“While we believe deeply in the long-term value drivers of our business, the policy environment continues to be complex and rapidly evolving,” Chief Executive Officer RJ Scaringe said on Rivian’s earnings call.
Rivian is being buffeted by major US policy changes under Trump that are inflating costs and cutting revenue. The tax bill the president signed into law last month eliminated civil penalties that automakers had been required to pay US regulators which oversee stringent US fuel economy requirements.That has essentially eliminated demand for credits. Rivian expects zero revenue from those sales for the remainder of the year, Chief Financial Officer Claire McDonough said on the company’s earnings call. Full-year credit revenue will be about $160 million, down from $300 million under its prior forecast before the changes took effect.
The company also expects tariffs to raise costs by a “couple thousand” dollars per vehicle in the second half, McDonough said.
“While sentiment into the print was weak, we believe the stock will underperform on the result, with a key question ahead on Rivian’s path to profit,” Barclays analyst Dan Levy said in a note to clients.
Rivian’s shares fell 5% in after-hours trading in New York. The stock had declined about 8.7% this year through Tuesday’s close, trailing the S&P 500 Index’s 7.1% gain.The worsening financial picture elevates the importance of its deal with Volkswagen AG. The German carmaker provided a $1 billion equity investment into the EV maker in late June, part of a broader $5.8 billion deal between the companies.
The struggling maker of electric pickups, SUVs and delivery vans is the latest automaker to say volatile US policy swings are crimping profits. Legacy automakers including General Motors Co., Ford Motor Co. and Stellantis NV have said tariffs will reduce earnings by billions of dollars in 2025.
Yet the abrupt changes to rules affecting the market for regulatory credits hits dedicated EV makers particularly hard. For Rivian, that revenue has helped it offset the heavy investments it’s made to increase production and develop a new line of more affordable EVs due out next year.
Credit sales helped the company post a gross profit of $206 million during the first three months of the year. Rivian swung to a loss of $206 million by that measure in the most recent period.
Tesla Inc. last month similarly warned the policy shifts would weigh on its revenue and earnings going forward.
Rivian now expects an adjusted loss before interest, taxes, depreciation and amortization of as much as $2.25 billion this year. That’s worse than the maximum loss of $1.9 billion by that measure under its prior forecast. Wall Street analysts had expected about $1.8 billion on average.
Scaringe said the carmaker’s second-quarter performance also factored into its gloomier earnings outlook. The adjusted loss was 80 cents a share in the period, worse than the 63-cent deficit expected by analysts.
