Rivian Automotive reported third-quarter vehicle production and deliveries that fell short of analyst expectations due to a supply shortage, compelling the electric vehicle manufacturer to revise its full-year production forecast. In the quarter ending September 30, Rivian produced 13,157 vehicles, a decline from 16,304 units year-on-year, and missing the consensus estimate from analysts on Visible Alpha, which anticipated around 13,800 units.
Additionally, third-quarter deliveries dropped to 10,018 units from 15,564 a year earlier, falling short of the Visible Alpha prediction of 12,100 units. In the preceding quarter, Rivian's production and deliveries stood at 9,612 and 13,790 units, respectively, marking fluctuations that highlight ongoing operational challenges.
The company disclosed that it is currently facing production disruptions attributed to a shortage of a key component for the R1 and RCV vehicle platforms. This supply issue began affecting operations in the third quarter of this year, has intensified recently, and shows no immediate signs of resolution. Rivian's shares reflected investor concerns, declining by 8.7% during Friday’s trading, culminating in a staggering 58% loss in value year-to-date.
The company has now adjusted its annual production projections to range between 47,000 and 49,000 vehicles, down from the prior estimate of 57,000 units. Despite these challenges, Rivian anticipates a modest increase in annual deliveries by a low single digit for 2023, estimating totals between 50,500 and 52,000 units. While the reaffirmation of delivery guidance may alleviate some investor anxiety regarding demand, analysts at Truist Securities expressed worries about Rivian's production capabilities and gross margin trends.
The note indicated that the lack of clarity regarding the severity and expected duration of the component shortage is likely to exert downward pressure on the company’s stock. Moreover, the impact of Rivian's joint venture with the German automotive giant Volkswagen Group is under scrutiny, particularly as the related equity transaction is still pending.
Truist Securities advised that the current production difficulties and their implications on gross margin targets could potentially exacerbate negative trends for Rivian's shares. Earlier this year, Rivian and Volkswagen announced plans for a joint venture aimed at developing new software-defined vehicle platforms for future electric vehicles, with Volkswagen poised to invest as much as $5 billion in the endeavor. Truist's estimates position Rivian's full-year production and deliveries at 55,700 and 53,600 units, respectively, while Wall Street forecasts are slightly lower at 55,300 and 52,100 units. Rivian is scheduled to disclose its third-quarter financial results on November 7..