Not everyone will be hit equally by the elimination of electric vehicle incentives. Which two stocks are on the upside?

Electric car manufacturers such as Rivian and Lucid will benefit from the elimination of subsidies for the purchase of electric vehicles, which is provided by the "big and beautiful" bill passed by Congress, BNP Paribas suggested. According to analysts, traditional automakers will shift their attention to gasoline-powered versions due to the elimination of incentives, which will give a small head start to those who are fully focused on the electric segment.

Not all automakers will be affected equally by the elimination of subsidies for electric vehicle purchases in the U.S., said BNP Paribas analyst James Picariello, who was quoted by Bloomberg.

The tax bill approved by Congress this week would eliminate the $7500 tax credit for U.S. citizens to buy an electric car after Sept. 30. The tax credit waiver is expected to reduce demand for electric cars later in the year, stated Bloomberg.

General Motors, Ford Motor, Hyundai Motor and Kia have seriously ramped up production of electric vehicles in recent years. However, as the BNP analyst notes, "without government support and with weakening consumer demand, these efforts are likely to slow down." At the same time, "for companies that are fully focused on electric vehicle production, such as Rivian, Lucid and Tesla, this could mean an increase in available market share," Picariello suggested.

The bill opens the door for a revaluation of stocks in the electric vehicle sector, which has generally been declining since the start of the year amid macroeconomic risks, including uncertainty surrounding duties, noted Bloomberg.

In trading on Thursday, July 3, Lucid securities were up 5.4%, Rivian was up 1.5%, and Tesla was down 0.1%.

On Rivian shares, BNP maintained an Outperform recommendation (Outperform) corresponding to a Buy recommendation, while on Lucid securities it maintained an Underperform recommendation (Underperform) suggesting a Sell.

Picariello believes Rivian could additionally benefit from consumers' continued negative view of Ilon Musk (and Tesla) due to his work in Donald Trump's administration, and then controversy with the U.S. president. According to data released Wednesday, Tesla delivered 384,122 vehicles in the second quarter - down 13 percent from a year earlier.

Meanwhile, Rivian and Lucid aren't doing well with deliveries either: they fell short of analysts' expectations for last quarter's results. Rivian delivered 10,661 vehicles, 2.3 percent below Wall Street consensus expectations, Bloomberg writes. And Lucid delivered 3,309 vehicles, 4 percent below consensus.

BNP expects third-quarter deliveries to rise as consumers rush to take advantage of the tax break before it is repealed. Rivian, however, "is likely to benefit more than Lucid, given the slower pace of the latter's expansion and the fact that the Lucid Gravity SUV won't be available until late 2025 and the crossover not until 2027," Picariello said.

This article was AI-translated and verified by a human editor