- Donald Trump’s tariff proposals and their push back on electric vehicles could have a significant impact on automakers.
- Rivian CEO RJ Scaringe said during an earnings call that the company is bracing for charges.
- The fate of the $7,500 EV tax credit issued under the Biden Administration remains unclear.
EV company Rivian says it is already preparing for the impact on its supply chain of tariff increases proposed by President-elect Donald Trump.
Rivian CEO RJ Scaringe said that to prepare for potential tariffs that Trump has proposed on foreign goods, the company has been deliberate about sourcing materials for its next lower-cost SUV , R2.
“The R2 sourcing process is something that we’ve been looking at very strategically and we’ve certainly thought about even before the election, what the impact would be if the overall approach to fees changes,” Scaringe said during the company’s earnings call in third quarter on Thursday. the day after the election was called for Trump.
“So a lot of our focus has been on finding suppliers that won’t be subject to large fees.”
The CEO said Rivian also structured its partnerships with overseas suppliers that could be subject to tariffs so the company “doesn’t bear too much of the risk.” He did not specify where the suppliers are located.
Still, analysts say the uncertainty surrounding the next administration could hurt already-slowing demand for EVs.
Shares of Lucid and Rivian — smaller car companies dedicated to EVs — saw a brief jolt. Rivian shares fell as much as 9.7% on Wednesday before recovering some of the losses the next day.
On the campaign trail, the president-elect has also taken aim at the Biden administration’s Inflation Reduction Act, which includes a $7,500 tax credit for SUVs and EV pickups that cost $80,000 or less.
Claire McDonough, Rivian’s chief financial officer, said on the call that Rivian customers who qualify for the tax credit are mostly renters. The CFO said “lease penetration,” or the percentage of total cars sold through leases, was 42%.
Rivian’s R1S and R1T trucks have a base price of $75,900 and $69,900 respectively, while the company plans to sell the R2 for $45,000.
“Given the price point of our vehicles and general income levels, most of our customers do not qualify for financed or cash purchases,” she said.
RBC Capital Markets auto analyst Tom Narayan told Business Insider that he’s concerned Rivian could lose the tax credit stimulus under the new administration.
A Rivian spokesman declined to comment.
Scaringe said on the call that Rivian is also looking at potential policy impacts on the “upstream supply chain,” which includes raw materials.
On top of the uncertainty that comes with a second Trump administration, Rivian continues to face obstacles to profitability — a challenge faced by many new automakers, with the exception of Tesla.
Rivian reported a negative gross profit of $392 million in the third quarter compared to a negative gross profit of $477 million for the same period last year.
Total third-quarter revenue fell 35% from a year earlier to $874 million, driven by the delivery of 10,018 vehicles, the company reported. Regulatory credits, or credits that automakers receive from the government for producing EVs, accounted for $8 million of total revenue for the third quarter of 2024.
Scaringe said he was optimistic about Rivian’s path to profitability, noting an expected 20% reduction in materials costs to produce Rivian’s pickup truck, the R1, between the first quarter and the fourth quarter of this year.
“As we look forward, we’re excited to work with the new administration,” Scaringe said in an interview with CNBC before the earnings call, “but really our focus is making sure the vehicles can really help customers make the transition from internal combustion to electrification”.