Electric vehicle makers Rivian and Lucid reported disappointing quarterly earnings on Tuesday, warning of a challenging year ahead as they grapple with policy changes and trade tensions. Rivian’s shares fell 4% in after-hours trading, while Lucid dropped 7%, reflecting investor concerns over weakening demand and rising costs. Both companies face headwinds from the Trump administration’s rollback of EV tax credits, higher tariffs on auto parts, and relaxed emissions penalties for gas-powered vehicles—policies that have disrupted the industry’s growth.
Supply chain disruptions, particularly China’s restrictions on heavy rare earth metal exports, have further strained production. Rivian reported an 8% increase in per-vehicle costs, reaching $118,375, due to lower production volumes caused by parts shortages. CEO RJ Scaringe attributed the higher costs to supply chain challenges rather than operational inefficiencies. The company will halt production for three weeks in September to retool for its upcoming R2 SUV, a more affordable model critical to its future. Meanwhile, Lucid avoided rare earth shortages by using stockpiled magnets but still faced margin pressures from tariff-related expenses, prompting a cut to its annual production forecast.
The impending expiration of the $7,500 federal EV tax credit in September is expected to dampen demand, though analysts predict a short-term sales surge as buyers rush to secure the incentive. Lucid’s interim CEO, Marc Winterhoff, acknowledged an anticipated softening in Q4 demand but hinted at undisclosed countermeasures to keep buyers interested. Additionally, the Trump administration’s elimination of fuel economy penalties has slashed the value of regulatory credits—a key revenue source for EV startups. Rivian now expects just half of its projected $300 million in credit sales, contributing to a widened full-year loss forecast of $2 billion to $2.25 billion.
With regulatory credit revenue drying up and consumer incentives disappearing, both Rivian and Lucid face a tougher path to profitability. Rivian no longer expects regulatory credit sales in the second half of 2024, while Lucid’s production cuts signal weakening demand for luxury EVs. The broader industry slowdown, compounded by policy shifts and trade barriers, underscores the growing challenges for EV makers in an increasingly competitive and politically volatile market.