Rivian could have a pleasant surprise for its customers and investors.
The EV upstart, considered one of Tesla's biggest rivals in the United States, could finally overcome the supply chain problems that have been hampering its rise for several months.
The Irvine, Calif.-based automaker has told employees that its production is expected to be 24% higher than the target of 50,000 vehicles announced on Feb. 28, according to Bloomberg News. This means that Rivian would produce nearly 62,000 vehicles this year. This revised figure would be in line with the expectations of Wall Street analysts. On average, they expected between 60,000 and 62,797 vehicles produced this year by the automaker.
The announcement was made by executives at an all-hands meeting on March 3, Bloomberg reports, citing close sources.
"Rivian is sticking to its official guidance of 50,000 during the fourth-quarter earnings," a spokesperson said in an emailed statement, but added that the 62,000 number "was said in an internal meeting and taken out of context."
The Supply Chain Nightmare
The announcement made to employees is likely to reassure investors, who were disappointed when Rivian explained on Feb. 28 that its supply chain would remain disrupted this year, and would, as in 2022, affect production ramp up.
"Supply chain continues to be the main limiting factor of our production," the company said in letter to shareholders, explaining that during the 2022 fourth quarter it "encountered multiple days of lost production due to supplier shortages."
"As expected, during the fourth quarter of 2022, in-transit time from rail shipments combined with increased volumes from the ramp of our second shift towards the end of the quarter caused a larger discrepancy between production and deliveries," Rivian detailed.
These problems led Rivian, which manufactures the R1S SUV, the R1T pickup truck and the EDV van at its Normal, Ill., plant, to halve its initial production target to 25,000 last year.
But in the end, the firm did not quite manage to meet this objective, ultimately producing 24,337 vehicles, including 10,020 in the fourth quarter.
Furthermore, Rivian has put an end to its tradition of giving an update on its preorder book at the end of each quarter. At the end of November, the group had 114,000 orders. The company said it has a "net preorder backlog that extends into 2024."
Perceived as one of Tesla's (TSLA) serious competitors, Rivian made a spectacular IPO on Wall Street in 2021, the sixth largest in U.S. history. The company was backed by the crème de la crème of investors, including Amazon (AMZN) and Ford (F). But its difficulties in ramping up production plunged the company into a nightmare.
A First Profit in 2024
The stock fell 82.2% in 2022, which translated to $75.3 billion of market capitalization being wiped out. It currently trades at around $16.92. It rose as high as $180 back in 2021.
Rivian, however, told investors last month that it will record its first profit in 2024.
"We forecast reaching positive gross profit in 2024 and therefore expect that by the end of 2024," the carmaker said.
The company is forecasting a loss excluding interest and amortization of $4.3 billion this year. In 2022, Rivian recorded a net loss of $6.75 billion, compared with $4.7 billion in 2021.
Total revenue was $1.66 billion.
