Rivian Automotive (RIVN) shares fell sharply Friday after the upstart EV maker warned that supply chain issues would halve its 2022 production forecasts following a wider-than-expected fourth quarter loss of $2.5 billion.
Rivian, which is hoping to ramp-up production in the coming years to challenge established rivals such as Tesla (TSLA) in the global EV market, has only produced 2,425 cars since it began production in September of last year, and will roll out 25,000 units this year. Tesla, which began production in 2010, made a record 936,000 vehicles last year.
Amazon (AMZN)-backed Rivian will also remain deeply in the red for the whole of 2022, the company said, even as it works to fulfill 83,000 pre-orders from customers in the U.S. and Canada, adding that supply chain challenges will be a 'fundamental limiting factor' in its total output and gross margins will remain negative throughout the year.
"Launching and ramping production of three different vehicles within a few months is an incredibly tough challenge. This production ramp requires the simultaneous ramp of our supply chain, hiring and training of our production workforce, equipment bring-up and rapid iteration through production quality loops," founder and CEO R.J. Scaringe told investors on a conference call late Thursday. "These challenges have been exacerbated given the state of our global supply chain, tight labor market and of course the complications from COVID."
"The good news is we do not believe any of our supply chain challenges represent long-term systemic issues," he added. "While our product development and manufacturing teams have been focused on ramping our normal production facility, our real estate and facilities team have been working diligently to ensure we remain well-positioned to capture and drive the accelerated large scale adoption of sustainable transportation."
Rivian shares were marked 10.9% lower in pre-market trading to indicate an opening bell price of $36.67 each. The stock has shed more than $78.6 billion in market value since its November 2021 peak.
