Rivian reported a 32% increase in sales. Why did its stock plummet?

Electric SUV maker Rivian Automotive reported a 32% year-on-year increase in third quarter deliveries. At the same time, the company worsened its outlook for the year, warning of instability in the coming quarters. The company cites the elimination of tax incentives for electric vehicles in the US as the reason for the expected drop in demand. Rivian had already lowered its forecast for deliveries in May because of the duties. The automaker's shares plunged more than 7% in Thursday trading.

Rivian delivered 32% more cars in the third quarter than a year earlier: 13,201. Analysts surveyed by Visible Alpha expected sales of 12,690 vehicles, Reuters writes.

However, Rivian's updated forecast calls for 41,500 to 43,500 vehicles to be delivered in 2025. By comparison, the previous range was 40,000 to 46,000 vehicles, meaning the average guidance has been reduced by 500 units.

Despite the growth in deliveries, the outlook for Rivian and the industry as a whole remains dim following the passage of the "Big and Beautiful Act," which eliminates the $7500 tax deduction for buying or leasing an electric vehicle, Reuters notes. Automakers have long relied on this tool to spur sales, the agency explains.

The concession ceased to apply on September 30. Analysts had previously predicted that demand for electric cars and leasing contracts would plummet after its abolition, Reuters writes, but in September, demand for electric cars nearly doubled from customers eager to catch up before the subsidy expired.

On October 2 Rivian shares fell by 7.4% to $13.5. At the postmarket the securities continued their decline by another 0.2%. Since the beginning of the year, the stock has gained 1.7%, while the S&P 500 broad market index has risen 14% over the same time.

In addition to the elimination of tax support, high duties on imported components have become an additional blow to automakers - they increase production costs and reduce margins, Reuters writes. This has forced the industry to revise supply chains, reduce dependence on foreign supplies and invest more actively in production in the United States.

Rising production costs could hurt Rivian's profitability, especially as it prepares to launch a more affordable lineup of R2 electric SUVs next year, the agency said.

Rivian had already lowered its 2025 delivery forecast in May when Donald Trump raised duties on U.S. imports. Although all of Rivian's pickup trucks and SUVs are made in the U.S., the company is "not immune to the impact of the global trade and economic environment," Rivian warned in a letter to shareholders.

At the time, Ford Motor said it expected a $1.5 billion loss from the duties in 2025, while General Motors predicted a loss of up to $5 billion.

BNP Paribas analyst James Picariello believes that electric car makers such as Rivian and Lucid stand to gain from the removal of subsidies for the purchase of electric vehicles. General Motors, Ford Motor, Hyundai Motor and Kia have all seriously ramped up production of electric vehicles in recent years. However, as a 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.

After the end of the tax credit for buying electric cars, Ford CEO Jim Farley said he expects demand for all-electric vehicles in the U.S. to nearly halve, from 10-12% in September to 5% in October.

"I think the industry will remain vibrant, but it will be much smaller than we expected. Especially with the changes in emissions policy and the elimination of the $7500 rebate," Farley said at a Ford event in Detroit on Sept. 30. - We'll know in a month. I wouldn't be surprised if the share of electric vehicle sales in the U.S. drops to 5 percent in October."

Farley said the company will now have to decide what to do with battery plants and capacity to produce electric vehicles. "We'll fill them, but it's going to be more difficult because we used to have a predictable four-year policy," Farley said. - Now the policy has changed ... We're all going to have to rebuild. And I believe it will be good for the country, but it's another source of pressure."

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