Rivian Slides as EV Production Target, Cash Burn Raise Concerns

Rivian R1T electric pickup trucks on the assembly line
Rivian R1T electric pickup trucks on the assembly line at the company's manufacturing facility in Normal, Ill. (Jamie Kelter Davis/Bloomberg News)

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Rivian Automotive Inc. tumbled the most in nine months after the electric vehicle maker’s production plans for this year fell short of Wall Street’s expectations.

The maker of plug-in pickups and delivery vans said it will build 50,000 vehicles in 2023. That’s more than double last year’s total, but the target is well short of the 62,797 estimated by analysts, according to the average of three projections compiled by Bloomberg.

Rivian is struggling with supply chain snags as it accelerates output in a bid to challenge EV market leader Tesla Inc. Since going public in a blockbuster offering in late 2021 with backing from the likes of T. Rowe Price Group Inc. and Amazon.com Inc., Rivian has faced persistent parts shortages, and ultimately fell short of a goal to build 25,000 EVs last year.

The automaker offered its 2023 forecast along with fourth-quarter results that spooked investors. Rivian on Feb. 28 reported $663 million in revenue in the quarter, below the $717 million analysts expected. Cash and equivalents stood at $12.1 billion at the end of the quarter, down from around $14 billion in the prior period ending Sept. 30.

Rivian’s cash could slide to about $6 billion by the end of this year, which “will elevate funding concerns,” Chris McNally, an analyst with Evercore ISI, said in a note. That comes as the EV company also faces an “uphill battle for margins throughout ’23 into ’24.”

Its shares fell 14% to $16.63 at 10:07 a.m. on March 1 in New York, the biggest intraday slide since last May. The stock fell more than 80% in 2022, making it the second-worst performer on the Nasdaq 100 Index last year.

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Multiple analysts reduced their price targets following the company’s disclosures. Mizuho analyst Vijay Rakesh, who cut his target to $37 from $42 while maintaining a buy rating, cited worries around consumer demand that are weighing on EV makers.

Rivian has stopped disclosing the number of net preorders for its consumer EVs but the tally stood at around 114,000 as of early November. Rivian says it still has a backlog of orders that extends into 2024.

The manufacturer, which makes consumer plug-in pickups, sport utility vehicles and an electric delivery van for Amazon, acknowledged that supply woes are lingering into this year.

“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 said in a letter to shareholders. “We expect supply chain challenges to persist into 2023 but with better predictability relative to what was experienced in 2022.”

Rivian said it expects a loss, excluding items such as interest and amortization, of $4.3 billion for 2023. The company expects to achieve a gross profit in 2024.

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