The Ultimate EV Stock to Buy With $500 Right Now (Hint: It's Not Tesla)

Everyone wants to invest in the next Tesla. However, that's easier said than done. Tesla's rise from a struggling start-up to an $850 billion behemoth wasn't always a smooth ride. Over its history, many other electric vehicle companies went bankrupt. It's a difficult needle to thread, but if you can identify the next Tesla, huge profits can be made.

Right now, there's one EV stock that has all the characteristics you should be looking for, right down to executing Tesla's proven roadmap for success: Rivian Automotive (NASDAQ: RIVN). Here's why.

This EV stock looks like the next Tesla

How exactly does a company become the next Tesla? Luckily, Elon Musk revealed his playbook many years ago when talking about Tesla's "Master Plan." The entire plan could be condensed into three points:

• Build a sports car.
• Use that money to build an affordable car.
• Use that money to build an even more affordable car.

Of course, Tesla executed on this plan incredibly well. It started with its expensive but supercharged Roadster model, which had a price point that only appealed to millionaire buyers. While the price point couldn't appeal to the mass market, it did prove to everyone that electric vehicles could be cool, stylish, and fun.

Once on the map, Tesla then pivoted to the Model X and Model S -- two models that were slightly more affordable but could easily cost $100,000 when including certain options. These models helped bring Tesla to thousands of new cities and neighborhoods but still prevented the company from truly marketing to the masses.

However, as its master plan outlines, Tesla took the proceeds from those models to build even more affordable cars: the Model Y and Model 3. It was these two models that made Tesla the company it is today. In the 24 months following the first deliveries of the Model 3, Tesla's sales more than tripled. For the Model Y, a very similar sales jump resulted.

TSLA Revenue (TTM) data by YCharts

Right now, Rivian is about to experience a similar step change in sales. In 2021, it began deliveries of its first two models, the R1T and R1S. Per Tesla's roadmap, these vehicles were more like sports cars than family vehicles. Both have prices that can easily surpass $100,000 with certain options, and the company spared no expense when it came to quality components.

The point with the R1T and R1S wasn't to sell a huge number of vehicles but to establish Rivian as a brand consumers could trust. And boy, did they accomplish that goal. Rivian was the only brand in a recent Consumer Reports study to earn a perfect score when it came to customer satisfaction and loyalty. The company beat out every other automaker in the study when it came to whether the purchaser would be interested in owning another of its vehicles. Keep in mind that the survey included both electric and conventional automakers, making the feat even more impressive.

The next step for Rivian is to release its mass-market vehicles that will put it on the map with thousands of additional cities and neighborhoods. It began that step earlier this year with the announcement of its R2, R3, and R3X models -- all of which are expected to debut under $50,000. If Tesla's Model 3 and Model Y launches are any indication, Rivian's sales could explode higher by 1,000% or more.

Here's how to profitably invest in Rivian stock

Now trading at 2.1 times sales, Rivian looks like a bargain compared to Tesla stock, which trades at a lofty 8.8 times sales. That's especially true when you consider that Rivian is potentially about to begin its largest sales ramp in company history. However, there's a reason why shares are priced so cheaply.

First, Rivian is still losing money. Last quarter, it lost more than $30,000 for every vehicle it sold. It should be noted that prior to its Model 3 and Model Y launch, Tesla was actually posting positive gross profits. Second, Rivian's mass-market models aren't expected to hit the streets until 2026 at the earliest. It could be two years or more until its mass-market sales ramp begins to gain traction.

Herein lies the opportunity for patient investors. Compared to its potential, Rivian stock is clearly cheap right now. That's especially true in light of its market value, which, after a recent correction, is down to just $11 billion. It's very possible that the company's sales base in 2027 is higher than the total market cap today.

Still, two things need to happen for shares to skyrocket in the coming years. The company needs to shift to positive gross profits -- something management has promised will happen by the end of this fiscal year. It also needs to get its mass-market vehicles to market on time and on budget.

Will those two catalysts come to pass? Rivian's history suggests there's a good chance. But the EV market is full of historical failures. There's a lot of downside potential here. If you're willing to remain patient, huge growth potential can be had by investors willing to get in early and wait for results.

Should you invest $1,000 in Rivian Automotive right now?

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Ryan Vanzo has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.