Shares of electric-vehicle startup
Rivian
RIVN -9.92%
Automotive Inc. are trading near all-time lows ahead of the company’s quarterly earnings update, expected after the close Wednesday.
The Irvine, Calif.-based auto manufacturer, led by Chief Executive Officer RJ Scaringe, 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.
Analysts are projecting an adjusted loss of $1.37 per share for the first quarter. Investors are watching Rivian’s production numbers closely, with other auto makers projecting a tough year ahead due to higher commodities prices and obstacles getting parts.
Toyota Motor Corp.
, which also reported earnings this week, said rising raw materials costs would lower operating profits by the equivalent of about $11 billion in the current fiscal year, a record hit.
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 that at both
General Motors Co.
and
Ford Motor Co.
F -2.47%
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.
Rivian’s stock closed Tuesday at $22.79, down 78% since the start of the year, and fell another 7% in midday trading Wednesday.
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 -3.03%
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. Its stock is down 58% since the start of the year.
Rivian executives have highlighted that the demand is there for its models, citing 83,000 reservations as of the end of March 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 fourth quarter, Rivian had $18.4 billion in cash and liquidity, a sizable pile for an electric-vehicle startup. About $12 billion was raised through its IPO.
As Rivian has ratcheted up spending on manufacturing and research-and-development, its losses have ballooned. In the fourth-quarter, it posted a loss of $2.46 billion, compared with a loss of $353 million in the year-earlier period.
Rivian’s factory in Normal, Ill., is capable of producing 150,000 vehicles a year but has been limited to making 1,000 vehicles a month due to supply constraints. The company has said it still can’t get enough parts to operate the factory for a full five-day workweek.
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.
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.
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
Shares of electric-vehicle startup
Rivian
RIVN -9.92%
Automotive Inc. are trading near all-time lows ahead of the company’s quarterly earnings update, expected after the close Wednesday.
The Irvine, Calif.-based auto manufacturer, led by Chief Executive Officer RJ Scaringe, 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.
Analysts are projecting an adjusted loss of $1.37 per share for the first quarter. Investors are watching Rivian’s production numbers closely, with other auto makers projecting a tough year ahead due to higher commodities prices and obstacles getting parts.
Toyota Motor Corp.
, which also reported earnings this week, said rising raw materials costs would lower operating profits by the equivalent of about $11 billion in the current fiscal year, a record hit.
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 that at both
General Motors Co.
and
Ford Motor Co.
F -2.47%
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.
Rivian’s stock closed Tuesday at $22.79, down 78% since the start of the year, and fell another 7% in midday trading Wednesday.
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 -3.03%
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. Its stock is down 58% since the start of the year.
Rivian executives have highlighted that the demand is there for its models, citing 83,000 reservations as of the end of March 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 fourth quarter, Rivian had $18.4 billion in cash and liquidity, a sizable pile for an electric-vehicle startup. About $12 billion was raised through its IPO.
As Rivian has ratcheted up spending on manufacturing and research-and-development, its losses have ballooned. In the fourth-quarter, it posted a loss of $2.46 billion, compared with a loss of $353 million in the year-earlier period.
Rivian’s factory in Normal, Ill., is capable of producing 150,000 vehicles a year but has been limited to making 1,000 vehicles a month due to supply constraints. The company has said it still can’t get enough parts to operate the factory for a full five-day workweek.
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.
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.
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8