Rivian Automotive Faces Pressure as EV Tax Credit Could Be Cut
Shares of Rivian Automotive (NASDAQ: RIVN) are experiencing a decline for the second consecutive day. This follows a report from Reuters indicating that the incoming Trump administration is considering the elimination of the electric vehicle (EV) tax credit program.
As of 10:30 a.m. ET, Rivian’s shares had dropped approximately 4.7% compared to Thursday’s closing price.
Potential Fallout for the U.S. EV Market if Credits End
Shares of Rivian fell over 14% on Thursday after Reuters highlighted plans from President-elect Donald Trump’s transition team to end consumer tax credits for EV purchases as part of a broader tax reform strategy.
These credits offer incentives up to $7,500 for buyers of specific electric vehicles. The program is designed to help automakers manage their initial production costs by encouraging consumer purchases.
Image source: Rivian.
Interestingly, according to Reuters, representatives from Tesla, the leading U.S. EV manufacturer, have expressed support for terminating the credits. As a well-established company, Tesla may not require the same level of support, but other automakers, including major companies like Ford Motor Company (NYSE: F), along with newer companies like Rivian and Lucid (NASDAQ: LCID), could be adversely affected by this potential change.
Rivian’s Strategic Moves Could Mitigate Risks, but Concerns Remain
While the conclusion of U.S. EV tax credits likely won’t spell disaster for Rivian, it raises valid concerns for EV investors as a whole. Rivian’s recent $5.8 billion technology-sharing deal with German automotive giant Volkswagen (OTC: VWAGY), finalized earlier this week, may provide some insulation from immediate market disruptions in the U.S.
Nevertheless, the proposed termination of these tax incentives is alarming for those invested in the EV sector, as reflected in Rivian’s declining stock value since the news broke.
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John Rosevear has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla and Volkswagen AG. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
