25% Tariffs on All Imports - Effect on Rivian prices?

[Electrified Outdoors]

R2 is a lower price point vehicle. My prediction? R2 is going to sell very very well...at least initially....especially when you factor in the current sentiment towards Tesla ATM.

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[Cycliste]

Barry Ritholtz had an interesting thought on the tariffs:

https://ritholtz.com/2025/03/us-vat-tax/

In a word, the U.S. tariff implementation seems to be moving towards the equivalent of a national VAT tax.

Hey, I understand that tariffs are not the equivalent of a national VAT tax. It’s not the same thing in theory, but in practice, especially with the chatter of reducing income taxes, it feels that way: European consumption tax minus the universal health care, education, and retirement benefits.

I hope this take is wrong. I understand that any VAT or sales tax is agnostic as to place of production, while tariffs are not. It’s not a perfect metaphor, but the parallels between a consumption tax versus an income tax are there.

Hmmm…so the tariffs are similar in effect to a national tax on import consumption, but not domestic consumption. Companies will need to evolve/adapt to handle the change in the environment they operate in. They will have to make immediate adaptations or die, and then also longer term adaptations. If companies realize this is effectively a consumption tax, I would eventually expect more options for smaller vehicles, with fewer standard bells and whistles,

So I have no idea how much the Rivian product mix/pricing will change over years.

 

[mkg3]

I think Rivian is going to avoid a price increase from the tariffs and this will be a net positive for Rivian.

Rivian's one of the most costly components come from South Korea (Samsung SDI). While the battery is assembled in Normal, cells are imported and will be 25% tariff starting May.

R1 is produced at a loss per vehicle still, so by absorbing the cost and not raise the R1 price, they are increasing loss per vehicle.

On the good note, they don't sell many R1 these days so losses will be limited and for R2, LG is building cell factory in US to supply Rivian.

My guess is that Rivian will raise the base price but will increase content to offset the price increase. In other words, some of the very profitable options will be bundled as a standard equipment and they'll manage the tariff hit at the top line and not at the bottom line.

 

[Dark-Fx]

I think you missed my point by a mile, Article 1 states a process needs to be setup for the auto tariff, and I don't see this moving quick. It's not as simple as using an HST code like other products.

See, your mistake is applying the law to this situation.

(8) Any automobile or automobile part, except those eligible for admission under “domestic status” as defined in 19 CFR 146.43, that is subject to the duty imposed by this proclamation and that is admitted into a United States foreign trade zone on or after the effective date of this proclamation, in accordance with clause (1) of this proclamation, must be admitted as “privileged foreign status” as defined in 19 CFR 146.41, and will be subject upon entry for consumption to any ad valorem rates of duty related to the classification under the applicable HTSUS subheading.

It certainly sounds like what they are expecting to happen. Outside of that, they've declared it has to be done within 90 days.

 

[Donald Stanfield]

Rivian's one of the most costly components come from South Korea (Samsung SDI). While the battery is assembled in Normal, cells are imported and will be 25% tariff starting May.

R1 is produced at a loss per vehicle still, so by absorbing the cost and not raise the R1 price, they are increasing loss per vehicle.

On the good note, they don't sell many R1 these days so losses will be limited and for R2, LG is building cell factory in US to supply Rivian.

My guess is that Rivian will raise the base price but will increase content to offset the price increase. In other words, some of the very profitable options will be bundled as a standard equipment and they'll manage the tariff hit at the top line and not at the bottom line.

Rivian is net positive on their vehicles. The way you're using the loss per vehicle metric is incorrect.

 

[Cycliste]

R2 is a lower price point vehicle. My prediction? R2 is going to sell very very well...at least initially....especially when you factor in the current sentiment towards Tesla ATM.

'Look what you made me do': Tesla owners post videos of their trade-ins set to Taylor Swift

The article does have embedded videos (so you won’t waste time watching additional TikToks), and people are selecting Rivians for their trade up.

https://www.businessinsider.com/bye-tesla-tiktok-trend-videos-taylor-swift-song-2025-3?op=1

 

[mkg3]

Rivian is net positive on their vehicles. The way you're using the loss per vehicle metric is incorrect.

You mean not including cost of goods sold and factory utilization, as standards set by FAS and GAAP...

The only reason they turn positive gross profit is due to environmental credit. without it, it would have shown continued loss.

But, sounds like you are accounting expert so have it your way.

 

[Dave Cundiff]

R1 is produced at a loss per vehicle....

As of 2024Q4, R1 is produced and sold at a profit per vehicle.

[EDIT: @mkg3 appears to be correct -- gross profit was $170M for 2024Q4, but $299M of regulatory credits figured into that. (https://www.cnbc.com/2025/02/20/rivian-rivn-earnings-q4-2024.html) If the regulatory credits hadn't been there, there would have been no gross profit. However, if the regulatory credits are "per car" and if they continue, there's nothing misleading about the statement.]

Rivian's losses are [EDIT: primarily] produced elsewhere in the company, especially in the areas that represent investments in the future.

Best wishes!

 

[Dave Cundiff]

Paywalled article on how Wall Street analysts think Trump's tariffs will have the primary effect of enriching Trump's biggest donor ("Tesla wins, Detroit bleeds....")

https://www.cnbc.com/2025/03/27/wal...ns-detroit-bleeds.html?recirc=taboolainternal

The best ROI in the world, is investing in a transactional American politician....

Best wishes!

 

[Donald Stanfield]

You mean not including cost of goods sold and factory utilization, as standards set by FAS and GAAP...

The only reason they turn positive gross profit is due to environmental credit. without it, it would have shown continued loss.

But, sounds like you are accounting expert so have it your way.

No, I mean the difference between direct and indirect costing methodology. Based on a direct cost basis, Rivian makes money for every R1 sold. That was the purpose of the retooling and the second generation. COGS, which includes things like factory buildouts, service centers, and every department outside of manufacturing, isn't a relevant metric to that discussion because these overheads aren't impacted by tariffs, which is the topic of this discussion.

I know generally accepted accounting principles, but you need to refresh your memory on the different kinds of costing and the things you can draw from each. I can also do without the flippant little remark at the end.

 

[André]

The key thing in economics that most people don’t understand, and nobody has mentioned on this thread is something called comparative advantage. It applies to companies and countries equally. The idea, or in fact, the actuality, is that one country can produce a certain good more cheaply than other countries, but those other countries can produce other goods more cheaply than that first country. So it is beneficial to Everyone for each country to produce what they can produce more cheaply than other countries and then to trade, there is a net benefit to everybody doing this.

Trump‘s idea which is economic idiocy, just on the face of it, is that America should basically produce everything itself. This will definitively lead to increased costs for most of the goods we produce because most of those goods can be produced more cheaply elsewhere.

The sensible approach is to figure out what we can produce more cheaply or efficiently than others and do a much better job of Investing in those industries.

Are there areas where tariffs makes sense? Of course there are. In the case of another country subsidizing a product and then trying to compete against American companies with that unfair advantage. Then tariffs make sense. Other than - they’re stupid and will lead to inflation and increased costs.

True. And I would add that inefficient plants that were shut down years ago because they weren't competitive could be started back as prices are going up and suddenly look like they are more productive. This is stupid and lead to bad business decisions and could also bring back to life old polluting technologies like in the aluminium industry. Add also to that local producers increasing their prices to raise their profit margins as competitors imported goods cost more and allow them to do so and contributing to increased inflation.

 

[Donald Stanfield]

The key thing in economics that most people don’t understand, and nobody has mentioned on this thread is something called comparative advantage. It applies to companies and countries equally. The idea, or in fact, the actuality, is that one country can produce a certain good more cheaply than other countries, but those other countries can produce other goods more cheaply than that first country. So it is beneficial to Everyone for each country to produce what they can produce more cheaply than other countries and then to trade, there is a net benefit to everybody doing this.

Trump‘s idea which is economic idiocy, just on the face of it, is that America should basically produce everything itself. This will definitively lead to increased costs for most of the goods we produce because most of those goods can be produced more cheaply elsewhere.

The sensible approach is to figure out what we can produce more cheaply or efficiently than others and do a much better job of Investing in those industries.

Are there areas where tariffs makes sense? Of course there are. In the case of another country subsidizing a product and then trying to compete against American companies with that unfair advantage. Then tariffs make sense. Other than - they’re stupid and will lead to inflation and increased costs.

You might have a point if every other country played by the same rules, but they aren't. You cannot sell ANYTHING to China unless it's being produced in China by their tariffs. Most European countries assess higher tariffs on our goods than theirs. The USA is being taken advantage of on a world scale.

 

[mkg3]

No, I mean the difference between direct and indirect costing methodology. Based on a direct cost basis, Rivian makes money for every R1 sold. That was the purpose of the retooling and the second generation. COGS, which includes things like factory buildouts, service centers, and every department outside of manufacturing, isn't a relevant metric to that discussion because these overheads aren't impacted by tariffs, which is the topic of this discussion.

I know generally accepted accounting principles, but you need to refresh your memory on the different kinds of costing and the things you can draw from each. I can also do without the flippant little remark at the end.

Since Rivian does not break out indirect and direct costs for R1 vehicles for their 10Q/K, perhaps you know some inside information to substantiate the cost structure.

I can only go by what is reported and to say " The way you're using the loss per vehicle metric is incorrect." implies you are an accounting expert, regardless of you thinking that the remark is flippant or not.

So in regards to the tariff, if the battery cells are hit with 25% import duty - single most expensive components, as a whole, on the vehicle - then Rivian has to react. How they blend the cost increase is up to them, as I've mention as an example of bundling with more profitable options and make them the base inclusion, as they raise the price points.

Since I do not write or speak in absolute terms, all I would say is that based on FAS, and GAAP Rivian still is a non-profitable business without environmental credit, as of last quarter. This is a fact.

Perhaps 1Q2025 will be better, although based on their commentary, there were a good amount of RCV pull forward by Amazon in 4Q2024 so they expect the deliveries to decline, which will hurt their top line.

 

[andrewgrhogg]

You might have a point if every other country played by the same rules, but they aren't. You cannot sell ANYTHING to China unless it's being produced in China by their tariffs. Most European countries assess higher tariffs on our goods than theirs. The USA is being taken advantage of on a world scale.

That comment on european countries applying higher tariffs on us than we do on them, while literally correct when looking at averages, the differences are on the order of a few % points, and are radically different across different goods. Much of that difference comes from very high tariffs on agricultural goods from the US - where Europe doesn't want meat that has been fed antibiotics since birth, never seen daylight, kept in a pen too small to turn around, etc. the tariff isnt to make US beef competitive, its to block the meat from coming in. Think Kennedys quest to ban lots of additives and food dyes - that are ALREADY banned in europe and have been for decades.

The point is that tariffs are about equal all things being equal, and the US is far far away from "getting ripped off"

 

[André]

Since Rivian does not break out indirect and direct costs for R1 vehicles for their 10Q/K, perhaps you know some inside information to substantiate the cost structure.

I can only go by what is reported and to say " The way you're using the loss per vehicle metric is incorrect." implies you are an accounting expert, regardless of you thinking that the remark is flippant or not.

So in regards to the tariff, if the battery cells are hit with 25% import duty - single most expensive components, as a whole, on the vehicle - then Rivian has to react. How they blend the cost increase is up to them, as I've mention as an example of bundling with more profitable options and make them the base inclusion, as they raise the price points.

Since I do not write or speak in absolute terms, all I would say is that based on FAS, and GAAP Rivian still is a non-profitable business without environmental credit, as of last quarter. This is a fact.

Perhaps 1Q2025 will be better, although based on their commentary, there were a good amount of RCV pull forward by Amazon in 4Q2024 so they expect the deliveries to decline, which will hurt their top line.

He probably refers to variable versus fixed costs more than direct/indirect costs which are related to cost accounting for management of specific products costs like R1T vs R1S or every components costs.

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