EV Makers Lucid and Rivian Navigate Tariff-Driven Cost Pressures in 2025

The electric vehicle (EV) sector is no stranger to headwinds, but 2025 has brought a new challenge: escalating tariffs. Both Lucid (LCID) and Rivian (RIVN) have flagged rising costs tied to trade policies, forcing them to recalibrate financial strategies, adjust production forecasts, and double down on domestic supply chains.

Rivian: Tariffs Test Resilience

Rivian’s Q1 2025 results reveal a company navigating a tightrope. While revenue rose 3% year-over-year to $1.24 billion, adjusted EBITDA losses widened to $1.7–1.9 billion for the year, reflecting tariff-driven cost increases of $2,000–$3,000 per vehicle. The automaker now faces a critical choice: absorb these costs or risk pricing itself out of the market.

To mitigate risks, Rivian has leaned into U.S. manufacturing. It stockpiled battery cells for 2026 and plans to source LG batteries from Arizona, avoiding South Korean imports and their associated tariffs. A $1 billion investment from Volkswagen Group—part of a $5.8 billion joint venture—also bolsters liquidity. Yet, Rivian’s revised 2025 delivery targets (40,000–46,000 units) highlight the toll of macroeconomic uncertainty. A looming threat? The stalled $6.6 billion DOE loan for its Atlanta plant, which could delay job creation and production scale-up.

Lucid: Margin Squeeze, Saudi Backing

Lucid’s struggles are equally telling. The company now faces an 8–15% gross margin headwind due to tariffs—a steeper burden than its prior 7–12% estimate. Despite this, Lucid maintained its 20,000-unit production target for 2025, though Q1 deliveries totaled just 3,109 units.

Lucid’s financial resilience hinges on its $5.76 billion liquidity cushion, bolstered by Saudi Arabia’s sovereign wealth fund. This funding buffer gives Lucid flexibility to weather margin pressures, but it remains vulnerable to global economic slowdowns. Meanwhile, retail traders have reacted positively to its results, with shares rising 1.3% post-earnings—a nod to its status as a "new Tesla" in a skeptical market.

Shared Challenges: Trade Policy and Supply Chains

Both companies underscore the volatility of trade policies. U.S. tariffs on non-USMCA parts threaten to unravel cost efficiencies, while macroeconomic headwinds—like consumer reluctance to pay premium EV prices—compound the pain. Rivian’s U.S.-centric supply chain offers a partial shield, but Lucid’s reliance on global suppliers leaves it exposed.

Conclusion: A Mixed Outlook for EV Investors

The tariff storm has reshaped the EV landscape in 2025. Rivian’s aggressive domestic supply chain investments and VW partnership provide a lifeline, but its financial losses and DOE loan uncertainty demand caution. Lucid’s Saudi-backed liquidity and margin management give it a competitive edge, yet its delivery cadence and global supply chain pose risks.

Investors should prioritize companies with:
- Strong liquidity: Lucid’s $5.76 billion and Rivian’s $1 billion VW infusion offer breathing room.
- Domestic supply chain control: Rivian’s Arizona battery sourcing and Normal plant expansion reduce tariff exposure.
- Strategic partnerships: The Rivian-VW joint venture exemplifies how alliances can offset costs.

While tariffs remain a wildcard, the EV sector’s long-term growth narrative—driven by climate policies and consumer demand—remains intact. For now, Rivian and Lucid’s ability to navigate 2025’s turbulence will determine whether they emerge as leaders or casualties in the EV revolution.

Invest with caution, but bet on those doubling down on resilience.