Rivian Automotive, Inc. (NASDAQ:RIVN) and Lucid Group, Inc. (NASDAQ:LCID) have returned -15% and -63% over the past six months, compared to a 21.25% return for the Insider Monkey Billionaire Index and 14% for State Street SPDR S&P 500 ETF Trust, as of October 12.
The big question for Rivian and Lucid is not whether electric vehicles have a future. It is whether these companies can build enough cars, sell them at prices customers will pay, and get their costs down before they run out of money. Both have promising technology and ambitious plans, but they are at different stages of that journey.
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Rivian Has a More Immediate Growth Opportunity
Rivian Automotive, Inc.’s next major test is the R2. The company began delivering the midsize SUV to customers in June, and CEO RJ Scaringe said reservation conversions for the $58,000 launch edition were better than expected. Rivian also recorded 57,000 demo drives in Q2, a company record. The opportunity is bigger than selling another model: a lower-priced vehicle could take Rivian beyond its current premium customer base and into a much larger part of the market.
But demand is only half the equation. Rivian needs to ramp production without letting manufacturing costs get out of hand. It expects to move to a second shift at its Illinois plant by the end of Q3, and management believes higher R2 volumes can help the automotive business reach positive gross profit by the end of 2026. That is an important milestone, not the same thing as company-wide profitability. Rivian still expects a substantial adjusted EBITDA loss this year.
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Lucid Has More to Prove
Lucid Group, Inc. needs to sell cars to more than just luxury buyers. Its midsize platform could help it do that, and the Uber and Nuro robotaxi deal gives it another avenue for growth. Both could make a difference, but Lucid still has to prove it can turn these plans into a meaningful business rather than just another set of promises.
The current business shows why execution matters. Lucid generated $405 million in Q2 revenue, up 56% year over year, but reported a negative 105% gross margin. It also recorded a $300 million inventory impairment after production outpaced demand for the Gravity. New CEO Silvio Napoli has identified $1.4 billion in potential cash-flow improvements for 2026 and is cutting costs, but Lucid still needs to show that those changes can improve the economics of each vehicle it sells.
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Valuation: Lucid Is Cheaper, but for Good Reason
Rivian trades at 3.23x sales, compared with just 0.91x for Lucid. Neither has a meaningful trailing or forward P/E ratio while it is losing money, so investors have to judge them on revenue growth, gross margins, cash burn, and the likelihood of eventually earning a return on the capital being invested.
Lucid’s discount is tempting. At less than 1x sales, the market is assigning relatively little value to its future potential. If the new management team can cut costs, improve production discipline, get the midsize platform to market, and turn the robotaxi partnership into a viable business, the stock could have substantial upside. But the current business is nowhere near proving that case. A negative 105% gross margin means Lucid is not simply spending heavily to grow. Its reported vehicle economics remain deeply challenged, and the $1.476 billion quarterly free cash outflow shows how expensive the turnaround is. Management expects liquidity to last well into 2027, but that is not a long runway for a company with so much to fix. Additional funding could also dilute shareholders.
Rivian’s 3.23x sales multiple reflects a business that looks further along than Lucid. Revenue rose 27% in Q2 to $1.66 billion, and consolidated gross margin hit 11%. But there’s more to that number than car sales. Software and services generated $215 million in gross profit, including revenue from the Volkswagen joint venture, while the automotive business still posted a $36 million gross loss. Regulatory credits and a tariff refund helped too. Rivian is making progress, but it still needs to show that selling vehicles can consistently make money.
The R2 launch will go a long way toward determining whether Rivian deserves its valuation. If production ramps up without major problems and the lower-priced models bring in more buyers, the current multiple will be easier to defend. But supplier issues, stubbornly high costs, or weaker demand after the launch edition could leave Rivian needing more cash before it becomes sustainably profitable.
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Conclusion
Rivian seems like the better choice at this point. The R2 gives it a more realistic shot at growing sales and making its vehicle business profitable, although getting there won’t be easy. Lucid is cheaper, but it has a longer road ahead and a greater chance of needing more money to get through it. A sub-1x sales multiple alone isn’t enough to make investors interested. Rivian looks like the better bet today, but neither company has shown yet that it can turn growth into consistent profits.
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Market Sentiment
Hedge fund ownership of RIVN declined from 45 funds in Q1 2026 to 40 in Q2, according to the Insider Monkey database, while the value of their positions increased from approximately $898 million to $1.72 billion. That is a mixed signal: fewer funds held the stock, but the reported value of their positions rose.
For LCID, the number of hedge funds holding shares remained unchanged at 23, while the value of their positions fell from approximately $56.9 million to $41.8 million.
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This article is originally published at Insider Monkey.
