Earlier in May, President Biden’s administration announced a series of new tariffs on goods sourced from China.

The move will raise the tariff rate on a variety of imported goods including steel and aluminum, semiconductors, electric vehicles and batteries, solar industry goods and medical equipment.

The biggest headline grabbing part of this policy move is the increase in the tariff rate on EVs from 25% to 100%. In theory, if this makes Chinese EVs uneconomic for the American market, that could be a boost for domestic EV producers.

But there is another less-discussed part of the policy that could be much worse for EV stocks. Tariff rates on lithium-ion batteries and parts will rise from 7.5% to 25% within the next two years. Meanwhile, the tariff rate on rare critical materials and permanent magnets will rise from 0% to 25%.

Given that China has overwhelming market share in the battery market and a near monopoly on crucial rare earth materials, this could be a devastating blow for the EV industry. These are three EV stocks to sell as they could face dark days ahead.

Tesla (TSLA)

Tesla (NASDAQ:TSLA) finds itself right in the middle of the current U.S.-China trade war over electric vehicles. It’s no secret that Elon Musk has bet heavily on China. Tesla spent a fortune to build its Shanghai gigafactory, and production from there has been key to Tesla’s overall growth.

However, Tesla now appears to be facing mounting issues there. Tesla just announced a large reduction in its Model Y production in China, given the lingering economic slump and uncertainty there. Tesla’s market share has been sliding in China amid competition from cheaper rivals. Still, Tesla is hoping to sell between 600,000 and 700,000 vehicles in China this year.

Tesla finds itself in a tough spot. It is one of the leading advocates for electric vehicles in North America. But it also has heavy sunk costs in China and could lose both sales and access to key inputs such as batteries if the current trade war accelerates.

For a company that is already dealing with multiple headwinds such as the controversy over Musk’s pay package, this current lithium and EV tariff dispute is another major risk factor for TSLA stock today.

Rivian (RIVN)

Rivian (NASDAQ:RIVN) started off with great expectations. The EV firm had backing from and exclusive contracts with Amazon.com (NASDAQ:AMZN) which seemingly put them in a fantastic position to make its mark in the EV industry.

However, a litany of things has gone wrong since then. RIVN stock has dropped from more than $100 per share to just $10 now. Management has seemed unsure whether to fully commit to consumer vehicles or make a major push in the commercial vehicle space. Rivian has also struggled with unit economics, delivering poor gross margins and massive operating losses.

Investorplace contributor Will Ashworth recently warned that Rivian stock is in trouble even with the current tariff situation. In theory, fewer Chinese EV imports could be a positive for Rivian.

On the other side though, Rivian is losing money on every vehicle it sells right now. If a prolonged tariff war breaks out for batteries and rare earth materials, Rivian’s already considerable input costs would go even higher.

Rivian’s financial situation is already in such murky waters that an eventual bankruptcy filing is not out of the question. Any problems with Rivian’s battery supply chain would add strain to an already difficult situation, making RIVN one of the EV stocks to sell.

VinFast Auto (VFS)

VinFast Auto (NASDAQ:VFS) is another EV stock to sell, potentially facing negative consequences from the EV and lithium tariff battle.

Based in Vietnam, VinFast finds itself in an interesting position. It’s not a Chinese EV producer, but it could be effected by the broader tariff battle over EVs. Any further measures that attempt to protect domestic U.S. EV makers could have negative impacts on VinFast.

And it’s not like everything is going great for VinFast right now. VFS stock has fallen more than 90% from its all-time high. Furthermore, the company lost more than $1 billion over the past 12 months.

In addition to its other issues, VinFast also came under fire earlier in May over safety concerns. The National Highway Traffic Safety Administration (NHTSA) announced that it is investigating VinFast over a fatal crash that occurred on April 24. The crash appears to be tied to potential defects in the steering system of a VinFast VF 8 vehicle.

VinFast is already dealing with multiple significant operational issues right now. Any negative impact from tariffs would further complicate a tricky situation.

On the date of publication, Ian Bezek did not have (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.