Investing

Human Error Cripples Rivian Stock

Douglas A. McIntyre

Published: October 8, 2024 6:20 am

24/7 Wall St. Insights

• Rivian Automotive Inc. (NASDAQ RIVN) reportedly cut production targets due to a miscommunication with a supplier.
• That is another sign the EV maker has no future as an independent company.
• Also: Dividend legends to hold forever.

Investors must wonder why Rivian Automotive Inc. (NASDAQ RIVN) said its supplier problems drove its stock down. As it cut its 2024 production targets to 47,000 to 49,000, management said, “Rivian is experiencing a production disruption due to a shortage of a shared component on the R1 and RCV platforms.” It turns out that the real problem was a “miscommunication.”

According to Bloomberg, “The answer lies in a miscommunication earlier this year between Rivian and its supplier, Atlanta-based Essex Furukawa, which has left the carmaker without access to copper windings, a core component in the electric-vehicle motors that Rivian makes in-house.” The electric vehicle (EV) maker did not indicate correctly what its demand for these parts would be.

It is the kind of human error one would expect from a car company that has built so little demand for its products. Rivian only delivered 13,157 vehicles last quarter, certainly losing tens of thousands of dollars on every vehicle it sells. While people outside cannot calculate that future, the company would need deliveries several times that to make money. The parts shortage almost has to undermine revenue this year.

If the company’s past is any indication, it will post $1.5 billion in revenue for the third quarter and lose about $1 billion. Investor confidence is gone. Rivian went public at $71 a share in November 2021. Investors are lucky now if the stock changes hands at $10.

It is said so often that it sounds like a broken record. Rivian has no future as an independent company.

Three Glaring Problems Facing Rivian