Baird analyst Ben Kallo is reassessing the electric vehicle landscape in light of geopolitical uncertainty and policy changes.

Here are two EV players attempting to navigate the turns ahead in 2025.

Tesla

Tesla, Inc. (NASDAQ:TSLA) remains a top pick with Baird emphasizing its long-term potential despite near-term volatility. The stock, up nearly 91% since the election, has momentum, Kallo says:

• New Models: Upcoming vehicles, including the lower-cost 'Model 2' and Cybertruck, promise to drive volume growth.
• Cost Efficiencies: Falling production costs and increased factory utilization are expected to boost margins.
• Regulatory Tailwinds: While the removal of the EV tax credit is a negative for the sector, Tesla's competitors are likely to feel the pinch more.
• AI and Autonomy: Investments in full self-driving (FSD), Dojo compute, and the Optimus robot could redefine the EV market.

However, Tesla's valuation, geopolitical risks tied to its Shanghai operations, and potential delays in autonomy initiatives are points of caution.

Kallo suggests buying on pullbacks, underlining Tesla's strong position as a market leader.

Read Also: What's Going On With Rivian (RIVN) Stock?

Rivian

Rivian Automotive, Inc. (NASDAQ:RIVN) faces a tougher road ahead, earning a downgrade to Neutral.

This downgrade reflects a challenging near-term outlook. Despite a strong brand and promising long-term potential, Kallo highlights several hurdles:

• Demand Concerns: EV sales may fall short of expectations in 2025, dampening momentum.
• Production Challenges: Limited ability to leverage fixed costs due to lower production volumes.
• Few Catalysts: With the Volkswagen joint venture finalized and DOE funding secured, Rivian lacks clear drivers for growth next year.

While Kallo remains optimistic about Rivian's R2 lineup and its long-term opportunity. But skepticism around near-term profitability and margins led to the Neutral rating.

The Big Picture

As the EV market faces headwinds from policy uncertainty and evolving global dynamics, Tesla continues to dominate while Rivian, though promising, has more to prove in the near term.

For investors, it's a tale of two trajectories—one accelerating confidently, the other stuck in neutral.

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