What happened

After tumbling nearly 9.7% last week, Rivian Automotive (RIVN 0.08%) stock opened Monday on a positive note and had shot up 4.8% as of 10:43 a.m. ET. Although the electric vehicle (EV) stock gave up some of those gains as the day progressed, it was still up 1.7% as of 1:30 p.m. ET today.

The latest move from President Joe Biden has investors hoping Rivian could soon make a breakthrough in its biggest growth challenge yet.

So what

In its recently filed annual report, Rivian listed supply constraints and cost pressure among its biggest risk factors. Specifically, Rivian highlighted how a shortage in the supply of key parts like batteries has added to its costs, and how the company is exposed to "multiple risks" related to the availability and prices of battery cells.

Batteries that power EVs are built using metals like lithium, nickel, and cobalt, the prices of which skyrocketed in recent weeks after the conflict between Russia and Ukraine disrupted supply. Lithium carbonate prices, for example, are still up a whopping 70% year to date despite cooling off a bit in the past couple of weeks on the back of rising production in China.

This supply crunch and high pricing has hurt nearly every EV manufacturer, including industry leader Tesla, which has had to raise its vehicle prices multiple times in recent weeks to offset inflationary pressures.

A person charging an electric car.

Image source: Getty Images.

Rivian also increased prices earlier in March but had to roll back part of the decision after receiving public backlash. Days later, Rivian said it expects to produce only 25,000 vehicles this year, half of what it claimed it could have produced if not for supply chain constraints.

These developments of course sent Rivian's stock price plummeting over the weeks, but investors see a silver lining today.

On Monday, the Biden administration announced plans to invest $3.1 billion under its $1 trillion bipartisan infrastructure law on battery manufacturing capacity in the nation. Biden's infrastructure law has lined up billions of dollars of investment on the electric vehicle industry, including more than $7 billion on the battery supply chain, $7.5 billion on EV charging networks, and $5 billion each on electric transit buses and electric school buses.

In its Monday press release, the U.S. Department of Energy said the $3.1 billion will go toward making more batteries and EV components in America, including building sustainable domestic sources of critical material used in lithium-ion batteries like lithium, nickel, cobalt, and graphite.

Now what

Honestly, I wouldn't read much into Biden's move as these plans take time to materialize, and producing minerals like lithium is a long-term game. That means Rivian's struggles to secure supply of key raw material and ramp up production remain. To top that off, competition is heating up and expectations are low from Rivian's upcoming quarterly earnings release on May 11.

And Rivian's initial public offering lockup period, during which early investors are barred from selling the stock, is expiring on May 9. It's hard to say what'll happen and whether large investors like Ford Motor Company and Amazon will dump Rivian shares, but on Monday investors were shaking off their fears nonetheless.