Tesla (NASDAQ: TSLA) experienced its second straight year of declining vehicle deliveries in 2025, with volumes falling by around 9% year over year. Yet in 2024, despite declining EV sales, Tesla's stock price moved higher by more than 60%, adding another gain of roughly 10% in 2025.

Why is Tesla's stock price rising despite a struggling EV business? There are many potential catalysts, but one of the biggest is the market's expectation that the company will transition from an auto manufacturing business to a fully fledged AI company. It's not that the company will be ditching EVs entirely -- although Elon Musk did recently announce that Tesla would soon discontinue its Model S and Model X vehicles. It's just that Tesla's future will be increasingly driven by its investments and success in AI technologies. AI upside is a big reason why shares trade at nearly 15 times sales.

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Rivian (NASDAQ: RIVN), another popular EV stock, is also heavily investing in AI. And yet shares trade at just 3.3 times sales, with a market cap under $20 billion versus Tesla's gargantuan $1.2 trillion valuation.

Wall Street doesn't know what to make of this emerging AI stock. By understanding what is going on, investors have a chance to buy into a potential growth superstar at a relatively large discount to its peers. There are three important factors to understand before jumping in.

1. Rivian is betting big on AI

For decades, consumers have been told that self-driving cars are just around the corner. Despite massive advancements, the world is still waiting. But now, experts are growing more confident that autonomous vehicles will soon be a reality. Global consultancy McKinsey & Co., for example, now predicts robotaxis will be available nationwide by 2030, with full self-driving capabilities available to all by 2032. Why? Because AI is a game changer for autonomy, helping distill and make complex decisions in real time like no other technology has been capable of in the past.

Rivian understands that over the next decade, consumers may purchase an EV not based on seating capacity or the number of cupholders, but for the vehicle's ability to be fully autonomous. That's why it is spending billions of dollars to advance its own AI ambitions. It even expects to produce its own AI chips in the future. By controlling its own AI software from end to end, Rivian has the potential to own its self-driving future, reducing reliance on third-party suppliers while competing head-to-head with major EV makers like Tesla.