During a tour of Rivian’s Normal, Illinois-based production factory, the automaker’s CEO R.J. Scaringe said it could not secure necessary parts for production, causing sharp drops in its stock value and negatively impacting production. Scaringe noted that suppliers are hesitant to provide components such as semiconductor chips to relatively new automakers such as Rivian and instead allocate them to larger automakers with much higher production numbers.
AlixPartners Director Dan Hearsch said that “larger players are willing and able to pay for a year’s worth of chips” and that, “on the basis of volume, and reputation and consistency, [well-established automakers] are more attractive.”
Prices of Rivian vehicles have already risen, with the highest current price landing at $95,000. At times, the automaker can ramp up production but is halted when parts supply runs out. Specifically, throughout Q1 of this year, production was limited to 40 vehicles per day.
When commenting on production shortages and parts issues, Scaringe said, “I’d love to run a full five-day shift, [but] one half of one percent of [the 2,000 parts in Rivian vehicles] are challenged.”
Rivian stock has dropped approximately 60% since the beginning of the year, which may derail Scaringe’s comments in December that the automaker would not need to seek more capital soon because it had over $18 billion in cash at the time.
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