Rivian’s CEO Says Losing The $7,500 EV Tax Credit Is A Win—Here’s Why

• The cancellation of the $7,500 federal tax credit for new EVs wreaked havoc on the market last month.
• Some legacy automakers are now scaling down their electrification ambitions.
• That’s bad news for the car market in general, but Rivian stands to benefit from the change.

The sunset of the $7,500 federal tax credit for new electric cars at the end of September took a toll on the auto industry. Many prospective buyers rushed to take advantage of the tax credit before the cutoff date, and as a result, sales figures nosedived in October, the first full month after the incentive’s cancellation.

What’s more, some legacy automakers are now reassessing their EV strategies in the United States. With the tax credit out of the picture and hiked import tariffs, companies like Kia and Stellantis have either “delayed until further notice” or straight-up cancelled upcoming battery-powered models.

Rivian’s smaller and more affordable R2 SUV is on track for a market launch in 2026.

Photo by: Rivian

Not Rivian, though. As a startup that has never built a gas-powered car in its history, the California company stands to benefit from the cancellation of the $7,500 federal tax credit. Even though the incentive allowed it to lease EVs more affordably when it was up and running, now there’s a different approach to doing business. And it all has to do with competition, or lack thereof.

Speaking at the Rotary Club of Atlanta last week, Rivian CEO RJ Scaringe said that the tax credit going away is beneficial for the company, simply because there’s less competition now. “I would say in the medium to long term, it actually simplifies things for Rivian,” Scaringe said. “Narrowly and myopically through the lens of Rvian, it actually creates less competition.”

The company’s head honcho added that some car manufacturers can no longer offer crazy lease deals for EVs that wouldn’t otherwise sell. That’s because the Trump administration eliminated the fines that non-EV car makers would have to pay if their lineups didn’t meet certain emissions standards. EV-only companies like Tesla and Rivian raked in hundreds of millions of dollars by selling regulatory credits to legacy automakers, but traditional brands that happened to have battery-powered models in their portfolio would also get regulatory credits from the government.

“If you saw an electric vehicle from another manufacturer with a lease rate of like $39 a month, it was really disruptive to the marketplace, because it would drive consumers to behave in irrational ways or expect irrational things,” said Rivian’s CEO. “And so that’s all going to go away. You’re going to see a lot of manufacturers step back pretty aggressively from electrification.”

All this being said, RJ Scaringe is adamant that legacy car makers should not scale back their electrification efforts because they’ll find themselves in a tough spot a decade from now, when they will inevitably need EVs in their portfolios.

“I think every manufacturer needs to be developing world-class leading technology in what is undeniably the future state of this industry. And throttling back right now will make it extremely hard for those companies to participate in the 2030s if you look at the competition that’s coming, particularly from China, [where] companies are not throttling back,” Scaringe added.

As for the long-term impact of the federal tax credit cancellation on the whole of the American EV industry, Rivian’s founder is optimistic that sales will pick up once the dust settles. “There’s a short-term impact from that, but I do think in the fullness of time, it doesn’t change any of the outcomes.”