Rivian’s 2023 outlook disappoints, recalls over 12,700 cars; shares fall 8 pct

(C) Reuters. FILE PHOTO: A Rivian Automotive sign outside the electric truck maker’s facility, in Plymouth, Michigan, U.S., July 15, 2022. REUTERS/Kevin Krolicki

By Akash Sriram and Abhirup Roy

(Reuters) – Rivian Automotive Inc on Tuesday forecast 2023 production well below analysts’ estimates as it grapples with lingering supply chain bottlenecks, and announced a recall of more than 12,700 vehicles, sending its shares down over 8%.

The recall, Rivian’s third since it went public in November 2021, was triggered by an issue with a sensor in the front passenger seat-belt system. However, the company estimated that fewer than 100 vehicles will require the part to be replaced.

The company did not state the cost for the recall.

The Irvine, California-based company, like the broader auto industry, has been battling supplier shortages sparked by worldwide lockdowns during the COVID-19 pandemic.

Rivian said it aims to produce 50,000 cars this year, compared with analysts’ estimate of 67,170 units, according to Visible Alpha.

Rivian said it “encountered multiple days of lost production due to supplier shortages” which remain “the main limiting factor” of production.

“We expect supply chain challenges to persist into 2023 but with better predictability relative to what was experienced in 2022,” Rivian said in a shareholder letter on Tuesday.

Guido Petrelli, founder of Merlin Investor, a multi-asset tracking tool for trading strategies, said the forecast “disappointed everyone” and was the reason behind the stock plummeting.

Shares of Rivian fell 8.1% to $17.74 in extended trading.

Rivian also reported lower-than-expected fourth-quarter revenue as the electric automaker delivered far fewer vehicles than it produced.

In 2022, Rivian made 24,337 vehicles, slightly short of its target of 25,000, and delivered only 20,332.

Revenue for the quarter ended Dec. 31 totaled $663 million, versus analysts’ estimate of $742.4 million, Refinitiv data showed.

Excluding items, the company reported a loss of $1.73 per share, less than analysts’ estimate of $1.94.

Cash and cash equivalents fell to $11.57 billion from $13.27 billion at the end of the preceding quarter.

In October, Rivian recalled about 13,000 cars due to a possible loose fastener. In May, it recalled about 500 2022 R1T electric pickup trucks because the air bags may not deactivate.