Rivian (RIVN -2.55%) stock tanked by 7.6% on Friday. The electric truck start-up's latest regulatory filing revealed several challenges facing the company, including fresh ones arising from the Russia-Ukraine war that it hadn't mentioned before.
The EV maker filed its annual 10-K report with the Securities and Exchange Commission on Thursday, and while its numbers had already been out there for everyone to see since it released its fourth-quarter results on March 10, the risk factors this new document discussed provided more insight into what investors can expect from the company.
First, Russia's invasion of Ukraine has worsened an already-challenging supply situation for Rivian. The company said shortages of critical parts like semiconductors and other materials and equipment necessary for vehicle production have forced it to make changes to its internal processes that have only increased its expenses. As it is, prices of metals like nickel, lithium, cobalt, and aluminum -- all of which are used in the manufacture of EVs -- have shot through the roof.
The EV maker said it may have to increase the prices of its vehicles to offset those cost pressures.
It's a catch-22 for Rivian. The company announced a steep price increase in early March, but a public backlash forced it to roll back part of the decision -- specifically, its plan to charge those higher prices to consumers who had already pre-booked vehicles at lower ones.
It remains to be seen how would-be customers and investors will react to another price increase -- assuming the company implements one -- especially when Rivian is already struggling to ramp up production. The company recently projected that its 2022 production would be around 25,000 vehicles; analysts had previously been expecting it to produce around 40,000. In fact, Rivian itself said it could have produced 50,000 vehicles this year if not for supply and cost constraints.
In its annual report, Rivian also said the semiconductor chip shortage, in particular, was likely to continue, resulting in higher chip delivery lead times and vehicle production delays.
Rivian's R1T pickup truck has received a lot of attention for its features and pricing, but what investors want to know is if the company can build and sell EVs profitably. That's a big question mark for now, and with Rivian already projecting a negative gross margin for 2022, traders are bidding down the stock, with some perhaps rotating their money into other EV companies that look a lot more compelling right now.