It’s a horrible year that ends on a false note.
But this is not really a surprise either for investors or for Rivian shareholders.
The upstart, seen as one of Tesla’s most serious rivals, had a nightmarish year 2022. Nothing went the way the Irvine, CA-based band hoped.
Rivian (RIVN) – Get Free Report, which started producing cars in 2021, predicted that 2022 would be the year of ramp-up or mass production. Unfortunately it turned out to be one of increased difficulties. The automaker encountered many problems including major disruptions related to the supply chain, which led it to halve its initial production target of 50,000 vehicles mid-year. Rivian was then less ambitious, planning to produce only 25,000 vehicles over the whole year.
But even this low bar could not be reached. The group has just published its 2022 production figures and these show that the automotive group produced only 24,337 vehicles.
One of the few good notes is that Rivian made great progress in the fourth quarter, during which time the company manufactured 10,020 vehicles, according to a press release.
‘Incredible Achievement’
The firm, which currently has only one plant in Normal, Illinois, delivered 20,332 vehicles for the whole of 2022, including 8,054 in the fourth quarter.
Rivian
In an email to employees CEO RJ Scaringe said the company actually produced 25,051 vehicles. But just over 700 of these vehicles were not ready to be delivered to consumers because some parts were still missing. Software had not yet been validated in certain vehicles and the wheels still had to be aligned in others.
Scaringe, however, praised the employees, describing Rivian’s performance as “an incredible achievement.” According to the CEO, Rivian could have done better had it not been for the supply chain issues that forced the company to shut down the plant for 20 days and disrupted another 50 days of production.
Bad weather also forced Rivian to shut down the plant for five more days, Scaringe said.
Rivian’s announcements were rather well received on Wall Street, where the stock gained more than 1% in electronic trading after losing nearly 6% during the session. It is the opposite of rival Tesla (TSLA) – Get Free Report, which was heavily sanctioned on January 3 after announcing delivery figures below expectations. Tesla stock lost more than 12% during this trading session.
The Stock Is Down 83%
But Rivian, which went public with much fanfare in November 2021, has fallen dramatically in 2022. The stock is down 83% in one year. Market capitalization has shrunk by more than $75 billion. Rivian’s market value is currently at $15.3 billion whereas it had exceeded $100 billion shortly after the IPO. This is a real disaster for shareholders.
The reasons for Rivian’s problems have been the same since the start of the year: continued disruptions to supply chains which are driving up costs and are having a colossal impact on its ambition to mass-produce vehicles.
The carmaker also ended, a few days ago, a strategic partnership with Mercedes-Benz (DMLRY) , which would have allowed it to penetrate the European market and reduce its costs.
“We’ve decided to pause discussions with Mercedes-Benz Vans regarding the memorandum of understanding we signed earlier this year for joint production of electric vans in Europe,” said Scaringe on December 12. “As we evaluate growth opportunities, we pursue the best risk-adjusted returns on our capital investments.”
Rivian is burning a lot of cash and is facing rising costs due, in particular, to soaring prices for raw materials and other logistics costs. In the short term, the end of the partnership complicates Rivian’s ambitions to compete with Tesla, which is present in three important markets – North America, China and Europe.
During the third quarter, the firm widened its losses, recording a net loss of $1.72 billion, against $1.23 billion in the third quarter of 2021.
“Throughout the quarter, our cost of materials was impacted by inflationary pressures, which we believe will continue to have an impact on our gross margin for the near future,” Rivian said.
Source: https://www.thestreet.com/technology/tesla-rival-rivian-narrowly-misses-its-bet?puc=yahoo&cm_ven=YAHOO&yptr=yahoo