The company's trucks are too expensive for credits and its customers are too rich.
With many automakers about to run out of their electric vehicle tax credits (or already ran out), the United States Senate proposed a new bill that would reinstate the $7,500 rebate and even add a $4,500 credit on used vehicles. That sounds great on the surface, but we dove deeper into the wording to discover there are tons of stipulations about where the EV is built, how much it costs, and even what body style is it. There are so many barriers behind the bill, only around a dozen vehicles on sale would qualify, and none of them are made by Rivian.
Speaking with Automotive News, the American automaker expressed its displeasure with the climate change bill. "As currently drafted, this legislation will pull the rug out from consumers considering purchase of an American-made electric vehicle," said James Chen, Rivian's Vice President of Public Policy.
"The final package must extend the transition period to provide consumer choice and protect good-paying manufacturing jobs here at home," Chen explained, referencing the company's Normal, Illinois plant, where it currently employs more than 6,000 workers. Rivian currently qualifies for the $7,500 tax credit because it hasn't yet produced 200,000 vehicles as a company. But under the new bill, trucks and SUVs wouldn't qualify if they cost over $80,000.
Following recent price hikes, the cheapest Rivian R1T Truck will cost $67,500, while the Rivian R1S SUV starts at $72,500. Those base models would technically qualify, but those aren't in production yet. "Nearly all of our vehicles would be ineligible for incentives," Chen said, as Rivian won't offer the lower-priced models until 2025. Chen seemingly believes the bill favors foreign manufacturers "who can come in at lower cost," but he likely didn't know there is wording stipulating the EVs must be made in North America.
Even if Rivian could manage to lower its costs and price its vehicles accordingly, the bill caps the credit based on income as well. Single buyers can only make up to $150,000 per year, while that number is doubled to $300,000 for a married couple. We don't have access to Rivian's customer data, but we can assume many buyers who can afford a nearly six-figure truck are taking home at least a six-figure salary.
The price caps are designed to prevent wealthy individuals from taking advantage of the tax credits. If you can afford a $154,000 Lucid Air Grand Touring, you really shouldn't be getting any help from the government to purchase it. Unfortunately, in this case, Rivian will suffer because it didn't design an affordable product that average blue-collar workers can afford.