The electric vehicle (EV) industry is having a moment right now. After a few years of rising consumer interest, government investments, and general optimism in the economy, EV makers now face rising costs, cutbacks in government-sponsored EV incentives, and consumers who are on the lookout for cheaper vehicle options.
There's a lot of debate as to where EVs are headed, but you don't have to be an EV-hater to acknowledge that the next few years could be bumpy for automakers, including Rivian (RIVN +2.01%). As a Rivan shareholder, I've been keeping a close eye on the pressures the EV industry is facing right now and how it's impacting Rivian.
Here are three things to watch with regard to Rivian over the next three years.
Image source: Rivian.
1. Tariffs and high costs could continue to weigh on Rivian
President Donald Trump announced a slew of tariffs just a couple of months ago, with some significant ones aimed at automakers and their supply chain. While Rivian is a U.S.-based company, produces its vehicles in Illinois and sources many of its parts from American companies, it's still being negatively impacted by tariffs. CEO RJ Scaringe said in an interview back in April:
One of the things with automotive is the supply chain is so complex, where we have hundreds of suppliers providing parts from, say, a headlight or a tow hook or tires or the structure under the skin here that are coming from not only a set of suppliers that supply to us, but those suppliers have suppliers, and then in turn, those suppliers have suppliers, so there's tier two, tier three.
In short, it's nearly impossible to source everything from U.S. vendors. More importantly, it's making Rivian vehicles more expensive by up to a couple of thousand dollars per vehicle, according to Scaringe.
Rivian's vehicles already aren't cheap -- its base R1T truck starts at about $70,000 -- but rising costs could eventually be passed on to customers, which could weigh down customer demand. That's especially bad at a time when elevated interest rates are already keeping some potential buyers on the sidelines. No one knows how long tariffs will stay in place or what their long-term impact will be, but it's clear they're already putting negative pressure on Rivian.
2. A pivot from government incentives could pinch the EV market
For a few years, the U.S. government was helping to boost the EV industry with incentives. But the recently passed budget reconciliation bill removes the $7,500 tax credit for new electric vehicles at the end of 2025. Rivian's trucks and SUVs didn't technically qualify for the credit because they're too expensive, but there was a leasing loophole that allowed customers to claim the credit. Now that it's gone, Rivian could lose some potential customers.
What's more is that the federal government is currently being sued by more than a dozen states over its attempt to pull back $5 billion in funding that Congress authorized during the Biden administration for EV charging infrastructure. A federal judge recently ordered that the funds need to be distributed, though the legal fight isn't yet over.
The combination of disappearing tax incentives for EV purchases and the current administration holding back funding for charging infrastructure does not bode well for the EV industry. To reach mass adoption (and the lower costs associated with it), EVs need a robust charging network, and some incentives need to be in place. With these drying up, Rivian and other EV makers may have a tougher time convincing buyers to go electric.
NASDAQ: RIVN
Key Data Points
3. New models on the way
Rivian recently released its second-quarter production and deliveries figures, and it wasn't all that great. Vehicle production in Q2 fell about 38% year over year to 5,979, and deliveries fell by about 23% to 10,661.
The good news is that part of the production slowdown has to do with the company preparing for new models in 2026. The temporary slowdown isn't expected to impact the company's full-year deliveries either, which is still expected to be in the range between 40,000 to 46,000.
Over the next three years, Rivian will launch its new R2, R3, and R3X vehicles. All of them will cost less than the company's current vehicle lineup, with the R2 expected to start around $45,000.
Cheaper EVs could help Rivian expand its customer base and convince reluctant EV converts to ditch their gas-powered vehicles. These new models are one of the big reasons why I continue to hold onto Rivian's shares. Expanding to lower-priced EVs is a key component to getting consumers to transition away from traditional vehicles. If Rivian gets it right (and it will take time to do so), then it could transition its lineup from a nice-to-have luxury product to a legitimate option when people go car-buying.
Rivian's next three years will likely be difficult
With tariff uncertainty, rising production costs, and a lack of federal investments for EVs, I think the next three years will be a bit bumpy for Rivian. As an investor, I'm keeping an eye on the company's production and delivery goals to see if Rivan can meet its targets.
I also think Rivian's new vehicles could play a vital part in the company's success over the next few years, but that'll be determined by how well it attracts new customers and if the selling price is low enough.
Rivian appears to be making the right moves to turn itself into a successful EV company, but the next few years will prove whether or not the company can weather outside forces well enough to reach its goals.
