TLDR
Jim Cramer prefers Rivian over Lucid, citing Rivian’s $5.8 billion deal with Volkswagen.
Lucid’s partnership with Uber, valued at $300 million, has raised questions about long-term potential.
Rivian has more production momentum and healthier gross margins than Lucid.
Lucid’s production and leadership issues make it a riskier investment.
Rivian is projected to grow at a compound annual rate of 32%, compared to Lucid’s 85%.
Wall Street veteran Jim Cramer has voiced his opinion on the electric vehicle (EV) race between Rivian (RIVN) and Lucid (LCID). Cramer favors Rivian over Lucid, citing Rivian’s strategic deal with Volkswagen as a key reason for his preference.
Lucid’s Partnership with Uber Raises Concerns
Lucid recently struck a deal with Uber Technologies, with Uber investing $300 million in Lucid and committing to purchase 20,000 vehicles for its robotaxi fleet. While this partnership looks promising on paper, Cramer remains skeptical about the deal’s long-term potential. The robotaxi market is still in its infancy, and the $300 million investment may not be enough to sustain Lucid through its financial challenges, including its $2.7 billion loss in 2024.
The uncertainty surrounding the Uber partnership is a major risk factor. Lucid’s production targets have consistently fallen short, and it remains to be seen whether the company can ramp up to meet the demands of its deal with Uber.
Rivian’s Strategic Deal with Volkswagen
In contrast, Rivian has secured a much more substantial partnership with Volkswagen. The deal grants Volkswagen access to Rivian’s technology platform and operating software in exchange for up to $5.8 billion in funding by 2027. Cramer sees this deal as a clear sign of confidence in Rivian’s tech and long-term prospects, calling it a much more committed partnership than Lucid’s deal with Uber.
Rivian’s production issues are not without challenges, but its partnership with Volkswagen provides it with a more substantial financial backing. The deal ensures that Rivian has the resources to scale its operations and compete more effectively in the EV market.
Production and Financial Performance Comparison
Rivian and Lucid both face significant production challenges, with supply chain issues and high production costs hampering their ability to meet ambitious targets. However, Rivian has shown more consistent progress, increasing production from 24,337 vehicles in 2022 to 57,232 vehicles in 2023. In contrast, Lucid has struggled with production, delivering only 4,369 vehicles in 2022 and 10,241 vehicles in 2024.
Rivian’s gross margins turned positive over the past two quarters, showing signs of improvement as it benefits from economies of scale. Lucid, on the other hand, still faces negative margins and struggles to meet investor expectations.
Growth Projections and Market Potential
Rivian is expected to grow its revenue at a compound annual growth rate (CAGR) of 32% from 2024 to 2027. While Lucid’s revenue is projected to grow faster at a CAGR of 85%, Rivian’s higher production rates, healthier margins, and more stable leadership make it the better investment at the moment.
Lucid’s ability to meet its ambitious production goals remains in question, and any failure to do so could lead to a further decline in its stock price. Rivian, despite its challenges, is positioned for more steady growth, especially as it prepares for the launch of its smaller R2 SUV in 2026.
Conclusion: Rivian Shows More Stability
While both Rivian and Lucid have their strengths and risks, Cramer’s endorsement of Rivian highlights its more solid foundation in terms of financial backing, leadership, and production capacity. Lucid’s smaller scale and leadership challenges make it a riskier bet, especially with its production delays and market uncertainty.
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