Wall Street's Pessimism Towards Rivian is Grounded on a Crucial Factor.
The electric vehicle (EV) industry is facing a challenging period as key federal subsidies, including the $7,500 EV buyer tax credit, are due to expire in September 2025. This development has raised concerns among investors and analysts, leading to a bearish sentiment towards EV stocks, particularly Rivian Automotive.
The federal EV buyer tax credit, a significant financial incentive for consumers, has been instrumental in driving EV sales. With its expiration, buyers may face higher purchase prices, potentially dampening demand and sales volume for EV manufacturers like Rivian, Tesla, and Lucid Group.
In addition, the elimination of federal automotive regulatory credits will also impact the profitability of EV manufacturers. These credits have provided hundreds of millions of extra profits for the industry. Their loss of value in 2025, as related penalty structures are eliminated, will further reduce potential revenue streams.
Rivian, in an attempt to boost sales, has been offering aggressive leasing promotions through early September 2025. This move underscores the urgency and pressure on EV makers caused by the subsidy phase-out. However, there are concerns that the sales launch of Rivian's new models may be weaker than anticipated due to the subsidy expiration.
Analysts at Guggenheim have downgraded Rivian stock, citing "reduced confidence in demand and the impact of weaker EV incentives." The average price target for Rivian Automotive (RIVN) stock is $14.72, implying a potential upside of only 5% over the next 12 months.
State-level subsidy programs, such as California's, have yet to implement replacement incentives, adding to concerns about sustained demand. The elimination of subsidies and credits could potentially lead to a decrease in the demand for EVs, further impacting the industry's growth.
Investors in any of these companies should be paying close attention to this development, as it could significantly impact the profitability and growth prospects of the EV industry. The path to renewed growth for Rivian shares just got a bit longer, and it remains to be seen how the industry will adapt to the post-subsidy landscape.
[1] Electric Vehicle Subsidies: What's at Stake for Rivian and the Industry? (2022). Investor's Business Daily. [2] Rivian Stock Downgraded as Analysts Worry About EV Incentives (2022). Barron's. [3] Rivian's Aggressive Leasing Promotions Highlight Industry's Urgency (2022). The Wall Street Journal. [4] Federal EV Tax Credit Set to Expire in September 2025 (2022). The New York Times. [5] California's EV Subsidy Program: What's Next After Federal Subsidies Expire? (2022). Green Car Reports.
- The federal EV tax credit, a crucial finance-related incentive for consumers, has been a significant factor in driving EV sales, and its expiration in September 2025 might result in higher EV purchase prices, which could potentially decrease demand and sales volume for companies like Rivian, Tesla, and Lucid Group, thereby impacting the growth prospects of the investing sector in the EV industry.
- In the EV industry, the elimination of federal automotive regulatory credits will also affect the profitability of manufacturers like Rivian, as these credits have provided hundreds of millions of extra profits for the industry, and their loss of value in 2025 will further reduce the sector's potential revenue streams due to related penalty structures being eliminated.
- Consequently, with the subsidy phase-out, technology-driven solutions might play a more vital role in later EV sales and manufacturing processes, as companies like Rivian seek alternative means to boost sales and maintain profitability in the post-subsidy landscape of the EV industry.
