It's a huge setback for Rivian (RIVN).
The upstart managed to buy time with investors this week by reaffirming its production target of 25,000 electric vehicles in 2022, despite continued supply chain problems and soaring raw material prices.
The Irvine, Calif.-based group said on Oct. 3 that it "believes it is on track to deliver on the 25,000 annual production guidance previously provided."
In the three months ending Sept. 30, the company produced 7,363 vehicles, more than the 7,000 anticipated by RBC Capital Markets analysts. When we add these 7,363 units to the 6,954 vehicles that the group had produced between January and June, Rivian has already produced 14,317 cars. It will therefore have to manufacture 10,683 vehicles in the next three months to reach its objective.
Producing 10,000 vehicles in three months would be an ambitious feat for Rivian, which manufactured its first vehicle in September 2021. Since the start of the year, the young company has struggled to manage its production ramp-up.
Major Recall
This task may become even more complicated since Rivian has just announced that it will recall 13,000 vehicles, or almost all the cars produced this year, due to a possible issue of a loose fastener that could make a driver lose steering control.
"As of September 28, 2022, Rivian became aware of seven reports potentially related to this issue that had accumulated over the production of Rivian vehicles," a Rivian spokesperson said in an email statement. "It was determined that the cause of the issue was an insufficiently torqued fastener."
"In rare circumstances, the nut could loosen fully," Rivian Chief Executive RJ Scaringe said in a letter to customers.
"It’s important not to minimize the potential risks involved and why we are volunteering to conduct this recall," Scaringe added.
"If you experience excessive noise, vibration or harshness from the front suspension, or a change in steering performance or feel, you should call immediately."
The company said that it's not aware of any injuries linked to the issue.
"The safety of our customers will always be our top priority, and we are committed to fixing this issue on any affected vehicles as quickly as possible," the spokesperson said.
The company will start "immediately" contacting affected customers to schedule appointments for inspections and repairs if needed.
Not the First Recall
"We will make any necessary adjustments free of charge at one of our service centers. The repair takes a few minutes to complete, and with customer collaboration, we have built out the capacity to complete the needed action in as little as 30 days," the spokesperson said.
Rivian produces the R1T electric truck/pickup and the R1S SUV, as well as its electric delivery van, the EDV. The company has an agreement with the e-commerce giant Amazon (AMZN), which is also its shareholder, to deliver 100,000 EDV before the end of the current decade.
The company recently signed an agreement with Mercedes-Benz (DDAIF) to jointly produce electric vans together in Europe.
The challenges facing Rivian have caused the stock price to plummet after a spectacular debut last November. Rivian stock prices are down 67.3% since January. The firm's market value has shrunk by around $64 billion since the start of the year.
Shareholders, like legendary financier George Soros and automaker Ford (F), have reduced their stake.
This is the second time in six months that Rivian has issued a recall. Last May, the group recalled 500 R1T Model Year 2022, because there was a risk that the airbag would not deactivate when a child was seated in the passenger front seat.
