It’s going to be tough, and it’s going to be uncertain. That was the clear message from Rivian and Lucid, America’s two most promising electric vehicle manufacturers, as they gave a grim forecast for the future of the EV market.
After a brief sugar rush of sales, Tesla’s top rivals are bracing for a brutal hangover, hit by a double punch of hostile policies from the second Trump administration: crippling tariffs and the fast-approaching end of the federal EV tax credits that have propped up the industry for years.
The Double Punch: A Tax Credit Cliff and a Tariff Squeeze
The first blow is the expiration of the federal EV tax credits. The credits, a key feature of the Biden-era Inflation Reduction Act (IRA), were designed to encourage the adoption of clean vehicles by giving buyers up to $7,500 off a new EV. Under President Trump’s “One Big Beautiful Bill,” that support is set to vanish after September 30. For consumers, this effectively means a sudden $7,500 price hike on already expensive vehicles.
The second blow comes from the ongoing trade war. As part of the economic conflict President Trump launched against other nations, vehicles and components imported into the United States are subject to a 25% tariff. While the goal is to encourage automakers to build in America, even companies like Rivian and Lucid, with factories in Illinois and Arizona, are getting squeezed. They rely on imported raw materials, especially from China, to manufacture their batteries and other essential parts.
This is hitting their bottom line right now.
“Changes to EV tax credits… and tariffs are expected to have an impact on the results and the cash flow of our business,” RJ Scaringe, the CEO of Rivian, told analysts during an August 5 conference call.
His CFO, Claire Rauh McDonough, put a number on it, warning that increased tariffs “are expected to have a net impact of a couple of thousand dollars per unit for the remainder of 2025.” She added, “We’re actively studying tariff mitigation strategies to best position the company.”
A Short-Term Boom, a Long-Term Bust
In the short term, this policy cliff is creating a sales boom. Both Rivian and Lucid expect the current third quarter to be their best of the year as consumers rush to lock in the $7,500 tax credit before it disappears.
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