What happened
Rivian Automotive (RIVN -2.21%) released its first-ever annual letter to shareholders yesterday, and it gave investors more visibility into its growth plans. But the reaction wasn't overly positive, potentially because of some risks the company highlighted. Rivian shares dropped as much as 5.5% in early trading Tuesday, though they recouped some of that loss. As of 1:50 p.m. ET today, shares were down just 1.2%.
So what
CEO RJ Scaringe has big plans for the company. In his shareholder letter, Scaringe boldly predicted "that Rivian can become one of the largest companies in the world, helping to drive the future of transportation." But he also highlighted several obstacles to that goal, and that seems to be where investors are focusing today.
Image source: Rivian Automotive.
Now what
Rivian has an order backlog of more than 90,000 R1T pickups and R1S SUVs. It also has an order from Amazon for 100,000 electric delivery vehicles. Yet the company only expects to produce a total of 25,000 vehicles this year, with about one-third being the commercial vans for Amazon. But that's not due to lack of capacity.
It already has the equipment and procedures in place at its Illinois factory to make 50,000 vehicles this year. But supply chain challenges are keeping it from maximizing production in 2022. From what Scaringe said, investors are wondering whether those issues (or similar ones) could impede its growth for longer.
He highlighted the potential for ongoing challenges in the battery supply chain. In fact, Scaringe predicted that electric vehicle makers will need battery production capacity to explode by more than 20 times over the next decade.
Though the company believes it is fully funded for its growth plans through 2025, some investors today might even be thinking beyond that and wondering if Rivian will have what it takes to be a leader in the sector over the long term.
