Here’s why Rivian (RIVN) is cutting its EV production goal for 2024

After Rivian (RIVN) lowered its production goal for the year, the EV maker said it was because of a supply shortage. A new report sheds some light on the situation.

Following third-quarter delivery and production numbers on Friday, Rivian cut its production plans for the year.

Rivian now expects to build between 47,000 and 49,000 vehicles this year, 14% to 17% lower than its previous 57,000 target. It’s also significantly lower than the 57,322 vehicles produced last year.

In a press release, the company said it is “experiencing a production disruption due to a shortage of a shared component on the R1 and RCV platforms.”

Rivian says the disruption began in Q3 and has “become more acute in recent weeks.” A new Bloomberg report gives us more details on what’s really going on.

According to sources familiar with the matter, the disruption was caused by a miscommunication between Rivian and its supplier, Essex Furukawa, earlier this year.

Why Rivian is cutting its EV production goal for 2024

Essex Furukawa makes magnet wire for most major OEMs, but the miscommunication has left Rivian without enough copper windings to hit its goal.

The shortage is impacting the output of Rivian’s R1T, R1S, and electric delivery vans (EDVs) built for Amazon.

The sources said Rivian “miscalculated” its supply needs with the supplier. Rivian has found other sources, but they would be too costly at such short notice.

Despite this, Rivian did reaffirm plans to deliver between 50,500 and 52,000 EVs this year. With another 10,018 delivered in Q3, Rivian has now handed over 37,369 vehicles through the first nine months of 2024.

Rivian also reaffirmed its goal of achieving its first gross profit in Q4 during its Investor Day in July. In Q2, the company’s losses widened to $1.46 billion, with a $32,705 loss on every vehicle built.

We will learn more about Rivian’s situation when it releases third-quarter financial results on November 7, 2024.

Rivian’s stock is down over 50% in 2024 and over 90% from its all-time high set in November 2021, shortly after going public

Meanwhile, the company is taking steps to restart construction in Georgia, where it plans to expand production of its lower-cost R2.