Shares of Rivian Automotive Inc. ($RIVN) increased by nearly 14% on Monday following two significant developments.
Tesla ($TSLA) reached a "conditional" settlement in its lawsuit against Rivian, which accused the electric vehicle manufacturer of poaching employees and stealing trade secrets. Tesla did not disclose specific details but plans to seek dismissal of the case by December 24.
Additionally, California Governor Gavin Newsom announced intentions to propose a new version of the state’s Clean Vehicle Rebate Program (CVRP) if President-elect Donald Trump proceeds with eliminating federal EV tax credits. Newsom's plan aims to replace federal incentives with state-level rebates, potentially funded by California’s Greenhouse Gas Reduction Fund. The original CVRP, phased out in 2023, supported 594,000 electric vehicle sales and saved 456 million gallons of fuel.
California has emerged as a leader in clean vehicle adoption, with over 2 million zero-emission vehicles sold. However, the new proposal may present challenges for Tesla, as market-share caps could exclude its top-selling models.
Despite Tesla's stock reaching a two-year high earlier in the day after UBS raised its price target to $226 from $197, shares fell over 1% by midday. Retail sentiment around Tesla remained bullish at 65/100, with many suggesting the decline is temporary.
Newsom's proposal not only positively impacted Rivian's stock but also boosted shares of other EV manufacturers, including Lucid ($LCID), which rose 5%, and VinFast Auto Ltd. ($VFS), which gained 1%.
Retail sentiment for Rivian shifted to 'bullish' (69/100) from 'neutral' just a day prior, although opinions on the cause of the stock surge were mixed. Some attributed the rise to optimism regarding Rivian's anticipated fourth-quarter earnings in February, rather than the tax credits or Tesla's lawsuit settlement.
Rivian's stock has dropped 46% this year, while Tesla has gained 40% year to date.