EV maker Rivian is finally keeping up pace by ramping up its production successfully. The company delivered 4,467 vehicles in the second quarter of this year. It is almost four times more than the first quarter. If the pace continues, the automaker could reach its annual target production of 25,000 units.
The company production number includes 4,401 vehicles in Q2, which is 72% more than the earlier quarter. As the announcement of its delivery numbers is out, the shared jumped by 13% nearly. After many months, the change was a relief for Rivian investors. Especially as the value has been down for some time now and was also considered overvalued stock by some analysts.
Supply chain and production are ramping! We just announced production of 4,401 vehicles for Q2 bringing our cumulative total since start of production to 7,969 — keeping us on track to reach our year-end goals. Thank you to our team & suppliers.
— RJ Scaringe (@RJScaringe) July 6, 2022
Now, Redburn analyst Charles Coldicott said, “The most important thing for the stock right now is to provide investors confidence on its 2022 forecast.” Amidst the shift in electric vehicles and increasing fuel prices, the demand for EVs is increasing. Rivian products are being rated by the users, however, the automaker had trouble with the production ramp. As it keeps up with the challenges, the production ramp could potentially benefit the company. Initially, the production target was around 50,000 vehicles annually. However, in March the numbers were halved, as the Russia-Ukraine war continues and materials cost keep increasing.
CFRA Research analyst Garrett Nelson said, “Rivian will need to operate at much higher utilization rates in the second half of 2022 in order to hit its guidance.”
The company has a factory in Normal, Illinois, where it produces the R1S sport utility vehicle, R1T pickup truck, and a delivery van for investors and customers -Amazon. The online retail giant has a stake of about 18% in Rivian. The Illinois factory has an annual capacity of 150,000 vehicles and the company has said it intends to increase that to 200,000 by 2023. Rivian also plans on opening its second plant near Atlanta in Georgia in 2025 as it expects demand for its vehicles to grow. The automaker is still working through a large backlog of reservations for both the R1T and R1S. So the demand is not really a problem, but it is the first time the company is ramping up production of a vehicle and it is expected to run into more issues. If it starts losing money on 10,000 vehicles a quarter, it will burn through its big cash pile faster than most investors would like right now.
Rivian wrote in a press release. “These figures remain in line with the company’s expectations, and it believes it is on track to deliver on the 25,000 annual production guidance previously provided.”