The EV maker is increasing production rates in the midst of disruption of supply chains.
Rivian (RIVN) – Get Rivian Automotive Inc. Report is breathing and just let it be known.
The young manufacturer of electric vehicles is finally experiencing a breakthrough that will reassure investors.
The group managed to deal with the disruptions caused to supply chains by the pandemic and the resurgence of covid-19 in China, the shortage of chips and the soaring prices of raw materials such as nickel, cobalt and palladium. Indeed, Rivian has made a real increase in production rates in the last month.
The company announced on July 6 that it produced 4,401 vehicles at its manufacturing facility in Normal, Illinois during the second quarter that ended on June 30, and delivered 4,467 vehicles during the same period.The group has thus managed to increase its production by 72,4% from one quarter to the next. Rivian produced 2,553 vehicles and delivered 1,227 in the first quarter. The company does not give details per vehicle. Rivian was founded in 2009 and went public in 2021. The company produces three electric vehicles: the R1T pickup truck, the R1S SUV, and the RCV commercial van.
2022 Production Target Confirmed
“These figures remain in line with the company’s expectations, and it believes it is on track to deliver on the 25,000 annual production guidance previously provided,” Rivian said in a press release.
Confirmation of this target means that Rivian will have to ramp up production rates in the second half of the year. In total, the automaker has already produced 6,954 vehicles since January 1. To achieve its target of 25,000 vehicles produced in 2022, the company must assemble 18,046 in the third and fourth quarters, or 9,023 units per quarter.
This doesn’t seem to scare CEO RJ Scaringe.
“Supply chain and production are ramping!” Scaringe wrote on Twitter on July 6. “We just announced production of 4,401 vehicles for Q2 bringing our cumulative total since start of production to 7,969 — keeping us on track to reach our year-end goals. Thank you to our team & suppliers.”
Rivian’s optimism is also justified by the fact that the company has managed to increase its production where its rivals have seen theirs decline. Tesla (TSLA) – Get Tesla Inc. Report, for example, announced that it delivered 254,695 electric vehicles in the second quarter, down 17.85% compared to the first quarter. During this last quarter, the group of Elon Musk had delivered 310,048 vehicles.
Lucid Group (LCID) – Get Lucid Group Inc. Report, another competitor of Rivian, for its part lowered its annual production target from 12,000 to 14,000 units while the company planned to produce 20,000 units at the start, mainly because of global supply chain and logistics challenges.
Rivian Shares Soar
Morgan Stanley analyst Adam Jonas is convinced that the group will have to find new injections of capital in 2023. Jonas estimates $2 billion of new equity will be raised in fiscal 2023 and an additional $3 billion of capital (50/50 equity/debt) in 2024, as we wrote on May 7.
Lucid produces the Lucid Air Sedan which comes in several configurations, including the Lucid Air Dream Edition, Lucid Air Pure, Lucid Air Grand Touring.
As for Rivian, the company said during its first-quarter earnings that it had $17 billion in cash as of March 31. It added that will be enough to cover its spending through the launch of its next model, a lower-cost vehicle called R2, at a planned new factory in Georgia in 2025.
At the time, the group also said it had received 90,000 reservations for its R1T and R1S models. The problem at Rivian, which produces pickups/trucks and SUVs with incredible and innovative features, has never been demand but rather whether the company could deliver the promised products to customers.
These doubts have weighed for several months on Rivian shares, which have fallen by more than 74% since January. But good production news announced on July 6 sent the stock up more than 11% to $30.06 at the time of writing.
