Rivian, who has had a rocky ride in the stock market after a blockbuster IPO, cast a further shadow over his outlook on Thursday, reporting that supply chain problems could severely limit electric vehicle production.
The company said it could only produce 25,000 vehicles this year, half the number it could make if the supply chain were not a “fundamental limiting factor”.
Problems with securing parts and materials afflict all automakers, but they hit Rivian when it has sold very few vehicles and faces competition from larger companies.
“Like the rest of the industry, we expect supply chain challenges to continue through 2022,” Rivian said in a letter to shareholders detailing last year’s financial results. Speaking with Wall Street analysts on Thursday, Rivian CEO RJ Scaringe said the problems centered on a “small number of areas.”
Rivian makes a high-end truck – designed more like an all-terrain vehicle than a truck – and an SUV. Rivian also has an agreement to make electric vans for a major shareholder, Amazon, which has ordered 100,000 of them. When Rivian went public, investors saw it as a possible competitor to Tesla, the largest electric vehicle manufacturer.
A critical year for electric vehicles
The popularity of battery-powered cars is rising worldwide, even as the general car market is stagnating.
Rivian said it had produced 1,410 vehicles as of Tuesday this year, a small fraction of the 83,000 orders submitted. The company has not said how many vans it has delivered to Amazon this year.
Equity analysts said Rivian’s report was disappointing and shares fell 12 percent in after-hours trading after the company released its results.
“It was a very frustrating name,” said Dan Ives, an analyst and director at Wedbush Securities, “and these results show that Rivian has a lot more to chop.” He said he originally expected Rivian to make 40,000 vehicles this year, well above the company’s latest forecast, adding that analysts had expected orders for Rivian vehicles to exceed the 83,000 reported.
Along with other EV makers, Rivian is battling rising prices for lithium and nickel, which are used in making batteries. Russia is a major exporter of nickel and fears that supplies of the metal could be limited have pushed the price up.
“We hope the inflation we’ve seen recently with nickel prices is short-lived,” said Mr Scaringe.
Rivian went public in November and raised $13.5 billion — cash it needs to expand its plant in Normal, Illinois, and build one in Georgia. The stock first skyrocketed, giving Rivian a market cap that was higher than General Motors, but it now trades at about half its IPO price.
Shares fell in recent months after Rivian said it was facing manufacturing challenges, then plunged further into a customer relationship debacle over pricing. Rivian said last week it would increase the prices of its vehicles, even those already ordered. Facing a backlash, Rivian came back and only applied the increases to new orders, and Mr. Scaringe apologized in a letter to customers.
Before the price change, Rivian’s truck and car could cost as much as $83,000. After the introduction of new offerings, the price could reach $95,000.
Rivian had revenue of $55 million last year and a net loss of $4.7 billion. It used $4.4 billion in cash to run its business and invest in new facilities and equipment, and had $18 billion in cash on its balance sheet at the end of last year. The company said it expects a loss of $4.75 billion this year based on a measurement of earnings known as adjusted earnings before interest, taxes, depreciation and amortization.
Mr Ives said investors might also be shocked by the high cost level, especially if they expected higher order numbers. “The cost overruns are much more than the street expected,” he said. “If the pre-orders were on schedule, the street would be fine with it.”
The director who oversaw Rivian’s operations left last year as the company attempted to ramp up production. Thursday said Mr. Scaringe that the company would announce a new Chief Operating Officer next week.
