Rivian Automotive, the electric vehicle (EV) startup backed by Amazon, is facing significant challenges as it announces lower-than-expected vehicle deliveries for the third quarter of 2024, leading to a substantial drop in its stock price. During intraday trading on Friday, Rivian's stock fell as much as 8.9%, before closing down 3.2% at $10.44. This decline reflects investor concerns over the company’s production capabilities and supply chain woes, particularly as the automotive industry experiences shifting consumer demand.
The core issue impacting Rivian's performance appears to be related to supply chain difficulties stemming from component shortages. Rivian slashed its annual production forecast for 2024, revising its target from 57,000 units down to between 47,000 and 49,000. The company confirmed these supply issues began to intensify during the third quarter and are primarily linked to shortages of specific parts used in its R1 SUV and R1T pickup vehicles, as well as delivery vans. CEO RJ Scaringe explained these challenges during an investor conference, emphasizing the complications of managing multiple tiers within their supply chain, particularly with their proprietary motor components.
Despite this setback, Rivian produced 13,157 vehicles at its production facility located in Normal, Illinois, for the third quarter. Deliveries, unfortunately, lagged behind pro formas, totaling just 10,018 — well below the anticipated figures of around 12,000 vehicles, as forecasted by analysts. This delivery shortfall has added to the growing skepticism about Rivian's ability to compete effectively, amid intensifying competition from both established and new entrants within the EV sector.
Selling prices for electric vehicles have become increasingly sensitive to broader economic pressures, with many consumers leaning toward cheaper hybrid alternatives, especially as interest rates rise. Currently, the average annual percentage rate (APR) for new auto loans has reached around 7.1%, pushing potential buyers to reconsider their vehicle purchases. Rivian's ability to meet its earlier commitment of delivering 50,500 to 52,000 vehicles this year remains contingent on resolving these supply issues.
Rivian's stock has had a turbulent year, plunging by over 50% amid concerns surrounding rising production costs and negative economic indicators affecting EV demand. Alongside these factors, Rivian recently halted production for three weeks to streamline its manufacturing processes and reduce costs, which has compounded the uncertainty over its operational efficiency.
Investors are keeping close tabs on how Rivian navigates these turbulent waters. The company has shown signs of resilience by reaffirming its delivery outlook, and looks to recover by potentially bolstering its production output once the supply chain issues are addressed. Rivian experiences consistent pressure, but it continues to work diligently to ramp up the production of the R1 models, all the meanwhile gearing up to launch the next-generation R2 models by 2026.
The collaboration with Volkswagen for shared EV architecture and software also aims to strengthen Rivian's position, which received investor attention as Volkswagen committed to investing up to $5 billion within this joint venture. This partnership is anticipated to help Rivian stabilize its financial footing and pave the way for profitability by late 2024.
Rivian's latest figures and forecasts highlight the need for the startup to remain adaptive and agile amid the ever-evolving automotive market dynamics. The company's efforts to cut costs and broaden its production capabilities are viewed as necessary steps to appease investor apprehensions as Rivian aggressively hones its focus on long-term viability.
The pressures aren't exclusive to Rivian; the entire electric vehicle market is increasingly saturated, and demand has been tempered by economic hurdles. Tesla has also missed its quarterly delivery projections, indicating broader struggles within the electric vehicle industry. Despite this, Rivian continues to position itself for potential market recovery and innovation.
With the upcoming launch of the R2 models slated for 2026 and Rivian's determination to respond to the challenges it faces, the coming months will be pivotal for the company. Stakeholders will watch closely as Rivian attempts to bridge the gap between production forecasts and actual deliveries, which will be instrumental for the young automaker's future.
