Electric vehicle manufacturer Rivian Automotive issued a production forecast for 2023 Tuesday after the close of trading while also announcing a recall of 12,700 vehicles, a move that pushed the stock downward more than 7% in after-hours trading.
The company forecast vehicle production of 50,000 vehicles for 2023, well below analyst expectations of 60,000 vehicles or more. But the company expects to begin generating profits in 2024.
Yet Rivian didn’t meet its announced goal of producing 25,000 vehicles last year, managing only 24,337 units, and delivering just 20,332 vehicles.
This led Rivian’s adjusted 2022 loss before income, taxes, depreciation and amortization to come in at nearly $5.2 billion, slightly less than its projected $5.4 billion loss.
Quarterly revenue was disappointing, totalling $663 million, not the expected $742.4 million The company reported a fourth quarter 2022 loss of $1.7 billion, down from the $2.5 billion reported a year earlier. That amounts to $1.87 per share, compared to $4.83 per share last year.
Rivian reported $11.6 billion in cash and cash equivalents, down from the $13.3 billion at the end of the third quarter.
Shortages still an issue
“Supply chain continues to be the main limiting factor of our production; during the quarter we encountered multiple days of lost production due to supplier shortages,” the company’s shareholder later stated. The company expects to have continue supplier shortages going forward, but anticipates they should be easing.
No doubt this is why its future production forecast isn’t as high as analysts expect.
And, to finish it the discouraging news, the company announced a recall to fix a sensor in the front passenger seatbelt. The recall is its third since going public in November. The company feels that fewer than 100 vehicles are affected, which should limit the cost of the recall.
While Rivian was the first to offer a pure full-size battery electric pickup truck, the company is facing increasing fresh competition from the Ford F-150 Lightning and the forthcoming Chevrolet Silverado EV and Tesla Cybertruck. And Tesla’s price reductions are sparking a price war that has caused others to do the same, such as Lucid. This eats into profit margins.
But Rivian’s R1T pickup and R1S crossover remain fresh and compelling, so they should be able to withstand the competition. But it hasn’t been the easiest year for the automaker.
In March, in the face of increased component costs and semiconductor shortages, the company raised the price of its R1T pickup 17% and the price of its R1S SUV 20%. The resulting furor from its customers forced the company to roll back the increases two days later.
“The costs of the components and materials that go into building our vehicles have risen considerably. Everything from semiconductors to sheet metal to seats has become more expensive,” said Scaringe in a statement.
“As we worked to update pricing to reflect these cost increases, we wrongly decided to make these changes apply to all future deliveries, including pre-existing configured preorders. It was wrong and we broke your trust in Rivian.”
Things didn’t get better in May, when Rivian’s chief manufacturing engineer Charly Mwangi left for “personal reasons.” Then, in July, in an effort to reign in costs and improve profitability, the company announced layoffs of 14,000 employees, or about 6% of its workforce.
It was followed in October by a recall of about 13,000 trucks of the roughly 14,000 that have been made to fix suspension nuts that hadn’t been sufficiently torqued down.
In December, a planned European-market joint venture between Rivian and Mercedes-Benz has been put on hold after Mercedes decided to develop its own new electric van architecture.
But there are signs that things are getting better.
The Rivian R1T has earned the J.D. Power award for most satisfying ownership experience among Premium Battery Electric Vehicles in the J.D. Power 2023 U.S. Electric Vehicle Experience Ownership Study. And its customer satisfaction that could prove the biggest boost for future Rivian sales going forward.