Rivian Shares Fall 3% After It Slashes 2024 Production Guidance

Shares of Rivian Automotive, Inc. RIVN fell 3.2% to $10.44 after it announced third-quarter 2024 production and delivery results and lowered its 2024 production guidance. The electric vehicle maker produced 13,157 vehicles at its manufacturing facility in Normal, IL, down from 16,304 units in the same quarter of 2023.

It delivered 10,018 vehicles, down from 15,564 units in the same period last year. Deliveries also missed expectations. FactSet's compiled analyst estimates anticipated third-quarter deliveries of 13,000 vehicles.

The company is facing production issues due to a component shortage on the R1 and RCV platforms. The supply shortage, which started in the third quarter, has worsened in recent weeks. As a result, Rivian now expects its annual vehicle production in the range of 47,000-49,000 units, down from the previous projection of 57,000 units. However, it maintains its annual delivery estimate in the range of 50,500-52,000 vehicles.

In June, Rivian announced a $5 billion joint venture with Volkswagen AG VWAGY, a global automotive giant. The collaboration will focus on software and electrical architecture design and development. However, the partnership will not cover battery technology, propulsion systems, high-voltage platforms, or autonomous driving. Per the JV, Volkswagen will initially invest $1 billion, followed by an additional $4 billion. Rivian anticipates finalizing the JV in the fourth quarter.

RIVN Applies for Federal Loan to Fund Factory Construction

The EV maker has applied for a federal loan to help fund the construction of an EV factory in Georgia, per a filing with the U.S. Department of Energy. Although Rivian has submitted the application, the department has not made a final call and the filing did not specify the loan amount or terms.

The factory is expected to begin partial operations in the third quarter of 2027, with full operation of its first production capacity block by 2028. Rivian had paused construction of the $5 billion Georgia plant to expedite the production of vehicles on the R2 midsize platform and to conserve cash. To save $2.25 billion and boost production, Rivian shifted manufacturing of the R2 midsize SUV, which will compete with Tesla's Model Y, to its Illinois facility. The production of R2 is scheduled to begin in 2026.

Rivian had secured $827 million in incentives from the State of Illinois to expand its Normal facility, where it also produces electric delivery vans for Amazon. In 2022, the company secured $1.5 billion in state and local incentives for the Georgia plant.

Rivian's Zacks Rank & Key Picks

RIVN currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the auto space are Blue Bird Corporation BLBD and BYD Company Limited BYDDY, each sporting a Zacks Rank #1 (Strong Buy) at present.

The Zacks Consensus Estimate for BLBD's 2024 sales and earnings suggests year-over-year growth of 17.58% and 215.89%, respectively. EPS estimates for 2024 and 2025 have improved by 65 cents and 80 cents, respectively, in the past 60 days.

The Zacks Consensus Estimate for BYDDY's 2024 sales and earnings suggests year-over-year growth of 21.88% and 17.12%, respectively. EPS estimates for 2024 and 2025 have each improved by a penny in the past 30 days.

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