Rivian warns of supply problems to hit production, shares fall to record lows

A Rivian R1T pickup, the Amazon-backed electric car maker (EV), runs outside the Nasdaq Market area during the company’s listing on Times Square in New York City, USA, November 10, 2021. REUTERS / Brendan McDermid / File Photo

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December 17 (Reuters) – Shares in Rivian Automotive Inc (RIVN.O) fell nearly 15% on Friday to reach a record low after the electric carmaker’s first performance as a listed company highlighted the challenges it is likely to face in increasing production to take on EV leader Tesla Inc (TSLA.O).

Rivian’s shares fell to $ 92.62 in early trading – opening below the $ 100 mark for the first time – and were still down around 11% in the afternoon. Before Friday’s decline, they had received around 40% since the company’s major film debut in November.

Rivian on Thursday announced plans to build a $ 5 billion plant in Georgia to increase capacity, while flagging production challenges even though they receive around 2,000 pre-orders each week. read more

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“We do not want to read too much into short-term issues … but it does highlight the risk that Rivian has a lot on its plate,” said RBC Capital Markets analyst Joseph Spak.

The Irvine, California-based company expects production to fall “a few hundred cars below” its 2021 target of 1,200 due to supply chain constraints.

Increasing the production of the R1T truck, R1S SUV and Amazon vans within a few months will be akin to “a very complex orchestra,” said CEO RJ Scaringe.

Rivian has 71,000 pre-orders for its R1 vehicles, up from 55,400 in October, but some on Wall Street said the total is at the low end of expectations. Rivian has also struggled to get the vehicles into customers’ hands.

“The strong order book provides support for the production ramp, although it is putting pressure to get vehicles to customers who may become impatient as current R1 orders will not be ready until the end of 2023,” said Wells Fargo analyst Colin Langan.

Construction of Rivian’s new Georgia plant will begin next summer and vehicle production will begin in 2024. The company plans to increase production by 50,000 vehicles at the Normal, Illinois plant, which began building the R1T pickup in September and added the R1S SUV this week. the van that follows this month.

Rivian faces new challenges in terms of construction volume as demand increases while shattering doubts about whether a new electric car company will be able to survive what Tesla CEO Elon Musk has called “production hell”.

Right after Rivian’s IPO, Musk said that high production and break-even cash flow would be the “true test” for Rivian. read more

Georgia’s economic development officials on Friday declined to say what Rivian’s incentives will be, as they are still being finalized. Georgia previously gave Korean carmaker Kia more than $ 450 million in incentives for a new state plant, according to some reports, and Texas officials offered Rivian up to $ 440 million for the new plant. read more

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Reporting by Akash Sriram and Nivedita Balu in Bengaluru, Ben Klayman in Detroit; Edited by Vinay Dwivedi and Dan Grebler

Our standards: Thomson Reuters Trust Principles.

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