress would possibly pave the way in which for a clean rollout of the R2 subsequent yr.
With an enterprise worth of $12.6 billion, Rivian trades at simply 2.3 occasions this yr’s gross sales. Tesla trades at 6.9 occasions this yr’s gross sales. Due to this fact, any constructive developments relating to its present automobiles or the upcoming R2 may drive its inventory larger.
Nio
Nio is a Chinese language maker of electrical sedans and SUVs that has been taking some child steps into Europe. It differentiates itself from its opponents with detachable batteries that may be shortly changed at its personal battery-swapping stations.
Nio’s deliveries greater than doubled in 2020 and 2021, then rose 34% in 2022 and 31% to 160,038 automobiles in 2023. That deceleration, which it attributed to provide chain points, more durable competitors, and China’s cooling economic system, spooked the bulls.
However in 2024, Nio’s deliveries grew 39% to 221,970 automobiles because it grew its home market share with its ET sedans, ES SUVs, and EC crossovers. It additionally launched its lower-end Onvo L60, which resembles Tesla’s Mannequin Y however begins at simply $20,500. Its annual automobile margin, which had dropped from 20.1% in 2021 to 9.5% in 2023, additionally expanded to 12.3% in 2024, because it bought the next mixture of premium automobiles.
This yr, its new Firefly compact electrical hatchback may considerably increase its deliveries in China and Europe. It may additionally shift a few of its manufacturing to Europe to offset the area’s rising tariffs on Chinese language EVs.
Nio is not anticipated to interrupt even anytime quickly, but it surely’s rising, has loads of money, and remains to be partly backed by the Chinese language authorities. With an enterprise worth of $8.9 billion, Nio appears to be like even cheaper than Rivian at 0.7 occasions this yr’s gross sales.
Polestar
Polestar, which was beforehand Volvo’s efficiency model earlier than it was spun out as an impartial EV maker, sells three luxurious EVs: the compact Polestar 2, the Polestar 3 midsize SUV, and the Polestar 4 compact coupe SUV.
Polestar’s deliveries soared 80% in 2022 however grew solely 6% in 2023, as some software program issues drove it to postpone the launch of the Polestar 3 from late 2023 to mid-2024. It additionally hasn’t reported its full-year outcomes for 2024 but, due to the restatement of its filings fo 2023 to right some accounting errors, but it surely beforehand anticipated its income to say no by the “mid-teens” for the yr because it handled slower-than-expected gross sales of the Polestar 3 and Polestar 4 in a tricky market.
These issues crushed its inventory, but it surely’s coming after Tesla this yr with its “Commerce in Your Tesla” offers of as much as $20,000 towards the lease of a brand new Polestar 3. These presents may achieve extra momentum as Tesla’s model loses its luster. Releasing its fourth-quarter and full-year earnings report — which has already been delayed twice — may additionally soothe its rattled buyers.
Polestar remains to be deeply unprofitable, however analysts count on its income to greater than double in 2025 because it launches its subsequent automobile, the Polestar 5 grand tourer, and expands its manufacturing vegetation within the U.S. and South Korea. With an enterprise worth of $4.6 billion, it appears to be like grime low cost at 1.0 occasions its projected gross sales for 2025 — and its inventory may skyrocket if it will get its act collectively.
