Rivian Automotive Inc shares fell 10% in premarket trading on Friday, after the electric pick-up truck maker’s first result as a listed company highlighted the challenges it is likely to face in ramping up production to take on EV leader Tesla Inc.
Rivian also announced plans to build a $5 billion plant to ramp up capacity, while flagging production challenges even as it receives about 2,000 pre-orders every week.
“We don’t want to read too much into near-term issues … but it does highlight the risk that Rivian has a lot on its plate,” RBC Capital Markets analyst Joseph Spak said.
The company expects production to fall “a few hundred vehicles short” of its 2021 target of 1,200 due to supply chain constraints.
Increasing production of R1T truck, R1S SUV and Amazon’s delivery vans within a few months would be akin to “a really complex orchestra,” Chief Executive Officer RJ Scaringe said.
Construction of Rivian’s new Georgia plant will begin next summer and production will start only in 2024. The company plans to increase production by 50,000 vehicles at its plant in Normal, Illionis, which opened in September.
“The strong order book provides support for the production ramp, though does add pressure to get vehicles to customers that may get impatient as current R1 orders won’t be ready until the end of 2023,” Wells Fargo analyst Colin Langan said.
Rivian faces fresh challenges in building volume as demand rises while squashing doubts on whether a new electric vehicle company will be able to survive what Tesla CEO Elon Musk called “production hell.”
Soon after Rivian’s IPO Musk said that high production and breakeven cash flow would be the “true test” for Rivian.
Shares in the world’s most valuable automaker after Tesla Inc have gained 40% since their blockbuster IPO in November.
(Reporting by Akash Sriram and Nivedita Balu in Bengaluru, Ben Klayman in Detroit; Editing by Vinay Dwivedi)