Rivian Manufacturing Normal 01

Rivian’s production difficulties are worse than expected

The latest supply chain problems in the automotive industry have proven to be bad news for both Rivian’s order holders and shareholders. In its Q4 2021 review letter, Rivian says it expects to produce 25,000 delivery trucks and vans this year, despite about 83,000 orders currently piling up. The company says the limited production is due to supply chain issues and that, under more normal circumstances, its current equipment and processes could turn out 50,000 vehicles a year.

Rivian’s letter states: “We believe that during 2022 the supply chain will be a fundamental limiting factor in our overall performance for the Normal Factory, and that our manufacturing equipment and processes will be capable of producing enough vehicles to deliver more than 50,000 vehicles worldwide. . R1 and RCV platforms in 2022 if we weren’t limited by our supply chain. Our confidence comes from the demonstrated performance of our processes and equipment that meets our expectations. Despite this, due to the supply chain constraints currently visible to us, we believe we will have enough parts and materials to produce 25,000 vehicles on our R1 and RCV platforms in 2022.”

Back in November 2021, the company predicted that it would overcome its existing reserve of 55,400 bookings by the end of 2023. However, with these latest projections, this looks more and more like a best-case scenario. To be fair to the company, this previous prediction was made before Russia’s invasion of Ukraine, the associated sanctions and shutdowns, which forced the auto industry to face yet another supply chain challenge.

It’s important to note that Rivian includes its delivery vans in this figure of 25,000 vehicles. It reportedly owes Amazon 10,000 of these vehicles by the end of the year and 100,000 by the end of the decade. longer.

Following the announcement, Rivian’s shares fell 13 percent, trading on Thursday at about $38 a share. This is the lowest figure since the company’s IPO in November last year.

In terms of financials, the electric vehicle start-up estimates in its shareholder letter that it will have an operating loss of about $4.75 billion this year, of which $2.6 billion is in capital expenditures—money spent on expensive fixed assets. such as premises, equipment and land. Rivian posted a $2.79 billion loss in 2021.

In the same letter, Rivian outlined plans to transition to a new type of battery cell made from lithium iron phosphate (LFP) for use in its standard battery pack. Since LFP batteries do not require expensive nickel or cobalt, these units are said to expand offering and reduce cost while providing an ideal range of 260 miles when used in R1S and R1T trucks. Late last year, Tesla took a similar step and announced the use of LFP batteries in all of its standard battery vehicles.

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