Rivian, which has had a tough time in the stock market since its initial public offering, cast a shadow over its outlook on Thursday, saying supply chain problems could severely limit electric vehicle production.
The company said it would only be able to produce 25,000 vehicles this year, half of what it said could have been produced had the supply chain not been a “fundamental limiting factor.”
Parts and materials issues affect all automakers, but they hit Rivian as it sells very few cars and faces competition from larger companies.
“Like the rest of the industry, we expect supply chain challenges to continue into 2022,” Rivian said in a letter to shareholders detailing last year’s financial results. In a call to Wall Street analysts Thursday, Rivian chief executive R.J. Scaringe said the problems stemmed from “a small number of details.”
Rivian manufactures high quality trucks, designed more as SUVs than utility vehicles, as well as SUVs. Rivian also has an agreement to manufacture electric vans for major shareholder Amazon, which has ordered 100,000 units. When Rivian went public, investors saw it as a potential competitor to Tesla, the world’s largest electric car maker.
Critical year for electric vehicles
The popularity of battery-powered vehicles is skyrocketing all over the world, despite the stagnation of the automotive market as a whole.
Rivian said it had produced 1,410 vehicles this year as of Tuesday, a fraction of the 83,000 orders placed. The company did not say how many vans it delivered to Amazon this year.
Stock analysts said Rivian’s report was disappointing and its shares fell 12 percent after business hours after the company released its results.
“It’s a very disappointing name,” said Dan Ives, an analyst and managing director at Wedbush Securities, “and these results show that Rivian still has a lot of wood to cut.” He said he initially expected Rivian to produce 40,000 vehicles this year, well above the company’s latest forecast, adding that analysts had expected orders for Rivian’s vehicles to exceed its stated 83,000.
Along with other electric vehicle makers, Rivian has to contend with rising prices for lithium and nickel, which are used in battery production. Russia is a major exporter of nickel, and fears that the supply of the metal could be limited have led to an increase in its price.
“We hope that the inflation we’ve seen very recently with nickel prices will be short-lived,” Mr. Scaringe said.
Rivian went public in November, raising $13.5 billion — the money it will need to expand its plant in Normal, Illinois, and build one in Georgia. Initially, the stock skyrocketed, sending Rivian’s market value higher than that of General Motors, but it’s now trading at about half its IPO price.
Shares have tumbled in recent months after Rivian said it was running into production problems, and then fell even further in the pricing fiasco with customer relationships. Rivian said last week that it would increase the prices of its cars, even those already on order. Faced with backlash, Rivian backed down and only applied the increase to new orders, with Mr Scaringe apologizing in a letter to customers.
Prior to the price change, Rivian’s truck and car could cost up to $83,000. After the introduction of new offers, the price could reach $95,000.
Rivian had $55 million in revenue last year and a net loss of $4.7 billion. He spent $4.4 billion in cash running his business and investing in new facilities and equipment, and had $18 billion in cash on his balance sheet at the end of last year. The company said it expects a loss of $4.75 billion this year, as measured by earnings known as adjusted earnings before interest, taxes, depreciation and amortization.
Mr. Ives said investors could also be put off by high costs, especially if they expect more orders. “The cost overrun is much bigger than the street expected,” he said. “If pre-orders were on pace, Street would be fine.”
Rivian’s chief operating officer left last year as the company tried to ramp up production. On Thursday, Mr. Scaringe said the company would announce a new chief operating officer next week.