Rivian Slashes Production Forecast Amid Parts Shortage

(Retrun by Reuters) – Rivian announced on Friday a reduction in its full-year production forecast, citing fewer vehicle deliveries in Q3 than analyst expectations. The startup is facing a parts shortage and a decline in electric vehicle demand.

Shares of Rivian dropped over 6% in premarket trading, contributing to an overall decline of more than 50% this year.

The shortage of essential parts for its R1 SUV, R1T pickups, and delivery vans started in Q3 and has worsened in recent weeks. Rivian now anticipates producing between 47,000 and 49,000 vehicles this year, down from an earlier estimate of 57,000, indicating a dramatic decrease from the previous year’s output.

The electric vehicle industry is being impacted by dwindling demand, as consumers shift towards more affordable hybrids due to rising interest rates. Rivian’s partner, Amazon, and U.S. market leader Tesla also reported quarterly misses in delivery estimates.

In April, Rivian temporarily shut down its sole manufacturing facility in Normal, Illinois, for three weeks to streamline production processes and reduce costs associated with building electric pickups and SUVs.

Cost reduction is vital for Rivian as it navigates the demand slump and aims to increase production of the R1 series while also preparing for its smaller R2 models, scheduled for 2026.

For the quarter ending September 30, Rivian reported 10,018 vehicle deliveries, falling short of the forecasted 12,078 from 15 analysts surveyed by Visible Alpha.

Despite the challenges, Rivian maintained its annual delivery forecast of 50,500 to 52,000 vehicles this year, though analysts anticipated a slightly higher figure of 53,491.

Earlier this year, Volkswagen committed to investing up to $5 billion in Rivian through a joint venture to collaborate on EV architecture and software, which will aid Rivian in enhancing its cash reserves and targeting positive cash flow. The company aims to achieve its first gross profit by the end of 2024.