Rivian warns of supply problems to hit 2021 production, shares fall 10%
Rivian Shares of Automotive Inc fell 10% in pre-market trading on Friday, following the power sale vans The manufacturer’s first results as a listed company highlight the challenges it may face in ramping up production to take the lead in electric vehicles. Tesla Inc.
Rivian also announced plans to build a $5 billion plant to increase capacity, highlighting production challenges even as it receives about 2,000 pre-orders a week.
“We don’t want to read too much into the short-term… but it highlights the risk that Rivian has a lot,” said RBC Capital Markets analyst Joseph Spak.
The company expects production to fall by “several hundred vehicles” from its target of 1,200 vehicles in 2021 due to supply chain constraints.
Increased production of R1T trucks, R1S RJ Scaringe CEO said that Amazon SUVs and delivery vehicles within a few months will be like “a really complex orchestra”.
Construction of Rivian’s new Georgia factory will begin next summer and production will only begin in 2024. The company plans to increase production by 50,000 vehicles at its plant in Normal, Illionis, which opens in September.
Wells Fargo analyst Colin Langan said: “Strong order books provide support to the manufacturing process, although adding pressure to get vehicles to customers who may be impatient with orders. Current R1 shipments won’t be ready until late 2023,” said Wells Fargo’s Colin Langan.
Rivian faces new challenges in building volume as demand grows while raising doubts about whether a tram the company will be able to survive what CEO Tesla Elon Musk called “production hell.”
Shortly after Rivian’s IPO, Musk said that high yields and breakeven cash flow would be the “real test” for Rivian.
Shares of the world’s most valuable automaker after Tesla Inc have surged 40% since its IPO in November.
(Reporting by Akash Sriram and Nivedita Balu in Bengaluru, Ben Klayman in Detroit; Editing by Vinay Dwivedi)