Electric Vehicle Maker Rivian Slashes Production Targets Amid Supply Chain Woes
Rivian Automotive Inc.’s stock took a hit after the company announced it would be scaling back its annual production goals due to a deepening supply chain crisis at its sole US manufacturing facility. The automaker now expects to produce up to 18% fewer vehicles this year, citing a persistent shortage of a critical component used in its electric pickup trucks, SUVs, and commercial vans.
The company’s third-quarter output and delivery numbers fell short of analyst expectations, leading to a 3.3% decline in its stock price. Rivian’s shares have already plummeted by over 54% this year. The revised production target marks the latest setback for the company, which has been grappling with multiple supply chain disruptions and a broader slowdown in consumer demand for electric vehicles.
Rivian’s production pause on its commercial van for Amazon.com Inc. in August was triggered by a component shortage. The company has now revised its production goal to 47,000-49,000 EVs this year, down from its initial projection of 57,000. Despite this, Rivian still expects to increase annual deliveries by a low single-digit percentage.
The production stumble may delay Rivian’s goal of achieving positive gross profits by the fourth quarter. Analysts predict gross margins will be negative 10% in the final three months of 2024. CEO RJ Scaringe had earlier acknowledged the company’s struggles with supplier issues, including EV motors produced in-house. The component shortage has worsened in recent weeks, leading to Rivian’s lowest quarterly delivery total in a year and a half.
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