Tesla vs. Rivian: Which Is the Better Growth Stock to Buy Now?

Key Points

Tesla's first-quarter revenue grew 16% year over year.

Rivian began selling its long-awaited R2.

Both growth stocks carry meaningful risks despite their recent pullbacks.

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Two of the main electric-vehicle stocks haven't had a great start to 2026. Year to date, shares of Tesla (NASDAQ: TSLA) are down about 13%, while Rivian Automotive (NASDAQ: RIVN) is off roughly 24% -- including a sharp drop on Friday after the smaller automaker's first-quarter earnings report.

But could sentiment toward these two stocks improve?

Now's a good time to look at both stocks, as each company has now delivered fresh first-quarter results. Additionally, with both stocks trading well below where they started the year, this is a good time to figure out which is the better growth stock to buy now.

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Tesla: margin recovery meets a heavy spending year

Tesla's first quarter looked encouraging on the surface.

The electric-car maker's first-quarter revenue rose 16% year over year to $22.4 billion -- a welcome bounce after Tesla's first-ever annual revenue decline last year. Additionally, Tesla's non-GAAP (adjusted) earnings per share jumped 52% to $0.41, helped by a gross margin of 21.1% -- up from 16.3% a year earlier and the company's best quarterly margin in some time.

But while Tesla's first-quarter deliveries rose 6% year over year, the company built about 50,000 more vehicles than it sold, suggesting there could be a demand issue. And the company's energy generation and storage revenue fell 12% year over year, with deployments dropping to 8.8 gigawatt hours from a record 14.2 gigawatt hours in the fourth quarter of 2025.

And the bigger surprise was in the company's outlook for its spending. Management said it now expects 2026 capital expenditures to exceed $25 billion -- up from a $20 billion guide just a quarter earlier and roughly triple the $8.6 billion the company spent in 2025.

Tesla chief financial officer Vaibhav Taneja told investors during the company's first-quarterearnings callthat Tesla is in "a very big capital investment phase."

That spending is being directed toward AI compute, Cybercab, Megapack 3, the Optimus humanoid robot, and an expanding Robotaxi service, now operating in Austin, Dallas, and Houston.

There's plenty to like here, particularly the margin recovery and continued progress on autonomy.

Still, the stock trades about 190 times analysts' consensus earnings-per-share forecast for the company over the next 12 months. Additionally, investors are going to need to exercise extreme patience; CEO Elon Musk acknowledged that Robotaxi revenue won't be material this year.

Rivian: the R2 finally arrives -- with a catch

Rivian's first-quarter update arguably wasn't as upbeat as Tesla's. Rivian's first-quarter revenue grew 11% year over year to $1.38 billion, supported by 10,365 deliveries -- up 20% -- and a 49% jump in software and services revenue (much of it tied to the company's joint venture with Volkswagen Group). And Rivian's loss per share of $0.33 notably narrowed from $0.48 a year earlier.

But Rivian's adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) was negative $472 million, and management still expects a full-year adjusted EBITDA loss of $1.8 billion to $2.1 billion.

The bigger story was the start of production for the R2 -- Rivian's long-awaited midsize SUV.

"I believe the R2 will be a game changer for our customers and will be a key driver of our company's long-term growth and profitability," founder and CEO RJ Scaringe said during the company's first-quarterearnings call

But here's the catch: the R2 launched at a starting price of $57,990 -- well above the roughly $45,000 entry point Rivian had advertised for years. A more affordable version isn't expected until late this year. But even that one won't be priced near $45,000. The company isn't planning to launch a $45,000 version until "late 2027."

Combining all of this with continued cash burn, that dynamic helps explain why shares fell more than 8% on Friday following the report.

Which stock is the better buy?

Ultimately, Rivian hasn't yet proven it can build vehicles profitably at scale -- and the latest news from the company doesn't suggest this will change any time soon.

Tesla, by contrast, is generating cash and expanding its Robotaxi footprint. That said, the company expects free cash flow to be negative for the rest of this year as it ramps up its capital expenditures. But the automaker has significant liquidity -- $44.7 billion of cash, cash equivalents, and short-term investments.

Overall, Tesla stock arguably looks like the better choice today. That said, both stocks look risky. Tesla's valuation already prices in big wins from autonomy and Optimus, while Rivian's path to profitability hinges almost entirely on a successful R2 ramp. Investors interested in either name may want to keep position sizes modest.

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Daniel Sparks has clients with positions in Tesla. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.