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

[mrose]

The way tariffs work on import is that the components are hit at that rate. I doubt Rivian has 15k in imported parts. This also only applies to the BOM cost of the imported good not the retail cost. In reality a 25% tariff should only net a ~10% retail price increase. If anyone says 25% on retail, they don't understand how these tariffs work.

i believe 100% of the aluminum used for body panels gen-1 and casting R2 is imported and most if not all of the R1 suspension is imported as well as gen-1 quad motors (someone has to pay for the increased warranty cost there). Gen-1 batteries are imported, I believe all the screens are imported still (Correct me if you know I am wrong). Where are Rivian airbag components made?
Tariffs are insane and raise all the prices

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[Electrified Outdoors]

i believe 100% of the aluminum used for body panels gen-1 and casting R2 is imported and most if not all of the R1 suspension is imported as well as gen-1 quad motors (someone has to pay for the increased warranty cost there). Gen-1 batteries are imported, I believe all the screens are imported still (Correct me if you know I am wrong). Where are Rivian airbag components made?
Tariffs are insane and raise all the prices

These are all great points. AFAIK Gen 2 uses a lot more high strength steel around the body vs Gen 1. Rising warranty costs show show up as cuts in other areas of the business, be passed on in new vehicles, result in increased prices elsewhere (e.g. charging, Connect+, or the Rivian Autonomy Platform), or more likely a combination.

These Tarriffs are not good at all once. Seems to me if this is the approach (and I am not saying one way or another if its the right thing to do) having a "phase-in" period might be a better approach than flipping a switch overnight?

 

[thrill]

Nothing is an island. All tariffs eventually raise the price of everything. If the oil and gas industry has to pay more, but not the EV world, then oil and gas is going to cost more, and those people dependent on it (as in everyone) will have less to spend on non-tariffed product, suppressing demand. Reducing the supply of EVs is not trivial, as entire process lines are shutdown and entire shifts are let go (and sometimes entire plants and companies), and entire plans and contracts are cancelled with penalties, and what product does get delivered gets encheapend as much as possible (ought'a make Sandy happy, but it hurts the loyalty of customers). Only in the short term does it have focused effect, and short-term tariffs probably have even worse effect because of the increased unpredictability and so that much poorer ability to plan. If "we" really just wanted to raise revenue using tariffs, which to be frank, I'm a fan of, then we'd pick a "reasonable" number such as 10% and set that across the board without exceptions and wait a year and see how it worked. But instead we get to play Calvinball with tariffs because of grumpiness and bad golf scores. No one can do good and cost effective planning and work under chaotic circumstances as everything starts to resemble wildfire fighting.

 

[andrewgrhogg]

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.

 

[SASSquatch]

Curious if any Forum members have heard from Rivian Corporate how the new tariffs (assuming it doesn’t get recalled or postponed like several of the others) might have on Rivian. I know they are US built but I would think many of the parts, especially the electronics, are foreign supplied.

From what I understand, the tariff applies to the percentage of the vehicles cost which is made of foreign parts. So say $15k of the total cost to build a Rivian are foreign sourced parts, the tariff on a Rivian would be $3,750.

If anyone has other info or a different understanding please chime in.

Maybe I'm wrong about this (probably not) but isn't the battery the most expensive part of the vehicle? Aren't most of the battery components sourced outside the US at least for R1 vehicles?

Asking for a friend.

"Rivian sources its battery cells from Samsung SDI in South Korea, which are then assembled into battery packs at Rivian's plant in Normal, Illinois."

 

[mrose]

Nothing is an island. All tariffs eventually raise the price of everything. If the oil and gas industry has to pay more, but not the EV world, then oil and gas is going to cost more, and those people dependent on it (as in everyone) will have less to spend on non-tariffed product, suppressing demand. Reducing the supply of EVs is not trivial, as entire process lines are shutdown and entire shifts are let go (and sometimes entire plants and companies), and entire plans and contracts are cancelled with penalties, and what product does get delivered gets encheapend as much as possible (ought'a make Sandy happy, but it hurts the loyalty of customers). Only in the short term does it have focused effect, and short-term tariffs probably have even worse effect because of the increased unpredictability and so that much poorer ability to plan. If "we" really just wanted to raise revenue using tariffs, which to be frank, I'm a fan of, then we'd pick a "reasonable" number such as 10% and set that across the board without exceptions and wait a year and see how it worked. But instead we get to play Calvinball with tariffs because of grumpiness and bad golf scores. No one can do good and cost effective planning and work under chaotic circumstances as everything starts to resemble wildfire fighting.

Reciprocal tariffs are fine, as are tariffs on goods which are subsidized by a government or dumped on our markets. Protectionist tariffs fuel inflation and meritocracy in products. What’s happening now is one man deciding unilaterally to break existing trade agreements and half of America saying it’s good. I would wager over half of the cost of Gen-1 R1 is imported components and materials so get ready for price jumps

 

[Electrified Outdoors]

I would wager over half of the cost of Gen-1 R1 is imported components and materials so get ready for price jumps

agree and add that is probably the case for most vehicles assembled in the US. If it’s assembled here it will see…potentially…less upward price pressures….but still very significant.

but then you have the question if my competitors are importing their vehicles and they have to charge more for the entire vehicle. Wouldn’t that give me the room to increase? My price is more while still under cutting my competitor? Would increase my profits and make my shareholders happy.

Will take time before we start to see it hit though as many have been stockpiling in anticipation of the tariffs. Once the existing supply is depleted though we are going to be in for a real shock if they aren’t reversed.

 

[SASSquatch]

Reciprocal tariffs are fine, as are tariffs on goods which are subsidized by a government or dumped on our markets. Protectionist tariffs fuel inflation and meritocracy in products. What’s happening now is one man deciding unilaterally to break existing trade agreements and half of America saying it’s good. I would wager over half of the cost of Gen-1 R1 is imported components and materials so get ready for price jumps

Rivian already has a demand problem for R1 vehicles. This, along with pulling back EV subsidies, is going to hurt Rivian significantly.

 

[SANZC02]

Rivian already has a demand problem for R1 vehicles. This, along with pulling back EV subsidies, is going to hurt Rivian significantly.

I agree for the R1, the R2 not sure.

I think the economy, raising unemployment, and people loosing some of their discretionary budgets will be a bigger overall impact.

 

[Donald Stanfield]

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

 

[SASSquatch]

I agree for the R1, the R2 not sure.

I think the economy, raising unemployment, and people loosing some of their discretionary budgets will be a bigger overall impact.

That all factors into demand though, right? The market for $100K utility EVs is elastic. Luxury goods are the first to go in bad economic conditions and those conditions have been fermenting for months.

Rivian faces growing competition in the segment, especially from Hyundai. Other OEMS that will be impacted by this mostly have legacy ICE vehicle sales to fall back on. Rivian doesn't have that luxury.

 

[Donald Stanfield]

That all factors into demand though, right? The market for $100K utility EVs is elastic. Luxury goods are the first to go in bad economic conditions and those conditions have been fermenting for months.

Rivian faces growing competition in the segment, especially from Hyundai. Other OEMS that will be impacted by this mostly have legacy ICE vehicle sales to fall back on. Rivian doesn't have that luxury.

Legacy ICE isn't relevant to the tariff conversion as ICE vehicles aren't exempted from the tariffs. If tariffs push the prices up of foreign vehicles but NOT Rivian's, then these competitors will be thrust into the price point Rivian is occupying, and they suffer in comparison if we are talking dollar for dollar.

 

[Eric9610]

I think it was mentioned on here somewhere, but they still have to setup how the calculations on % of parts will impact the import. This could take several months. Just because the tariff is "active" does not mean its implemented. I suspect this will take over a year to sort out. The Aluminum issue is interesting and could go away. Also, how will the calculation be when using some materials from the USA when blended...

 

[Dark-Fx]

I think it was mentioned on here somewhere, but they still have to setup how the calculations on % of parts will impact the import. This could take several months. Just because the tariff is "active" does not mean its implemented. I suspect this will take over a year to sort out. The Aluminum issue is interesting and could go away. Also, how will the calculation be when using some materials from the USA when blended...

The vast majority of automotive is "Just-In-Time" manufacturing. The tariff costs are borne when the product is imported. J-I-T means the parts aren't typically sitting around for a long time before being installed. I'd guess within 45 days, probably 95% of parts Rivian imports from places where the tariff is in force will be subject to it.

 

[Eric9610]

The vast majority of automotive is "Just-In-Time" manufacturing. The tariff costs are borne when the product is imported. J-I-T means the parts aren't typically sitting around for a long time before being installed. I'd guess within 45 days, probably 95% of parts Rivian imports from places where the tariff is in force will be subject to it.

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.

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