Rivian Pares delivery target for 2022 citing supply problems
Rivian, which has had a rocky ride in the stock market following a blockbuster initial public offering, cast another shadow on its outlook on Thursday, reporting that supply chain problems could severely disrupt production of electric vehicles. .
The company said it would only be able to produce 25,000 vehicles this year, if the supply chain wasn’t a “fundamental limiting factor” that it said could make up half that number.
Problems securing parts and materials are affecting all automakers, but they are killing Rivian when it has sold too few vehicles and faces competition from larger companies.
“Like the rest of the industry, we anticipate supply chain challenges to persist through 2022,” Rivian said in a letter to shareholders. On a call Thursday with Wall Street analysts, Rivian Chief Executive Officer RJ Scaring said the problems focused on a “small number of parts.”
Rivian makes a high-end truck – designed more as an off-road vehicle than a cargo hauler – and a sport utility vehicle. Rivian also has an agreement to build electric delivery vans for a major shareholder, Amazon, which has ordered 100,000. When Rivian went public, investors saw it as a potential competitor to Tesla, the largest electric vehicle maker.
An important year for electric vehicles
The popularity of battery-powered cars continues to grow around the world, even as the overall auto market has stagnated.
Rivian said as of Tuesday it had produced 1,410 vehicles this year, a tiny fraction of the 83,000 orders it submitted. The company did not say how many vans it delivered to Amazon this year.
Stock analysts said Rivian’s report was disappointing, and its stock fell 12 percent in after-hours trading after the company released its results.
“It’s been a very disappointing name, and these results show that Rivian still has a lot of wood to cut,” said Dan Ives, analyst and managing director at Wedbush Securities. He said he originally expected Rivian to make 40,000 vehicles this year, well above the company’s latest forecast, adding that analysts were expecting orders of more than 83,000 for Rivian vehicles.
As with other EV makers, Rivian will face rising prices of lithium and nickel, which are used to make batteries. Russia is a big exporter of nickel, and fears that supplies of the metal could be disrupted have pushed its price up.
“We expect the inflation we’ve seen with nickel pricing recently to be short-lived,” said Mr. Scaring.
Rivian went public in November, raising $13.5 billion—the cash it would need to expand its factory in Normal, Ill., and build one in Georgia. The stock rose at first, giving Rivian a higher market value than General Motors, but it is now trading at about half its IPO price.
Shares tumbled in recent months when Rivian said it was facing production challenges, then fell further in the debacle of customer relations over pricing. Rivian said last week that it would increase the prices of its vehicles, even those of vehicles it already ordered. Faced with a backlash, Rivian backtracked and applied the increase only to new orders, and Mr. Scaring apologized in a letter to customers.
Before the price change, Rivian’s truck and car could cost up to $83,000. After the launch of the new offerings, the price could reach up to $95,000.
Rivian reported revenue of $55 million and a net loss of $4.7 billion last year. It used $4.4 billion in cash to run its business and invest in new facilities and equipment, and it had $18 billion in cash on its balance sheet at the end of last year. The company said it expected a loss of $4.75 billion this year under a measurement of profits known as adjusted earnings before interest, taxes, depreciation and amortization.
Mr Ives said investors could also avoid the higher level of cost, especially if they were expecting higher order numbers. “The increase in cost is much higher than expected,” he said. “If pre-orders were on pace, the road would be fine with it.”
The executive overseeing Rivian’s operations left last year as the company tries to ramp up production. On Thursday, Mr Scaring said the company would announce a new chief operating officer next week.
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