Rivian Halts Production of Amazon Vans Due to Parts Shortage
Rivian Automotive (RIVN) shares declined in intraday trading Friday after the electric vehicle (EV) maker halted production of vans for Amazon (AMZN) because of a parts shortage.
The Parts Shortage Issue
The problem apparently began earlier this month at Rivian’s plant in Normal, Ill. In an email to Investopedia, the company explained that it expects “to recover all missed production,” although no timeline was given. The statement added that the issue won’t affect production of its R1T pickup and R1S SUV.
The company did not identify which components were involved.
Amazon’s Commitment to Rivian
Amazon, which held a 15% stake in Rivian as of June 30 and is its biggest shareholder, has committed to purchasing 100,000 vans by 2030 as part of its climate pledge to be net-zero carbon emissions by 2040. Last month, Amazon reported that it had put 15,000 of the vans in operation across the U.S. since 2022.
Also last month, Rivian affirmed its full-year production estimate of 57,000 vehicles. In fiscal 2023, it produced 57,232 vehicles.
Market Reaction
Shares of Rivian Automotive fell 4.2% to $13.18 as of 2:50 p.m. ET Friday. They are down about 44% this year.
Conclusion
Rivian’s decision to halt production of Amazon vans due to a parts shortage has caused a decline in the company’s shares. However, Rivian remains confident that it will recover the missed production and that the issue will not impact the production of its pickup and SUV models. Amazon, as Rivian’s biggest shareholder, has committed to purchasing a significant number of vans from the company as part of its sustainability goals. Despite the setback, Rivian has affirmed its full-year production estimate and continues to be a major player in the EV market.
Disclaimer: The information provided in this article is for informational purposes only and should not be considered as financial or investment advice.
Sources:
- Investopedia
