A Little Good News for Rivian Investors

Daniel Miller, The Motley Fool

Mon, May 5, 2025, 6:15 AM 4 min read

• In the latest turn of events, the Trump administration gave some relief on tariffs.

• Rivian began stockpiling battery components before the tariffs were enacted.

• The EV maker hopes the upcoming launch of its R2 model will help boost sales.

Unless you've been purposely avoiding the news, you've surely heard about the Trump administration's tariffs. While Trump has used tariffs as bargaining chips and to influence foreign policy, the auto industry has been concerned that it could see raised prices, reduced sales, and less profit.

For Rivian Automotive (NASDAQ: RIVN) investors, there's a little bit of good news on the tariff front and with one strategy it used to offset some of the tariff headwinds.

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The first bit of good news for Rivian investors is the Trump administration's tariff relief. Currently, there's a 25% tariff on imported vehicles, and a 25% tariff on vehicle parts that began on May 3.

A couple of executive orders are expected to provide some relief for the automotive industry. Essentially, for a vehicle with 50% imported parts, the automaker would only have to pay tariffs on 35% of the vehicle for the first year. The rebate is then lowered in year two and then phased out. That means that a vehicle with 85% domestic parts will avoid tariffs during the first year – it should be noted 85% is a high percentage of domestic parts.

A separate executive order noted that automakers would pay only up to a 25% tariff on a vehicle and its parts, and would not have to pay additional import taxes on aluminum and steel used in the vehicle, or because it was imported from Canada or Mexico.

While the relief is welcomed, not everyone thinks it's hugely helpful. One such person is Dan Ives, managing director of autos at Wedbush Securities, according to the Detroit Free Press: "It's akin to having a car accident and saying, 'Oh good, it's not totaled, but it's still $20,000 worth of damage.'"

In a strategic move, Rivian quietly began building a reserve of electric vehicle (EV) batteries from Asia ahead of the Trump administration's tariffs. The small gamble is paying off and gives the company a little insurance against the tariff pressure being applied on the entire automotive supply chain.

Rivian even acquired a supply of lithium-iron phosphate cells from China's Gotion High-Tech Co. before the U.S. election and more recently worked with cell supplier Samsung SDI to move a substantial amount of battery inventory to the U.S. from South Korea.