Rivian and Lucid Face Challenges Amid Policy Changes and Trade Tensions

Post by : Monika

Photo: Reuters

In August 2025, two electric vehicle makers—Rivian and Lucid Motors—released their second-quarter results. While both sell high-tech electric cars, they also shared that the road ahead may be rough. They pointed to rising costs, changing government rules, and trade issues that are weighing on their performance and plans.

Rivian’s Financial Performance
Rivian came in with a bigger loss than many expected for the second quarter. It cost them about $118,375 to build each vehicle—roughly 8% more than before. CEO RJ Scaringe said this happened because they made fewer cars than planned. Problems in their supply chains and shifts in U.S. policies cut into their efficiency.

They also had to revise their full-year loss estimate. Previously, they said they would lose $1.7 billion to $1.9 billion, but now they expect the loss to reach up to $2.25 billion. A key reason was that they earned far less from selling regulatory credits—credits automakers can sell when they beat pollution standards. Changes to emission rules brought in by the U.S. administration reduced that income sharply.

Plan to Pause Production
To prepare for a new model called the R2 SUV, Rivian will pause production for three weeks in September. They hope this pause will let them retool their factory and systems. Despite the challenges, Rivian expects their third-quarter deliveries will be a record high.

They are banking on buyer demand before the federal electric vehicle tax credit of $7,500 ends at the end of September.

Lucid Motors’ Updated Outlook
Lucid also had to revise its plans. Originally, they said they would make 20,000 cars by end of 2025. Now they expect to make 18,000–20,000. This change reflects worry about escalating trade tensions around the world and uncertainty in the U.S. economy. Import tariffs on key parts may push up costs and delay production.

Lucid delivered more luxury electric vehicles during the quarter, but still fell short of what Wall Street expected. They reported revenue of $259.4 million, missing the forecast of $279.9 million. Their adjusted loss per share came in at 24 cents, which is worse than the 21-cent loss analysts had expected.

How They’re Responding
Lucid is moving to secure critical materials closer to home. They’re partnering with companies in North America to source rare minerals needed for EV batteries and motors. This approach fits with growing U.S. policy support for reshoring clean energy supply chains.

In addition, Lucid signed a major six-year agreement with Uber. The deal includes 20,000 autonomous-ready Gravity SUVs and $300 million in investment from Uber. This is part of Lucid’s strategy to enter the robotaxi market, preparing for future self-driving electric ride services.

Industry-Wide Challenges

• What Rivian and Lucid are facing mirrors challenges across the EV industry:
• The U.S. government has rolled back consumer tax credits, making it harder for some buyers to afford EVs.
• High import tariffs on auto parts are increasing costs for companies that rely on global supply chains.
• Rules around emissions and credits have changed, affecting how much money companies can make from environmental incentives.
• Meanwhile, China has limited exports of rare earth metals, which are vital for EV motors and batteries. This creates strain on production in the U.S.
• These shifts have raised costs and made it harder for newer EV makers to grow profitably in a changing environment.

Key Impacts and Forward Strategy
Both companies are focusing on domestic partnerships and resilient supply chains. By sourcing more materials locally in the U.S., they hope to mitigate risks from tariffs and import delays.

They are also adjusting production plans and scaling operations to avoid overextending themselves at a time when market demand is uncertain and competition is growing—not only from Tesla and legacy automakers, but also from foreign EV producers entering the U.S. market.

• Rivian lost more than expected, boosted vehicle costs, and cut profit estimates. The pause in production aims to prepare for a new model.
• Lucid lowered its forecast for annual production, missed revenue estimates, and expanded to robotaxi partnerships while grappling with trade pressures.
• Both companies cite policy changes (like tax credits and emission rules) and trade uncertainties as major hurdles.
• They face higher costs, supply delays, and need to rely more on domestic material sourcing.
• Strategies include retooling factories, employee training, and strategic deals like Lucid’s with Uber to enter new markets.

The EV industry at large is reacting to tariffs, export restrictions, and changing national policies by seeking stability through local partnerships and reduced dependence on foreign suppliers.

Why It Matters

• These challenges are influential not just for Rivian and Lucid, but for the entire EV market:
• Right now, the EV sector depends on subsidies and trade rules that vary by country. When policies shift, small automakers feel the impact quickly.
• Trade rules matter. Tariffs on parts or vehicles can erase any advantages an EV company may have in pricing.
• Supply chains are fragile. Relying on international sources for critical minerals or components is a risk that older automakers with in-house systems may avoid.
• New companies like Rivian and Lucid must be agile. They need to adopt new technologies and strategies faster to survive disruption.

Looking Ahead

• Over the rest of 2025 and into early 2026, watch for key developments:
• Q3 delivery numbers—especially at the end of September, before the EV tax credit is set to expire.
• Production volume updates—whether supply chain issues ease or worsen.
• New trade or policy changes—especially from the U.S. or China, which may affect materials or imports.
• Automaker partnerships—like Lucid’s Uber deal or Rivian’s upcoming collaborations to secure components.
• Financial performance in Q4—when companies issue updated annual forecasts and profit margins.
• Their ability to adapt to changing conditions may determine whether they survive and thrive in the shifting world of electric vehicles.

Rivian and Lucid are racing in a fast-changing industry. They launched with big ambitions—to make clean, luxury, and adventure-ready EVs. But rising production costs, policy shifts on tax credits and emissions, and international trade problems are making the climb steeper.

Both are trying to adjust: Rivian by retooling its factory and chasing delivery milestones before a major tax credit ends. Lucid by forming partnerships in North America and preparing for robotaxis. Their success will depend on how well they control costs, secure key materials, and manage timing.

The road ahead may not be smooth, but these companies believe long-term growth is still possible—if they adapt quickly. This drama also offers a lesson: EV manufacturing today is not just about sleek designs and powerful batteries—it’s about navigating governments, global trade, and fragile supply chains in real time.