Rivian Automotive (RIVN -5.53%) shares have been on a roller-coaster ride since the U.S. election on Nov. 5. A dip after Donald Trump’s election victory was followed by a sharp surge in the shares on company-specific news.
Rivian stock is ending the week on a down note, though, with shares lower by 5.9% as of 1:15 p.m. ET. That’s because there is growing commentary about how the incoming presidential administration could hinder the electric vehicle (EV) start-up’s growth plans. But it also could be a buying opportunity if the pundits have it wrong.
How vulnerable is Rivian?
The initial reaction to Donald Trump’s election among EV sector investors was one of concern. While Trump has famously not been a fan of electric vehicles, he has strong support and a close relationship with EV trailblazer and Tesla CEO Elon Musk. Yet there are growing expectations that the incoming administration will eliminate existing tax credits for EV buyers.
There are already qualification limits on those credits, though, including vehicle price and buyer income level. Rivian’s current lineup sells for list prices, mostly too expensive to qualify for credits. But there is a loophole in the law where all leased vehicles are eligible for the $7,500 credit. And over 40% of Rivian’s sales in the third quarter were leased, according to Barron’s.
Additionally, Rivian’s next R2 EV platform is expected to be available for about $45,000, which would qualify for credits under the current rules. But that won’t be available until 2026. There could be many more changes within the EV sector between now and then. And with Elon Musk having an influential position in the next administration, it remains to be seen if his strong support for electric vehicle use will sway Donald Trump and others.
Musk is reportedly not against eliminating the current tax credits. Tesla is profitable, and the business could withstand lower selling prices to help support consumer interest. But he certainly wants the overall industry to succeed, and it seems a little early to guess what might happen in the next administration.
Howard Smith has positions in Rivian Automotive and Tesla. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.