Shares of US electric vehicle maker Rivian Automotive (RIVN), surged on Monday (25 November), trading 14.9% above Friday’s close at noon, before recording a 13.28% gain before market close.
California plans to offer incentives to buyers of electric cars if President-elect Donald Trump repeals a federal subsidy when he takes office next year, Governor Gavin Newsom announced on Monday.
In a statement, Newsom said a programme that California phased out in 2023 could be revived to ease the burden on car buyers, replacing a $7,500 tax credit that Trump intends to eliminate.
Trump has previously spoken out about ending the federal electric vehicle tax credit, but has since softened his stance as Tesla CEO Elon Musk has become a supporter and adviser to him.
According to the California governor’s office, Newsom’s proposed subsidy could potentially exclude Tesla and other automakers in an effort to promote more competition and innovation in the marketplace. But that would require consultation with the state Legislature.
Two researchers who have studied the effects of environmental incentives, Joseph Shapiro of the University of California, Berkeley, and Felix Tintelnot of Duke University, have estimated that eliminating the tax credits could reduce U.S. demand for electric cars by 27 percent. That’s putting pressure on electric car stocks, including Rivian.
According to Rivian’s earnings report, operations have been in losses since it went public in 2021, and the company has long relied on a steady stream of outside financing to support itself since then.
Its third-quarter earnings report showed that Rivian’s revenue was $874 million, down 53% year-over-year; gross loss was $392 million; operating loss was $1.339 billion; and net loss was $1.326 billion. In addition, Rivian’s deliveries will remain around 50,000 units for the year, and may even decline. This means that it is very unlikely that the company will start to make profit in the next few years.
Tesla shares fell 3.96 per cent to close at $338.59 on Monday.
