Rivian Faces New Challenges Amid Subsidy Changes

LOS ANGELES, CA – Rivian Automotive, an electric vehicle (EV) manufacturer, is facing new challenges as federal subsidies are set to be phased out. The company, currently valued at $15 billion, has reported a 2.25% decrease in stock price, landing at $13.02 as of July 11, 2025.

This year, Rivian saw several quarters of positive performance, and management anticipates launching three new vehicles priced under $50,000 early next year. These new models could draw significant interest from budget-conscious consumers.

However, a critical source of revenue, stemming from automotive regulatory credits, is in jeopardy. In 2024, Rivian generated $325 million through these credits, essential for bolstering its financial viability. The recent signing of President Donald Trump‘s budget bill, labeled as the “Big Beautiful Bill,” will eliminate certain tax credits by the end of 2025, dramatically affecting demand for EVs.

Recent surveys indicate that more than 80% of car buyers would cancel orders if prices increase by 25%. The eradication of federal tax credits, offering up to $7,500 per buyer, could lead to increased consumer costs and diminish sales.

Moreover, Rivian benefits from the sale of regulatory credits, which it earns by manufacturing low-emission vehicles. Automakers that fail to meet production requirements purchase these credits from compliant manufacturers like Rivian, generating a high profit margin.

The proposed budget bill also aims to eliminate penalties for automakers failing to comply with emissions standards, diminishing their incentive to buy credits from Rivian. Analysts suggest that Rivian could see a significant decline in credit sales and, consequently, profits.

While it is unclear how much of Rivian’s credit sales come from federal programs, estimates suggest that about 75% of credits for its competitor, Tesla, are U.S.-based, with half from federal sources. Applying similar ratios to Rivian may indicate a potential $120 million drop in profit next year without these federal credits.

Despite the challenges, Rivian’s total gross profit last year was around $170 million, leaving a cushion of approximately $50 million if credit sales falter. Trading at 2.8 times sales, expectations for Rivian are currently low, indicating that the elimination of federal regulatory credits might not be catastrophic on its own.

Nonetheless, Rivian’s growth timeline could extend, possibly requiring a reassessment of future investments. For investors willing to adopt a long-term perspective, Rivian still holds promise despite the shift in subsidy policy.