Rivian falls after cutting production guidance for a full year

Investing.com — Shares of Rivian (NASDAQ:RIVN) fell more than 6% in premarket trading on Friday, after the company cut its full-year production guidance and revealed a significant setback in its production plans due to a lack of a common component used in both R1 and RCV Platforms.

Rivian revealed that it now expects full-year production to be between 47,000 and 49,000 vehicles, down from its previous forecast of 57,000 vehicles.

While Rivian managed to produce 13,157 vehicles and deliver 10,018 during the third quarter of 2024, the supply chain problem has escalated in recent weeks, impacting overall production.

Despite the production challenges, Rivian remains optimistic about its delivery outlook for the year. The company reiterated its expectation of low single-digit growth in deliveries compared to 2023, which is estimated to be between 50,500 and 52,000 vehicles.

The revised forecast indicates that the company now anticipates producing fewer vehicles than last year.

There has been a slowdown in demand for electric vehicles as high interest rates and high inflation have led consumers to seek more affordable alternatives.

The rising cost of electric vehicle ownership, coupled with economic uncertainty, has caused some potential buyers to reconsider, opting instead for lower-cost options in the current environment.

Morgan Stanley recently revised its outlook on the US auto industry to In-Line from Attractive, citing headwinds such as rising inventory levels, affordability concerns and increased competitive pressure from China.

As part of its sector review, Morgan Stanley downgraded Rivian from Equal-weight to Underweight, along with other key automakers. The bank explained that the downgrade reflects the “incorporation of AV/ADAS capital intensity that may be required to meet the technology fundamentals that attracted Volkswagen (ETR:VOWG_p) as a JV partner.”

Morgan Stanley also cut their price target on the stock to $13.00 from $16.00 per share.

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