What happened
Rivian Automotive (RIVN 6.10%) stock dropped Friday morning, shedding almost 4.6% in the first hour of trading before gaining some ground. The electric-vehicle (EV) stock was already under a bit of pressure this week after Rivian's expansion project ran into hurdles, and it appears some of the things CEO RJ Scaringe just said at the Wolfe Research virtual global auto, auto-tech, and mobility conference failed to lift investor sentiment.
So what
One of the biggest challenges that Scaringe highlighted at the conference on Thursday was the ongoing semiconductor-chip shortage, according to Reuters. Supply constraint was the primary reason why Rivian fell short of its production target of 1,200 vehicles in 2021, and its shares took a massive hit thereafter.
Investors are now hoping to see the chip-supply crunch -- which started in 2020 and has hit the automotive industry the hardest -- ease in 2022. Unfortunately, Scaringe believes the chip shortage could last through the year, even as the company tries to navigate other headwinds, such as labor constraints.
Scaringe also revealed that Rivian had idled its assembly plant in Normal, Illinois for 10 days in the month of January. While that could mean lower production and deliveries, it should just be a one-time hiccup and eventually work in Rivian's favor, as the company idled the plant only to upgrade its production lines in a bid to boost capacity. Last quarter, Rivian said it plans to expand annual production capacity from 150,000 vehicles to 200,000 vehicles at its Normal factory.
Image source: Rivian Automotive.
In December, Rivian also announced plans to set up a second manufacturing facility in the U.S. in Georgia, with an annual production capacity of 400,000 units. The plant, though, has met with opposition from local residents, as reported this week, with state authorities now taking over approvals for the project.
Now what
The chip shortage is a real concern, and the obstacles to expansion at Rivian's Normal factory has only added to the several questions investors are already seeking answers to from the company when it reports its quarterly numbers on March 10. Scaringe, though, also just said that Rivian is targeting a 10% share in the EV market by 2030.
The company's R1T pickup truck won the 2022 MotorTrend Truck of the Year award, so expectations are high. It's now up to the company to gain investor confidence on March 10, as that's the day that could largely decide where Rivian stock is headed next.
