supply chain constraints affect Rivian’s production ramp-up in Normal

On December 17, – Rivian Automotive Inc (RIVN.O) shares fell nearly 15% to a record low on Friday after the electric vehicle maker’s first financial report as a public company highlighted the challenges it would face in increasing production to compete with EV leader Tesla Inc. (TSLA.O).

Rivian’s shares fell to $92.62 in early trading, dropping below the $100 mark for the first time, and were still down about 11% in the afternoon. Before Friday’s drop, they had risen roughly 40% since the company’s blockbuster market opening in November.

On Thursday, the electric automaker announced its first quarterly results. Rivian announced that 652 R1 vehicles (mostly trucks) had been produced since production began in September. Rivian will produce “a few hundred vehicles short” of its target of 1,200 vehicles by the end of 2021 due to some constraints on its supply chain.

Ramping production of the R1T truck, R1S SUV, and Amazon’s delivery vans in a matter of months would bed to “a really complex orchestra,” according to Chief Executive Officer RJ Scaringe.

Scaringe stated that supply chain constraints continue to be a challenge. Rivian’s suppliers are also ramping up production to match the company’s ramp-up rate, and the procurement team remains “agile and continues to work with supplier partners across all tiers to mitigate issues arising from our supply chain; labor market, and the COVID pandemic.”

 

Scaringe stated that the supply chain problems were “short term” and “solvable.”

“Given the uncertainty in the supply chain, we’ve decided to carry higher inventory levels than we previously assumed to help ensure we have parts to build on consistently.

Rivian has 71,000 R1 pre-orders, up from 55,400 in October, but Wall Street analysts believe the total is on the low side of expectations. Rivian has also had difficulty getting the vehicles into the hands of customers.

“The strong order book supports the production ramp, but it does add pressure to get vehicles to customers who may become impatient as current R1 orders will only be ready by the end of 2023,”  stated Wells Fargo analyst Colin Langan.

Rivian faces new volume challenges as demand rises while dispelling doubts about whether a new EV company will be able to survive  what Elon Musk has dubbed “production hell.”

Rivian is spending a lot of money and making very little money from vehicle sales because production has only begun. Rivian reported an operations loss of $776 million and a net loss of $1.2 billion for the quarterly report ending September 30. It made a total of $1 million in revenue in the third quarter, thanks to the first customer deliveries of 11 pickup trucks.

Rivian does not expect to be profitable in the near future, which is not uncommon in the EV world. Tesla took 18 years to make a full-year profit, which it finally did in 2020. It produced 500,000 vehicles that year.

Brandy Fietsop
Brandy is a contributor at The Volter and she is a passionate writer.

Latest articles

We combed Through the Entire Rivian R1S User Guide and This is What we Found

We have been waiting with so much anticipation to see the R1S deliveries begin. Signs that the deliveries are soon to begin are coming...

How Long Does It Take To Charge A Rivian?

Like other EVs, Rivian cars are not only prestigious but also environmentally friendly and cost-effective as they do not need gasoline. Because they do...

Rivian’s Strategy to Overcome the Upcoming Battery Shortage

(adsbygoogle = window.adsbygoogle || ).push({}); This has got to be the worst time for a startup automaker to begin production...

What are the New Rivian Models

Rivian has gotten production of the R1T, the R1S, and the Amazon electric van up and running.  As per revised estimates, the automaker should...

Related articles

Leave a reply

Please enter your comment!
Please enter your name here