Rivian, Lucid to Gain from U.S. EV Tax Credit Phase-Out

BNP Paribas has indicated that electric vehicle manufacturers Rivian Automotive and Lucid Group are set to benefit from the tax incentives included in the tax reform bill proposed by former U.S. President Donald Trump. The bill, which has been approved by the U.S. Senate and is currently being reviewed by the House of Representatives, will terminate the $7,500 consumer tax credit for electric vehicle purchases after September 30.

Analyst James Picariello from BNP Paribas noted that both Rivian and Lucid are likely to benefit from the reduced competition in the U.S. electric vehicle market as traditional automakers scale back their electric vehicle strategies due to the phasing out of government subsidies and softer consumer demand. This could potentially open up more market share for pure electric vehicle brands like Rivian, Lucid, and Tesla.

The impending expiration of these tax incentives is expected to drive increased demand for electric vehicles as consumers rush to take advantage of the remaining benefits. This surge in demand could provide a significant boost to companies like Rivian and Lucid, which have been focusing on expanding their electric vehicle offerings.

However, both Rivian and Lucid reported lower-than-expected delivery numbers for the second quarter. Rivian delivered 10,661 vehicles, missing analyst estimates by 2.3%, while Lucid delivered 3,309 vehicles, falling short of expectations by 4%. BNP Paribas anticipates that delivery numbers will rebound in the third quarter as consumers hurry to purchase vehicles before the tax credits expire.

Given Lucid's slower production ramp-up and the delayed market release of its Gravity SUV, scheduled for the end of 2025, and its crossover vehicle, expected in 2027, Rivian may benefit more significantly from the increased demand. Currently, Picariello maintains an "outperform" rating for Rivian and an "underperform" rating for Lucid.