Today's rise in Rivian's stock can be attributed to:
Rivian Automotive's shares (RIVN 10.50%) saw an increase in trading on Monday, following California's governor's announcement that his state could offer rebates for electric vehicle (EV) buyers if President-elect Trump decides to end federal EV tax credits.
By midday ET, Rivian's shares had climbed approximately 14.9% from their previous closing price.
Governor Newsom of California is preparing to counter Trump's EV policies
In a statement released Monday morning, Governor Gavin Newsom of California indicated his intention to introduce a modified version of California's Clean Vehicle Rebate Program, or CVRP, if Trump carries out his plan to abolish federal tax incentives for EV buyers.
These federal tax incentives can offer up to $7,500 to purchasers of selected new EVs. According to a study by two researchers, Joseph Shapiro of the University of California, Berkeley and Felix Tintelnot of Duke University, who specialize in environmental incentive effects, such a termination could potentially lower U.S. demand for EVs by approximately 27%.
This prospect has been causing uncertainty among EV stocks, including Rivian's, ever since Bloomberg reported the researchers' findings last week.
This could significantly reduce the impact of the loss of federal EV tax credits
California ranks as the largest U.S. market for electric vehicles, with over 2 million EVs sold thus far. The CVRP offered incentives to California EV buyers until its discontinuation in 2023.
The potential return of California's incentives could substantially offset a significant portion of any decrease in overall U.S. EV demand if the federal tax incentives were to be discontinued. This explains why Rivian and other EV stocks are on the rise today.
Investors are closely watching the financial implications of Governor Newsom's plan, as the potential return of California's Clean Vehicle Rebate Program could help mitigate the impact of the loss of federal EV tax credits on EV sales. If successful, this move could encourage more individuals to invest in electric vehicle companies like Rivian Automotive, given the potential increase in demand for their products.
