Investing.com — Shares of Rivian (NASDAQ:RIVN) fell more than 6% premarket Friday after the company cut its full-year production forecast and revealed a significant setback in its production plans due to a shortage of a shared component found in both R1 and RCV platforms.
Rivian revealed that it now expects full-year production to be between 47,000 and 49,000 vehicles, down from its previous forecast of 57,000 vehicles.
While Rivian managed to produce 13,157 vehicles and deliver 10,018 in the third quarter of 2024, the supply chain issue has escalated in recent weeks, impacting overall production.
Despite the production challenges, Rivian remains optimistic about its delivery prospects for the year. The company reaffirmed its expectations for low-single-digit delivery growth compared to 2023, which it estimates will be between 50,500 and 52,000 vehicles.
The revised forecast indicates that the company now expects to produce fewer vehicles than last year.
There has been a slowdown in demand for electric vehicles as high interest rates and high inflation have pushed consumers to look for more affordable alternatives.
The rising cost of owning an EV, coupled with economic uncertainty, has caused some potential buyers to reconsider their choice and opt for cheaper options in the current environment.
Morgan Stanley recently revised its outlook for the US auto industry, downgrading it from Attractive to In-Line, citing headwinds such as rising inventory levels, affordability concerns and increasing competitive pressure from China.
As part of its industry analysis, Morgan Stanley downgraded Rivian from Equal-weight to Underweight, as well as other major automakers. The bank explained that the reduction reflects the “incorporation of the capital intensity of AV/ADAS, which may be necessary to meet the technological base that attracted Volkswagen (ETR:VOWG_p) as a JV partner.”
Morgan Stanley also lowered its price target for the stock from $16.00 per share to $13.00.
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