Shares of Rivian automotive industry (NASDAQ: RIVN) were trading higher on Monday after California’s governor said his state could offer rebates to electric vehicle (EV) buyers if President-elect Donald Trump ends federal electric vehicle tax credits.
As of noon ET, Rivian shares were up about 14.9% from Friday’s closing price.
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In a statement Monday morning, California Gov. Gavin Newsom said he will propose creating a new version of the California Clean Vehicle Rebate Program, or CVRP, if Trump follows through with his plan to eliminate federal tax breaks for EV buyers.
The federal tax credits could give buyers of certain new electric cars up to $7,500. Two researchers, Joseph Shapiro of the University of California at Berkeley and Felix Tintelnot of Duke University, who both study the effects of environmental incentives, estimate that eliminating the tax breaks could reduce U.S. demand for electric vehicles by 27%.
That figure carries weight EV stocks including Rivian’s since Bloomberg reported the researchers concluded last week.
California is by far the largest state market for electric vehicles in the US, with more than 2 million units sold to date. The CVRP offered incentives to electric car buyers in California until the program was discontinued in 2023.
A return of that state’s stimulus could offset much of the decline in overall U.S. EV demand if federal tax credits were to end. That’s why Rivian and other EV stocks are up today.
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