Actions of Rivian Automobile(NASDAQ:RIVN) has languished for most of 2025. From January 1 to November 1, the company’s stock price barely moved, although there were sporadic ups and downs along the way. However, over the past month, the stock’s value has soared by more than 40%.
I have been exhorting investors to take a closer look at Rivian shares throughout the year. In many ways, the company appears to have the potential to become the next Tesla. Even after the latest price surge, the stock still appears to be a long-term buy for several reasons, the most important of which is expected to see serious progress in 2026.
Take a quick look at Tesla’s valuation and you’ll realize that its stock is valued at a huge premium over almost all others stock of electric vehicles (EV). It trades at a price-to-sales ratio of around 17. Rivian, on the other hand, trades at just 4.2 times sales.
There are many reasons for Tesla’s premium. The company has a huge capital advantage and the best brand recognition in the industry. But it also has a leading position in robo-taxis, a market that some experts say will eventually be worth more than $5 trillion.
The robo-taxi market looks like a high-tech business. But it’s much more than that. Investors have been betting on autonomous driving stocks for more than a decade.
Progress has been slow. Cameras and detection devices are very expensive, and real-world testing has been limited due to safety and regulatory concerns. But artificial intelligence (AI) has dramatically accelerated the process in recent years.
“There is currently considerable progress in AI, resulting in end-to-end AI systems that are more intelligent, capable of learning much more efficiently, interpretable and generalizable to all possible scenarios on the road,” said Raquel Urtasun, CEO of Waabi, a company specializing in autonomous driving technologies. “These advances are giving rise to autonomous vehicles with superhuman capabilities that will improve road safety and transform transportation as we know it.”
Tesla wisely invested heavily in AI, and investors were keen to reward it for its efforts. In general, AI stocks have performed very well in 2025, so their grouping in this category has generated direct gains for shareholders.
For most of the year, Rivian was not considered an AI title. But I’ve repeatedly pointed out that Rivian is also investing heavily in AI, just like Tesla. Rivian scheduled an AI day in early December, and shares have apparently started to rise based on expectations.
Executives have largely delivered on their promises, with new updates on hands-free roadside assistance, point-to-point navigation, eye alerts, and Level 4 personal autonomy. Expect the electric vehicle maker’s progress in AI to continue to strengthen in 2026. But there’s one catalyst that excites me even more in the near term.
A Rivian pickup in front of the company’s headquarters. Source: Rivian
Tesla offers many vehicle models on the market. But its two least expensive models – the Model Y and Model 3 – account for more than 90% of its vehicle sales. To compete directly with Tesla, electric vehicle makers need to have several impressive models priced under $50,000.
Until now, few companies have achieved this feat. Most competing electric vehicles are either overpriced or cheaply priced, with poor features and relatively minimal range.
Rivian currently only has two models on the road: the R1S and the R1T. Both cost more than $70,000, significantly above what most consumers are willing to pay. But next quarter, production should begin on the R2, its first model sold for less than $50,000. Two other models will follow: the R3 and the R3X, both expected to cost less than $50,000.
Within months, Rivian could go from being a niche luxury automaker powered by artificial intelligence to a legitimate competitor to Tesla. More vehicles on the road provide it with more real-world data, strengthening its AI.
Even after the recent share price rise, Rivian still has a market cap of less than $30 billion. Compare that to Tesla’s valuation of $1.5 trillion, and the long-term upside potential of Rivian stock becomes clear.
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Ryan Vanzo has no position in any of the stocks mentioned. The Motley Fool holds positions at Tesla and recommends it. The Mad Motley has a disclosure policy.
