Rivian’s shares took a nearly 9% hit on Friday after the company cut its 2024 production targets, leaving analysts questioning the severity of yet another supply chain issue. Shares were up 0.48% on Monday.
It turns out that a miscommunication earlier this year with its supplier, Essex Furukawa, caused Rivian to lose access to a crucial component—copper windings used in its electric-vehicle motors, according to sources familiar with the matter, reports Bloomberg.
As a result, Essex Furukawa, a division of Superior Essex Inc., allocated its resources to serve other clients, the sources said. Insert ‘you had one job’ memes right about now.
Without these parts, Rivian’s production of its R1 pickup, SUV, and Amazon delivery vans has slowed, affecting its ability to meet targets. Essex, based in Atlanta, redirected its production to other clients, leaving Rivian scrambling to find alternatives at a much higher cost. Sources said Rivian had a lack of backup suppliers for this critical part.
As a result, Rivian adjusted its annual forecast down by 18%, now expecting to produce between 47,000 and 49,000 vehicles this year. Ouch.
Analysts are concerned this shortage might impact deliveries into 2025, putting Rivian’s goal of a positive gross margin at risk.