The Best EV Stock to Invest $500 in Right Now

Whether you're a diehard electric vehicle fan or merely curious about the EV market, you have likely thought about which companies -- that aren't named Tesla -- might be a good idea to hitch your horse to right now.

We're still early in the transition from petroleum-powered vehicles to electrified ones, but I've been impressed with Rivian's (NASDAQ: RIVN) EV pickup truck and SUV, so much so that I bought shares of the company earlier this year. Here are three reasons I think it could be one of the best EV stocks to put $500 toward.

1. It has significant backing from large companies

Over the summer, the world's second-largest automaker, Volkswagen, started a joint venture with Rivian in which VW will get access to some of its tech. In exchange, the EV maker received an initial $1 billion and will get up to $5.8 billion in planned investments by 2027.

Not only is the investment a good thing for the company as it burns through cash for expensive vehicle production, but it's also an indicator that Rivian is creating valuable technology that the auto industry is taking notice of.

And VW's investment isn't the only significant backing from a large company. Amazon was an early investor and owns about 17% of the company. It also ordered 100,000 electric vans from Rivian to be delivered by 2030, with 10,000 having already been delivered.

2. Rivian is inching close to profitability

Making vehicles is difficult and expensive, and it's especially true for EV start-ups. Rivian and many of its competitors are burning through cash as they launch new products and try to ramp up production. But even as it spends lots of money, Rivian is narrowing its losses.

The company's net losses were $1.1 billion in the third quarter (which ended Sept. 30), an improvement from its loss of $1.37 billion in the year-ago quarter.

Some of Rivian's cost-cutting this year has included reengineering some of the wiring harnesses in its vehicles, removing 100 steps from its battery-making process, and removing 500 parts from the design of its R1S SUV and R1T pickup truck, all resulting in a 35% cost reduction.

The difference between Rivian and some of its peers is that the company is moving closer to profitably. Management recently reiterated that it will achieve modest gross profit by the end of the fourth quarter.

3. Recent share price pullbacks have opened up a buying opportunity

If you believe that EVs are the future of the automotive market, then now is a good time to invest. Many EV stocks, Rivian included, have experienced significant share price declines over the past few years.

Image source: Rivian.

Rivian's share price has fallen 34% over the past year. With such a large decline, you can get shares at a significant discount right now. The company's stock has price-to-sales ratio of 2.58, much lower than rival Lucid's 6.7.

I don't think all EV start-ups are worth investing in, but I do think Rivian offers a unique opportunity. It has cut costs and is moving toward profitability; at the same time, it has received large investments to keep its operations going.

It also makes products that are very popular. A Consumer Reports survey recently found that 86% of Rivian customers say they would buy another vehicle from the company, the highest score of any car brand.

Will the stock experience more volatility? Probably. There's still a long road ahead for mass EV adoption. But putting some money toward Rivian right now could end up being a smart bet once electric vehicles reach a tipping point with consumers.

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Chris Neiger has positions in Rivian Automotive. The Motley Fool has positions in and recommends Amazon and Tesla. The Motley Fool recommends Volkswagen Ag. The Motley Fool has a disclosure policy.