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Rivian Foresees Success Despite Multiple Hurdles

Rivian Automotive Inc. in Irvine believes it can compete effectively in the increasingly crowded electric vehicle market, but notes multiple near-term difficulties it faces, ranging from the Russian attack on Ukraine to global supply chain disruptions.

In its first annual report as a publicly traded company, filed March 31, Rivian (Nasdaq: RIVN) provided an in-depth look at the future.

Rivian delivered 920 vehicles last year and is ramping up for a large increase. Among the company’s bright spots: $18.4 billion in cash and equivalents as of Dec. 31—probably the biggest such bank account of any Orange County public company. Much of that cash is likely to be tapped as the company ramps up production of its R1T pickup truck and R1S SUV.

IPO Ups, Downs

With backing from Amazon, Rivian went public in November to reach a sky-high market cap of $153 billion late last year. That value had sunk to $38 billion as of early this month.

“To accompany our vehicles, we have developed a comprehensive portfolio of vehicle accessories that will further sharpen our brand’s focus on adventure and active lifestyles,” Rivian said in the 10-K report to the Securities and Exchange Commission.

As of Dec. 31, the company’s manufacturing factory in Normal, Ill., was equipped to produce up to 150,000 vehicles annually. The company produced 2,553 vehicles in Normal in the first quarter of this year.

In addition, the company recently announced plans to construct a second manufacturing facility near Atlanta, with an anticipated capacity to produce up to 400,000 vehicles annually as demand surges.

Pain Points

Rivian in its report to the SEC went into detail on the risks it faces, including:

• Price volatility for lithium, nickel, aluminum, and cobalt, all of which are used in the vehicles and batteries. The price volatility is “expected to persist for the foreseeable future.”

• “The cascading impacts of the COVID-19 pandemic, and more recently the conflict in the Ukraine, have impacted our business and operations from facility construction to equipment installation to vehicle component supply.”

• “Disruptions in supply of raw materials or other components used in our vehicles.”

• The global semiconductor supply shortage.

Long Term

Last month, the company reversed a controversial decision to raise the prices of its pre-ordered, electric-powered R1T trucks and R1S SUVs.

“Any future attempts to increase prices could have similar results, which could adversely affect our business, prospects, financial condition, results of operations, and cash flows,” Rivian said in the annual report.

Rivian reported fourth-quarter revenue of $54 million, missing the $60 million expected by analysts.

RBC Capital Markets said in a written note to investors dated March 1 that it was remaining “positive on the long-term story” for Rivian, while lowering its forecast for 2022 deliveries to 24,800 from 42,700.

“We don’t want to over-emphasize near-term issues too much believing it doesn’t impact the medium/long-term story,” RBC said. “We continue to view this phase as trial by fire but one that can help forge RIVN’s DNA, setting it up for future success.”

The company said April 5 that it believes it is “well positioned” to deliver on the 25,000 annual production guidance provided last month.

The company’s expansion in Orange County continues.

“So far this year, we’ve opened a service center in Costa Mesa and another office in Irvine, on Irvine Blvd., to be exact. Plans are also underway to open our Laguna Beach space next year,” company spokesperson Kenya Friend-Daniel told the Business Journal on March 31. 

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Kevin Costelloe
Kevin Costelloe
Tech reporter at Orange County Business Journal

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