California’s EV Rebate Plan Boosts Rivian Stock
A recent announcement from California’s governor has sent Rivian Automotive’s (NASDAQ: RIVN) stock soaring. As of Monday noon ET, shares were up a staggering 14.9% from Friday’s closing price.
A Response to Federal Tax Credit Uncertainty
Governor Gavin Newsom’s proposal aims to create a new version of California’s Clean Vehicle Rebate Program (CVRP) if President-elect Donald Trump eliminates federal EV tax credits. This move could provide a significant lifeline to electric vehicle (EV) buyers, who currently benefit from up to $7,500 in federal tax credits.
The Impact of Federal Tax Credit Elimination
Researchers Joseph Shapiro and Felix Tintelnot estimate that ending federal tax credits could slash U.S. demand for EVs by a whopping 27%. This forecast has been weighing on EV stocks, including Rivian’s, since last week. California, the largest state market for electric vehicles, has sold over 2 million EVs to date.
California’s Incentives Could Offset Decline in Demand
The CVRP previously provided incentives to California EV buyers until its discontinuation in 2023. Reviving this program could help offset a significant portion of the decline in overall U.S. EV demand if federal tax credits are discontinued. This is why Rivian and other EV stocks are experiencing a surge today.
A Word of Caution for Investors
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