Rivian CEO Says Its Chip-Shortage Problems Will Ease This Year

The company’s net loss nearly quadrupled to $1.6 billion for the January-to-March period, compared with $414 million in the prior-year quarter, as the company continued to spend heavily on R&D and manufacturing of its first vehicles.

Rivian said higher logistics costs also weighed on results, due in part to higher spending on expedited shipping as a workaround to supply-chain disruptions. Since the end of March, the company has stopped assembly lines for longer-than-anticipated periods, leading it to lose about a quarter of its planned production because of supply constraints, Rivian said.

Chief Executive RJ Scaringe said it has been working with suppliers to ensure more parts and believes the company is moving past earlier obstacles it had with getting semiconductors. He said Rivian plans to add a second factory shift in the latter half of this year.

“We’ve seen really the worst of it, or sort of the valley if you will, of the supply constraints,” Mr. Scaringe said, referring to the computer-chip shortage.

Rivian executives said the company’s losses should narrow as it begins to make full use of its factory in Normal, Ill., a facility that can produce 150,000 vehicles a year. The company manufactured 2,553 vehicles and delivered 1,227 of them to customers during the three-month period.

The quarterly report follows a multiweek slide in Rivian’s stock price, which hit an all-time low this week and is trading at nearly a quarter of its initial offering price of $78 a share.

Following the results, Rivian shares rose 7% in after-hours trading. Before that, the stock fell 9.6% during the regular session, closing at $20.60 a share.

The Irvine, Calif.-based auto manufacturer was among a handful of EV-focused startups that went public last year with highflying valuations, tapping Wall Street’s zeal for the auto industry’s transition to electrics. But this year has proved challenging for the young company, which has struggled to increase production of its first two models, the R1T pickup and R1S sport-utility vehicle. Both went on sale last fall.

Like other auto makers, Rivian is confronting rising raw material costs, particularly on ingredients needed to manufacture batteries, and troubles securing enough semiconductors and other parts to fully run the assembly line.

Rivian in March cut its 2022 production forecast to 25,000 vehicles, citing supply-chain and logistical difficulties. The company said it otherwise would have produced 50,000 trucks and SUVs.

Rivian reported an adjusted loss of $1.43 a share for the first quarter, compared with analysts’ expectations of a loss of $1.37 a share.

The obstacles facing the broader global auto industry are falling hard on startups like Rivian, which have yet to build the type of clout with suppliers that some of their well-established competitors have amassed over decades, executives and analysts say. The car company this spring increased prices on vehicle orders placed after March 1, reflecting the toll that higher commodities costs are taking on its business.

Rivian’s shares have been in sharp decline since its blockbuster IPO in November, a listing that at the time was among the largest U.S. debuts since 2014. At one point shortly afterward, Rivian’s valuation climbed to more than $160 billion, surpassing the market cap of both

General Motors Co.

and

Ford Motor Co.

F -3.90%

The stock sank to an all-time low Monday, after reports that Ford—an early investor in Rivian—sold about 8% of its stockholdings, following the expiration of a post-IPO lockup period. Ford has since confirmed the stock sale in a regulatory filing.

Shares continued to slide this week ahead of the quarterly report and are down more than 80% from the start of the year. As of Wednesday’s close, Rivian’s market value stood at $17.9 billion, according to FactSet.

The company’s tumbling share price has weighed on earnings for both Ford, which held about 102 million shares before the recent sale, and

Amazon.com Inc.,

AMZN -3.20%

another early investor, with a roughly 18% stake in Rivian. Both Ford and Amazon swung to a loss in the first quarter as a result of declines in the market value of their Rivian holdings.

The stock declines also reflect a wider cooling on Wall Street for auto startups that had burst onto the scene last year with big promises and little-to-no revenue.

Rival electric-vehicle startup

Lucid Group Inc.,

which makes luxury sedans that compete directly with

Tesla Inc.,

has also cut production forecasts and raised prices in recent months.

Rivian executives have highlighted that demand is there for its models, citing 90,000 reservations as of May 9 and a 100,000-vehicle order from Amazon for electric vans. They have also expressed confidence in their manufacturing capabilities, saying they are working with suppliers to ease bottlenecks.

At the end of the first quarter, Rivian had $17 billion in cash and liquidity, a sizable pile for an electric-vehicle startup. About $12 billion was raised through its IPO.

In addition to its factory in Normal, Ill., Rivian has committed to spending $5 billion to build a new factory in Georgia, which would produce a more-affordable EV called the R2. Production is expected to start in 2024, and the company said it believed it could accomplish this goal with its current cash. Rivian executives said they were slashing R&D spending by simplifying their future vehicle lineup to conserve cash.

The company’s supply-chain challenges don’t stop with electronics. Mr. Scaringe also has warned of a looming battery shortage, which would limit the auto industry’s ability to hit their EV sales targets over the next decade.

On Wednesday, Mr. Scaringe said he didn’t foresee an immediate problem with Rivian getting battery supplies, adding that this is a longer-term problem for the car sector as demand increases.

Write to Sean McLain at sean.mclain@wsj.com

The company’s net loss nearly quadrupled to $1.6 billion for the January-to-March period, compared with $414 million in the prior-year quarter, as the company continued to spend heavily on R&D and manufacturing of its first vehicles.

Rivian said higher logistics costs also weighed on results, due in part to higher spending on expedited shipping as a workaround to supply-chain disruptions. Since the end of March, the company has stopped assembly lines for longer-than-anticipated periods, leading it to lose about a quarter of its planned production because of supply constraints, Rivian said.

Chief Executive RJ Scaringe said it has been working with suppliers to ensure more parts and believes the company is moving past earlier obstacles it had with getting semiconductors. He said Rivian plans to add a second factory shift in the latter half of this year.

“We’ve seen really the worst of it, or sort of the valley if you will, of the supply constraints,” Mr. Scaringe said, referring to the computer-chip shortage.

Rivian executives said the company’s losses should narrow as it begins to make full use of its factory in Normal, Ill., a facility that can produce 150,000 vehicles a year. The company manufactured 2,553 vehicles and delivered 1,227 of them to customers during the three-month period.

The quarterly report follows a multiweek slide in Rivian’s stock price, which hit an all-time low this week and is trading at nearly a quarter of its initial offering price of $78 a share.

Following the results, Rivian shares rose 7% in after-hours trading. Before that, the stock fell 9.6% during the regular session, closing at $20.60 a share.

The Irvine, Calif.-based auto manufacturer was among a handful of EV-focused startups that went public last year with highflying valuations, tapping Wall Street’s zeal for the auto industry’s transition to electrics. But this year has proved challenging for the young company, which has struggled to increase production of its first two models, the R1T pickup and R1S sport-utility vehicle. Both went on sale last fall.

Like other auto makers, Rivian is confronting rising raw material costs, particularly on ingredients needed to manufacture batteries, and troubles securing enough semiconductors and other parts to fully run the assembly line.

Rivian in March cut its 2022 production forecast to 25,000 vehicles, citing supply-chain and logistical difficulties. The company said it otherwise would have produced 50,000 trucks and SUVs.

Rivian reported an adjusted loss of $1.43 a share for the first quarter, compared with analysts’ expectations of a loss of $1.37 a share.

The obstacles facing the broader global auto industry are falling hard on startups like Rivian, which have yet to build the type of clout with suppliers that some of their well-established competitors have amassed over decades, executives and analysts say. The car company this spring increased prices on vehicle orders placed after March 1, reflecting the toll that higher commodities costs are taking on its business.

Rivian’s shares have been in sharp decline since its blockbuster IPO in November, a listing that at the time was among the largest U.S. debuts since 2014. At one point shortly afterward, Rivian’s valuation climbed to more than $160 billion, surpassing the market cap of both

General Motors Co.

and

Ford Motor Co.

F -3.90%

The stock sank to an all-time low Monday, after reports that Ford—an early investor in Rivian—sold about 8% of its stockholdings, following the expiration of a post-IPO lockup period. Ford has since confirmed the stock sale in a regulatory filing.

Shares continued to slide this week ahead of the quarterly report and are down more than 80% from the start of the year. As of Wednesday’s close, Rivian’s market value stood at $17.9 billion, according to FactSet.

The company’s tumbling share price has weighed on earnings for both Ford, which held about 102 million shares before the recent sale, and

Amazon.com Inc.,

AMZN -3.20%

another early investor, with a roughly 18% stake in Rivian. Both Ford and Amazon swung to a loss in the first quarter as a result of declines in the market value of their Rivian holdings.

The stock declines also reflect a wider cooling on Wall Street for auto startups that had burst onto the scene last year with big promises and little-to-no revenue.

Rival electric-vehicle startup

Lucid Group Inc.,

which makes luxury sedans that compete directly with

Tesla Inc.,

has also cut production forecasts and raised prices in recent months.

Rivian executives have highlighted that demand is there for its models, citing 90,000 reservations as of May 9 and a 100,000-vehicle order from Amazon for electric vans. They have also expressed confidence in their manufacturing capabilities, saying they are working with suppliers to ease bottlenecks.

At the end of the first quarter, Rivian had $17 billion in cash and liquidity, a sizable pile for an electric-vehicle startup. About $12 billion was raised through its IPO.

In addition to its factory in Normal, Ill., Rivian has committed to spending $5 billion to build a new factory in Georgia, which would produce a more-affordable EV called the R2. Production is expected to start in 2024, and the company said it believed it could accomplish this goal with its current cash. Rivian executives said they were slashing R&D spending by simplifying their future vehicle lineup to conserve cash.

The company’s supply-chain challenges don’t stop with electronics. Mr. Scaringe also has warned of a looming battery shortage, which would limit the auto industry’s ability to hit their EV sales targets over the next decade.

On Wednesday, Mr. Scaringe said he didn’t foresee an immediate problem with Rivian getting battery supplies, adding that this is a longer-term problem for the car sector as demand increases.

Write to Sean McLain at sean.mclain@wsj.com