Ford and Rivian Announce Big Developments -- But Are They Buys Now? | The Motley Fool

For years, the automotive industry was looked down upon by most investors because it tends to be a fiercely competitive market, is capital-intensive, and is notoriously low-margin (unless you're Ferrari ). That investment attitude is slowly changing as vehicles load more technology into the ride, driverless vehicle programs expand, and artificial intelligence (AI) works its way into the industry. Recently, Ford Motor Company ( F +0.30%) and Rivian ( RIVN 0.24%) both announced new developments worthy of investor attention. But do these developments move the needle and make the two stocks buys now? Image source: Ford Motor Company. Rivian's AI chip Rivian is looking to accelerate the rollout of autonomous driving features. It has developed its own AI computer chip and said that it will add lidar sensors to the upcoming R2 SUV. The Rivian Autonomy Processor will power its upcoming third-generation Autonomy computer. The chip can process 5 billion pixels per second and enables a "dramatic expansion of Rivian's autonomy capabilities," said Rivian CEO RJ Scaringe, according to Automotive News . Rivian's new chip marks its most aggressive push into autonomous driving technology and positions the company to compete more directly with Tesla , especially when the R2 SUV hits the roads in 2026 and goes head to head with Tesla's top-selling Model Y. Another positive from Rivian developing its own chip is that it can move faster to deploy advanced driver-assistance features than it could if it was forced to work with suppliers. For investors, as far as revenue streams go, the new Autonomy+ driver-assistance package will cost $2,500 as an upfront payment or $49.99 per month, according to Rivian. That's noticeably cheaper than Tesla's Full Self-Driving (FSD) system, which costs consumers $8,000 upfront or $99 per month. The question, however, is: Does this recent development make Rivian stock a buy? Not necessarily. It's a great headline, and it's certainly technology that investors want Rivian to develop, but it doesn't seem like a game-changer for an investment thesis. At least, it doesn't change the investment thesis until perhaps it's more intertwined with joint venture business, potential licensing, or other new revenue streams. Developing this simply puts Rivian on par with, or in the vicinity of, Tesla's current technology. While it does open the doors in the future for more ambitious autonomous projects that could be game-changing, what should really matter to investors right now is the R2. Until then, watch Rivian stock from the sidelines as it builds scale and continues to improve gross profits. NASDAQ: RIVN Key Data Points $19.5 billion pivot away from EVs Ford had its own massive development as the Detroit automaker announced it would take a charge of $19.5 billion over the next couple of years in a pivot away from full electric vehicles (EVs) to place a renewed focus on hybrids. Ford made a massive decision when it saw a market that wasn't buying high-end EVs -- think in the $50,000 to $80,000 range -- to pivot and focus on not only...

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