Rivian (NASDAQ:RIVN) stock is in the spotlight following Biden’s plans to commit $900 million to an electric vehicle (EV) charging network and CEO RJ Scaringe’s speech at Goldman Sachs’s Communacopia + Technology Conference.
The network will span 53,000 miles of highway across 35 states. In addition, the $900 million is part of a five-year $5 billion commitment to build EV charging stations across the country. By 2030, Biden has a goal of having 50% of all new vehicles purchased by the government be electric or hybrid models. He also seeks to install 500,000 new EV charging stations by then. The president’s stance toward electric transportation is a massive shift from his predecessor.
With further charging stations, consumers will be more incentivized to purchase EVs. With that in mind, let’s get into the details of Scaringe’s speech.
RIVN Stock Buoyed by EV Charging Commitment and Scaringe’s Update
At the conference, Scaringe stated that he was “ecstatic” about the effects of the Inflation Reduction Act (IRA) and that it would result in “a step change in demand” for EVs. He also believes that the IRA will boost the EV adoption rate, especially for higher-end EVs due to a credit stipulation. The act will also bring “profound effects” to the EV supply chain, as more raw materials will come from the U.S. and other countries that have trade agreements with the U.S.
Meanwhile, the effects of the IRA may result in a “bifurcated materials market.” This is because materials compliant with the IRA may receive a subsidy, while noncompliant materials will not. On the other hand, the ongoing shortage of raw materials, like low-cost commoditized semiconductor components, is still a problem for EV makers. Scaringe expects the shortage to last until at least next year.
Still, a joint venture with Mercedes Benz (OTCMKTS:DMLRY) may alleviate some supply chain woes. Earlier this month, Rivian announced that it would collaborate with the European automaker to build electric commercial vans on Mercedes’ assembly line. The two companies will build separate vehicles, although they will share costs, technology, and suppliers. Mercedes will build a new production facility exclusively for EVs at one of its existing facilities, and production is expected to begin “in a few years.”
On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.