What happened
Shares of electric truck start-up Rivian Automotive (RIVN -2.10%) caught fire on Wednesday -- in a bad way -- falling 2.7% through 2:10 p.m. ET.
The apparent reason: Another fire at a Rivian plant.
Image source: Getty Images.
So what
Four months ago, if you recall, investors shrugged off news that a Rivian vehicle spontaneously combusted while atop a vehicle lift at the Rivian Automotive plan in Normal, Illinois. Now it's looking like they may have been overgenerous in giving Rivian a pass on that incident.
As Illinois' WGLT radio reported four days ago -- in a story that's been filtering out slowly ever since -- the Normal Fire Department was called to respond to a fire at the Rivian Automotive plant once again on Saturday morning. And as the station reported, this was "at least the third fire at the plant in the last seven months."
Unlike the February truck fire, but more like an incident reported in October last year, Saturday's fire centered on a battery pack, not yet installed in a truck, that went into "thermal runaway" by overheating and catching fire in the factory's battery testing area. The battery in question this week may have been damaged, because the radio station reported that it was located "in a repair area" of the factory when it caught fire.
Now what
How serious of a setback is this for Rivian? As I wrote back in February, "a pair of fires does not a pattern make" -- and I'd go so far as to say a trio of fires also doesn't necessarily mean there's a trend of Rivian batteries going up in flames. Still, three fires in a row is something that would-be electric car buyers are probably going to factor into their consideration when deciding whether to buy an electric truck from Rivian, or a competing model from Ford or General Motors, for example.
Now would probably be a good time for Rivian to put out a statement acknowledging car-buyer (and investor) concerns about its quality control. Rivian might even want to emphasize that, as it told Automotive News recently, "the battery pack was already identified as faulty prior to the fire," and was being tested as part of the company's quality control to find out what was wrong with it -- i.e., that it was not about to be installed in someone's new electric truck.
The sooner Rivian gets ahead of this story and assures potential customers that it's got the problem in hand, the better things will go for Rivian stock.
