Rivian pauses Amazon van production due to supply chain challenges, pre-market drops more than 1%

According to the financial news app Zhitong Finance, electric vehicle manufacturer Rivian Automotive Inc. (RIVN.US) recently encountered another challenge in its supply chain. Due to parts shortages, the company had to temporarily halt production of electric commercial vans for Amazon (AMZN.US). The Rivian factory in Normal, Illinois, began a temporary shutdown earlier this month. While Rivian did not disclose which specific parts were affected, the company expects to resume production soon, although no specific timeline was provided.

A spokesperson for Rivian stated that parts shortages are a common issue across the entire automotive industry. It is worth noting that the production of the R1 electric pickup truck and SUV models was not affected. Additionally, all affected employees have the opportunity to continue working 40 hours per week during the shutdown.

This production interruption poses a significant challenge for Rivian, especially at a critical moment when the company is striving to increase production volumes of its electric vehicle product line for next year. Rivian, based in Irvine, California, currently produces pure electric SUVs, pickups, and delivery vans primarily for its largest shareholder, Amazon, at its Illinois factory.

A spokesperson for Amazon (AMZN.US) stated in an email declaration that while Rivian encountered short-term production issues this month, it is expected not to impact Amazon. Rivian's CFO, Claire McDonough, had previously warned that Amazon's car delivery volume in the fourth quarter is expected to decrease, consistent with the seasonal pattern of the online retail giant.

Although Rivian's vans only represent a small portion of Amazon's delivery fleet, the production volume of this automaker remains crucial for Amazon. In addition to hiring gig workers who drive their own vehicles, Amazon also relies on traditional delivery companies like UPS.

Rivian's CEO, RJ Scaringe, emphasized during the second-quarter earnings conference call that the company has started pilot projects with non-Amazon customers. Currently, the Rivian factory has a backlog of a large number of delivery vans waiting to be delivered to Amazon. Under the agreement with Amazon, Rivian plans to supply 100,000 vans to the company by 2030, with approximately 15,000 vans already in use in the United States.

It is understood that Rivian is one of the few pure electric vehicle manufacturers in the United States, with production second only to Tesla. However, the company has been facing challenges with production issues and a slowdown in consumer demand for all-electric vehicles. Earlier this year, in addition to the shutdown at the Normal factory in April, Rivian also paused construction of a new factory in Georgia.

Previously, Rivian reiterated its goal to produce 57,000 consumer and commercial electric vehicles this year, consistent with the level in 2023. Despite the upcoming factory closure, the CEO expects production to continue growing in 2025. Earlier this year, the main assembly line at the factory was shut down for three weeks. The same factory will be shut down for over a month next year for the launch of new vehicles As of the time of publication, Rivian's pre-market stock price has fallen by 1.42%. Year-to-date, the electric vehicle stock has dropped by over 40%. In addition, Rivian's short interest has accounted for 11.9% of its total outstanding shares, indicating some investors' cautious outlook on the company's prospects