Rivian on Thursday announced plans to build a $5 billion plant in Georgia to increase capacity while also flagging production challenges while it receives about 2,000 pre-orders every week.
see photosConstruction of Rivian’s new Georgia plant will begin next summer and vehicle production will begin in 2024
Shares of Rivian Automotive Inc fell nearly 15% on Friday after the electric vehicle maker’s first results as a listed company highlighted the challenges it faces in ramping up production to take on EV leader Tesla Inc.
Shares of Rivian fell to $92.62 in early trading — below the $100 mark for the first time — and were off about 11% in the afternoon. Prior to Friday’s drop, they were up nearly 40% since the company’s blockbuster market debut in November.
Rivian on Thursday announced plans to build a $5 billion plant in Georgia to increase capacity while also flagging production challenges while it receives about 2,000 pre-orders every week.
“We don’t want to read too much into the near-term issues … but it highlights the risk that Rivian has a lot on its plate,” said RBC Capital Markets analyst Joseph Spak.
The Irvine, Calif.-based company expects production to fall “a few hundred vehicles short” of its 2021 target of 1,200, due to supply chain constraints.
Chief executive RJ Scaring said increasing production of R1T trucks, R1S SUVs and Amazon’s delivery vans within a few months would amount to a “really complicated orchestra”.
The company plans to increase production to 50,000 vehicles at its plant in Normal, Illinois.
Rivian has 71,000 pre-orders for its R1 vehicles, up 55,400 in October, but some on Wall Street said the total is on the low end of expectations. Rivian has also struggled to bring vehicles into the hands of the customers.
Wells Fargo analyst Colin Langan said, “The strong order book provides support for the production ramp, although it puts pressure on customers to acquire vehicles who may be impatient as existing R1 orders are not ready until the end of 2023.” Will be.”
Construction on Rivian’s new Georgia plant will begin next summer and vehicle production will begin in 2024. The company plans to ramp up production to 50,000 vehicles at its plant in Normal, Illinois, which began manufacturing the R1T pickup in September and adding the R1S SUV this week. With delivery vans to follow this month.
Rivian faces new challenges in manufacturing volume as demand picks up, while a new electric vehicle company Tesla CEO Elon Musk has called “production hell” or not.
Shortly after Rivian’s IPO, Musk said higher production and break-even cash flows would be a “true test” for Rivian.
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Georgia economic development officials on Friday declined to say what the overall stimulus would be for Rivian because they were still being finalized. Georgia previously offered Korean automaker Kia more than $450 million in incentives for a new plant in the state, according to some reports, and officials in Texas offered Rivian up to $440 million for the new plant.
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