Rivian(RIVN.US) has significantly lowered its full-year production forecast for 2024 due to component shortages and a slowdown in demand for electric vehicles. The company now expects production to be between 47,000 and 49,000 units, down from its previous forecast of 57,000 units. The latest forecast also means Rivian's production this year will be lower than last year.
Rivian said the component shortages for its R1 SUV, R1T pickup truck, and delivery van began in the third quarter and have become more severe in recent weeks. Meanwhile, the slowdown in demand for electric vehicles has affected the entire industry as U.S. consumers coping with high interest rates shift to cheaper hybrid vehicles. Earlier this week, Tesla(TSLA.US) also failed to meet expectations for its third-quarter delivery data, while Rivian said it delivered 10,018 vehicles in the third quarter, below the market's expectation of 12,078.
Rivian also reiterated its full-year delivery forecast of 50,500 to 52,000 vehicles, while the market average expects 53,491.
Rivian closed its only manufacturing plant in Normal, Illinois for three weeks in April to streamline production and cut costs for producing electric pickup trucks and SUVs. Cutting costs is crucial for Rivian as it aims to weather a slowdown in demand while preparing to produce its smaller R2 model in 2026.
Earlier this year, Volkswagen said it would invest up to $5 billion in Rivian as part of a joint venture to share electric vehicle architectures and software. The investment will help Rivian increase its cash reserves and turn its cash flow positive. The company aims to achieve its first positive gross margin in the fourth quarter of 2024.