Rivian(NASDAQ: RIVN) has emerged as one of the most promising U.S.-based electric vehicle (EV) companies over the past several years. The company’s brand scores the highest among all car brands in terms of owner satisfaction; it reached an important milestone of gross profitability in the past two consecutive quarters; and it has exciting new models in its pipeline.
But the Trump administration’s tariffs are throwing a wrench into many automakers’ plans, and Rivian isn’t immune. Here’s how the company is handling the current auto tariffs and whether or not Rivian stock is a buy right now.
Image source: Rivian.
Rivian, like every other automaker, sources some parts from outside the country, and tariffs are already increasing the company’s capital expenditures (capex) and weighing down its vehicle production.
Rivan’s management lowered its vehicle-delivery guidance for the full year to a range of between 40,000 to 46,000, down from its previous guidance of 46,000 to 51,000 vehicles. The company said in its first-quarter shareholder letter that its guidance reflects the “evolving” trade regulations and tariffs.
The downward revision means that Rivian will deliver fewer vehicles in 2025 than it did in each of the previous two years. Making matters worse for Rivian is an uptick in costs because of tariffs. The company raised its capex guidance for the year to a range between $1.8 billion to $1.9 billion — up from $1.6 billion to $1.7 billion — because of “the expected impact from tariffs.”
Rivian CFO Claire McDonough said on the earnings call that the company’s expenses will increase by a “couple thousand dollars” per vehicle because of tariffs.
It’s worth noting that Rivian is an American automaker, making its vehicles 100% in the United States. CEO RJ Scaringe also said recently in a Fox Business interview that his company has a “very U.S.-centric supply chain.” And yet, the tariff impact is significant for the company.
Rivan mentioned the potential for a negative impact on the economy due to tariffs a few times in its shareholder letter, saying:
The current global economic landscape presents significant uncertainty, particularly regarding evolving trade regulation, policies, tariffs, and the overall impact these items may have on consumer sentiment and demand.
Economic cracks are already beginning to show. The U.S. economy contracted in the first three months of this year, the first quarter of negative growth since 2022. Gross domestic product (GDP) declined 0.3% on an annualized basis, sparking fears that a recession may be on the horizon.
And a recent survey of company CFOs found that 60% expect a recession by the end of this year, and 95% of them say tariffs are impeding their ability to make decisions.
An economic slowdown could be very bad for Rivian and its peers. Automakers don’t sell as many vehicles during tough economic times, and EV makers are even more vulnerable because their vehicles are more expensive. The average transaction price for an EV in March was $59,200, up 7% from the same time last year.
If a full-blown economic slowdown occurs, Rivian could see vehicle sales fall on top of the rising costs due to tariffs.
I’m a long-term believer in Rivian, and I own shares of the company, but if you’re considering buying the stock right now it may be best to wait.
Rivian has some promising, cheaper vehicles coming out over the next couple of years, including the R2 and R3, that could help the company gain more market share and appeal to buyers with smaller budgets. But they’re going to launch at a time of economic uncertainty and potentially amid ongoing tariffs.
I’m bullish on Rivian for the long term, but I think the current situation has lengthened the time frame for Rivian’s success. I’m OK with the uncertainty for now, but investors considering buying Rivian should know that its roadmap for success has likely lengthened.
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Chris Neiger has positions in Rivian Automotive. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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