The entire automotive industry has been struggling with supply chain issues, including a shortage of semiconductors. But the Rivian Automotive (RIVN -0.79%) CEO is warning of a much bigger looming supply issue, and that has the stock down to start this week. After sinking as much as 6.6% in early trading, Rivian shares were down 4.7% as of 10:23 a.m. ET.
Rivian CEO RJ Scaringe says that the supply of batteries will be the biggest challenge to growing electric vehicle (EV) production. He said the battery supply issue will be "an order of magnitude worse" than the ongoing semiconductor shortage, reports The Wall Street Journal.
Rivian already told investors it only expects to produce 25,000 EVs this year, even though it has capacity to make double that number. The shortfall is due to current supply chain challenges that most global automakers are facing. But Scaringe gave investors a more ominous warning about long-term challenges EV companies will face regarding battery supply. The report quoted Scaringe saying, "Semiconductors are a small appetizer to what we are about to feel on battery cells over the next two decades."
Rivian has barely begun production as it is, with only 2,425 total vehicles as of March 8, 2022 since it started production late last year. It does have more than 80,000 preorders for its SUV and pickup truck models, as well as an order for 100,000 electric delivery vehicles (EDVs) from Amazon. But the long-term warning from the CEO has investors nervous. That's understandable, considering the company already has a market cap of about $34 billion, even after a drop in Rivian shares of more than 60% year to date.
Rivian is sure to continue to be a volatile stock, and investors will want to see more of what the company says about its prospects for production when it reports its first-quarter earnings on May 11, 2022.