Why Tesla is a better EV play than Rivian: Good Buy or Goodbye
September 25, 2024
Hamilton Capital chief investment officer Alonso Munoz joins the latest edition of Good Buy or Goodbye to discuss his best and worst picks in the electric vehicle industry. Munoz points to Tesla (TSLA) as a good buy, explaining that the company's autonomous driving initiatives will be key to its next phase of growth. While other companies, like Waymo, are rolling out their own robotaxis, Munoz believes Tesla has a leg up on the competition as it has much more data to train its vehicles. However, he points to potential regulatory and policy risks down the line. He also highlights its improving financials, believing the company has "a lot of cash to deliver on their product roadmap." He expects third quarter deliveries to come in between 460,000 and 470,000. Munoz notes that Tesla is "not just a car company." He is bullish on its energy businesses, highlighting the "explosive" second quarter revenue growth. "That's something that gets us excited away from just the selling of vehicles. And the auto industry has had some struggles over the last couple of years in this macro environment, but also with higher rates. So their diversified business lines and revenue there gets us very excited," he explains. Meanwhile, Munoz is bearish on Rivian (RIVN), telling Yahoo Finance, "They need a lot of cash. This is a scale industry, and very recently, this summer, they partnered with Volkswagen (VWAGY). They got $5 billion to roll out the next phase of their growth, which is lower-cost vehicles. And so this is something that we're looking at. It's an unprofitable business. They lose money for every car that they make, and we're in an environment where consumers have preferences and there are options." In addition, Rivian is facing production challenges. Last month, the company paused the production of its electric delivery vehicles for Amazon (AMZN) —one of its biggest customers. Munoz also notes that production declined last quarter, and while it appears as if the company will meet its targets, it's enough to make him feel "uncomfortable." Finally, he argues that Rivian's offerings are not only narrow but too expensive relative to other EV players. Coupled with production challenges, he adds, "They have to get these vehicles out to market to get sales to drive revenue, to hopefully become a profitable company. And they expect to do that by 2026. We don't know if they're going to make it." Munoz concludes, "If they can lower their cost, if they can leverage their partnership with Volkswagen, and they can crank production up and get cars on the streets, I think that would be really positive for Rivian over the long run." For more expert insight and the latest market action, click here to watch this full episode of Market Domination. This post was written by Melanie Riehl Read More...
Hamilton Capital chief investment officer Alonso Munoz joins the latest edition of Good Buy or Goodbye to discuss his best and worst picks in the electric vehicle industry.
Munoz points to Tesla (TSLA) as a good buy, explaining that the company’s autonomous driving initiatives will be key to its next phase of growth. While other companies, like Waymo, are rolling out their own robotaxis, Munoz believes Tesla has a leg up on the competition as it has much more data to train its vehicles. However, he points to potential regulatory and policy risks down the line.
He also highlights its improving financials, believing the company has “a lot of cash to deliver on their product roadmap.” He expects third quarter deliveries to come in between 460,000 and 470,000.
Munoz notes that Tesla is “not just a car company.” He is bullish on its energy businesses, highlighting the “explosive” second quarter revenue growth. “That’s something that gets us excited away from just the selling of vehicles. And the auto industry has had some struggles over the last couple of years in this macro environment, but also with higher rates. So their diversified business lines and revenue there gets us very excited,” he explains.
Meanwhile, Munoz is bearish on Rivian (RIVN), telling Yahoo Finance, “They need a lot of cash. This is a scale industry, and very recently, this summer, they partnered with Volkswagen (VWAGY). They got $5 billion to roll out the next phase of their growth, which is lower-cost vehicles. And so this is something that we’re looking at. It’s an unprofitable business. They lose money for every car that they make, and we’re in an environment where consumers have preferences and there are options.”
In addition, Rivian is facing production challenges. Last month, the company paused the production of its electric delivery vehicles for Amazon (AMZN) —one of its biggest customers. Munoz also notes that production declined last quarter, and while it appears as if the company will meet its targets, it’s enough to make him feel “uncomfortable.”
Finally, he argues that Rivian’s offerings are not only narrow but too expensive relative to other EV players. Coupled with production challenges, he adds, “They have to get these vehicles out to market to get sales to drive revenue, to hopefully become a profitable company. And they expect to do that by 2026. We don’t know if they’re going to make it.”
Munoz concludes, “If they can lower their cost, if they can leverage their partnership with Volkswagen, and they can crank production up and get cars on the streets, I think that would be really positive for Rivian over the long run.”
For more expert insight and the latest market action, click here to watch this full episode of Market Domination.
Add Comment