Rivian Shares Slide After Lowering Full-Year Production Forecast

Rivian’s shares fell over 6% in premarket trading on Friday after the company revised its full-year production forecast downward due to a significant setback in its production plans caused by a shortage of a shared component used in both its R1 and RCV platforms.

The electric vehicle manufacturer now expects to produce between 47,000 and 49,000 vehicles this year, a decrease from its earlier estimate of 57,000 vehicles.

In the third quarter of 2024, Rivian produced 13,157 vehicles and delivered 10,018, but recent supply chain issues have exacerbated concerns about overall output.

Despite these challenges, Rivian remains hopeful about its delivery outlook, maintaining expectations for low single-digit growth in deliveries compared to 2023, which is projected to be between 50,500 and 52,000 vehicles. The revised forecast suggests the company anticipates producing fewer vehicles than it did the previous year.

There has been a noticeable decline in demand for electric vehicles as high interest rates and inflation lead consumers to explore more affordable alternatives. The rising costs associated with EV ownership, along with economic uncertainty, have prompted some potential buyers to consider lower-cost options.

Morgan Stanley has recently adjusted its outlook for the U.S. auto industry, downgrading it from Attractive to In-Line due to challenges including increased inventory levels, concerns about affordability, and growing competition from China.

As part of this review, Morgan Stanley downgraded Rivian from Equal-weight to Underweight, along with other major automakers. The bank noted that this downgrade is influenced by the capital intensity required for advanced vehicle technology and its implications for potential partnerships, such as the one with Volkswagen.

Additionally, Morgan Stanley reduced its stock target for Rivian from $16.00 to $13.00 per share.