Electric vehicle (EV) maker Rivian said it will lower its 2024 production target because of increasing supply chain problems that began in the third quarter.
The company has been very candid about its preferred offerings, including the R1 truck and SUV, as well as its electric commercial van. Now, the headaches come with the impressive growth curve that the company has seen, and it is not likely to change anytime soon.
Supply Chain Problems Impact Rivian's Production
According to Rivian, the trouble centers on a critical component used in the electric motors of the R1 platform, under which the popular pickup and SUV versions of its models fall, as well as its RCV commercial van.
Rivian would not say what component is the source of the trouble but said it has been "more acute in recent weeks," prompting it to lower its production targets.
Initially, the company had estimated sales of 57,000 vehicles in 2024, though the constraints developing from the supply chain have forced the company to reevaluate that estimate at 47,000 and 49,000. This is a drastic cut in the company's original build plan, which further reflects the misery the EV manufacturers face in sourcing much-required component parts.
Deterioration in Q3 Deliveries
It also reported delivering fewer vehicles during the third quarter. The company had delivered 10,018 vehicles in Q3 but compared that to 13,970 vehicles in the second quarter of the year 2024.
TechCrunch reports that analysts had warned of a decline, as Rivian's Chief Financial Officer, Claire McDonough, said in August that the company sold quite an amount of its inventory in Q2, which would lead to a drop in Q3 figures.
Even with Q3 challenges, Rivian has assumed it can end the year at an optimal level of 50,500 to 52,000 units. However, only the successful ride of the company over supply chain hurdles will clearly define whether Rivian will meet its deliverable target or not.
2024 Will Be a Sensitive Time For Rivian
The production setbacks come at a sensitive time for Rivian, which has set its sights on launching a lower-cost R2 SUV in 2026. The company had anticipated that the coming year would be relatively flat for growth compared to the previous year. However, the recent supply chain issues are going to make this year tougher than thought.
As it faced these challenges, Rivian undertook several measures that would ensure its long-term viability. For instance, in February, the firm announced that it was cutting 10 percent of its workforce in a move towards slashing operational costs.
In addition, the automaker put an end to plans regarding its new facility in Georgia and instead concentrated on perfecting and simplifying its existing operations.
The company has also redesigned its more iconic models, the R1T pickup truck and R1S SUV, to streamline their designs in a manner that reduces the cost of production and a lesser amount of loss on every sale.
The changes are moving along the lines of making Rivian more competitive in a rapidly growing EV market while ensuring that it scales further without losing any steam.
