Despite Setbacks, Rivian Automotive Has Many Positive Prospects Ahead
Rivian Automotive, the electric vehicle (EV) maker, saw its stock take a hit after they revealed that their 2021 production target of 1,200 vehicles will not be met. The company cited supply chain issues and challenges in ramping up battery production as the main reasons for falling short of the target. CEO RJ Scaringe said that bringing up a highly automated line is a complex process and does not present any long-term challenges to Rivian.
The updates come alongside Rivian’s Initial Public Offering (IPO), which has brought in much needed cash to help with the production ramp up. However, it has also spread senior management focus too thin when it should have been concentrated on getting products out the door at an increasing rate. This could have an impact on share prices if the company fails to deliver on expectations.
Despite this setback, there are still many positives surrounding Rivian's future. They have enough cash to sort out all the production issues, and launching an IPO during an optimistic economy was a smart move. Additionally, Rivian can learn from Tesla's example by quickly adopting incremental improvements such as additional heat pumps or using heat from motors to make their vehicles more efficient. Doing so would cement more pre-orders and almost guarantee success.
Rivian is also in a good position to benefit from the Biden administration's focus on electric vehicles. The new president has already announced plans for an EV infrastructure and tax credits, which could help Rivian gain more market share. Furthermore, with the current global chip shortage affecting many automakers, Rivian’s decision to use its own chips may prove beneficial in the long run as they will not be affected by this issue.
Overall, while there are some short-term issues that need addressing at Rivian Automotive before it can reach its full potential, there are still plenty of positives surrounding their future prospects. With enough cash and smart decisions made now during these challenging times they should be able to overcome any obstacles thrown their way and become one of the leading players in electric vehicle production over time.
What caused Rivian Automotive's stock to take a big hit yesterday?
Rivian Automotive's stock took a big hit yesterday after they revealed that they're going to fall short of their 2021 production target of 1,200 vehicles due to supply chain issues and challenges ramping up production of the complex batteries that power the vehicles.
What is causing the production ramp up issues?
The biggest culprit is likely managing the production ramp up, which is very difficult under the best of circumstances and is much more difficult when trying to sort out a chaotic supply chain. Additionally, launching an IPO this year has spread senior management focus too thin, when it should be concentrated primarily on ramping up to full production and getting their cars and trucks to customers.
Is there any hope for Rivian Automotive?
Yes, there is hope for Rivian Automotive. They have cash to sort out all the production ramp issues, and following Tesla with incremental improvements like additional heat pumps or using heat from the motors could cement more pre-orders and almost ensure their success.
Should I buy more shares if the stock goes down to the IPO price?
That decision is ultimately up to you, but many investors are optimistic about Rivian Automotive's future and may choose to purchase more shares if the stock goes down to the IPO price. It's important to remember that the stock market is unpredictable and that no one can predict the future. Therefore, it's best to do your own research and make an informed decision before investing in any company.