Rivian lowers annual production forecast due to parts shortage

By Zaheer Kachwala

(Reuters) – Rivian cut its full-year production forecast on Friday and missed third-quarter delivery expectations due to a parts shortage and slowing growth in demand for electric vehicles, sending the startup's shares down nearly 4%.

The company said shortages of parts used in its R1 SUV and R1T pickup trucks and vans began in the third quarter and have worsened in recent weeks.

Amazon.com-backed Rivian now expects full-year production to be between 47,000 and 49,000 vehicles, down from its previous forecast of 57,000 vehicles. The forecast cut means the company now expects to produce fewer vehicles than last year.

Slower growth in demand for electric vehicles has impacted the entire industry as Americans struggling with high interest rates switch to cheaper hybrid vehicles. US market leader Tesla also missed quarterly delivery estimates earlier this week.

“The cut to production guidance was significant and will likely raise a number of questions about RIVN's ability to turn around to generate gross profit,” said Garrett Nelson, senior equity analyst at CFRA Research.

The company said it aims to make its first profit in the last three months of the year. To support these efforts, Rivian closed its sole manufacturing facility in Normal, Illinois, for three weeks earlier this year to simplify its manufacturing processes and reduce the cost of building its vehicles.

Reducing costs is critical for Rivian as it tries to weather the decline in demand and increase production of its R1 models while preparing for production of its smaller R2 models in 2026.

The company said it delivered 10,018 vehicles in the quarter ended Sept. 30, compared with estimates of 12,078, according to 15 analysts surveyed by Visible Alpha.

Rivian reiterated its annual delivery forecast of 50,500 to 52,000 vehicles. Analysts expected 53,491, according to Visible Alpha.

German automaker Volkswagen said earlier this year that it would invest up to $5 billion in Rivian as part of a joint venture, which could help boost its cash reserves and boost cash flow.

(Reporting by Zaheer Kachwala in Bengaluru; Editing by Shinjini Ganguli)