Rivian Automotive (NASDAQ:RIVN) shares dropped over 3% on Friday after the company slashed its full-year production forecast, citing a major disruption caused by a shortage of a key component used across its R1 and RCV platforms.
The electric vehicle maker now expects to produce between 47,000 and 49,000 vehicles this year, down significantly from the previous target of 57,000. The supply chain issue, which has intensified in recent weeks, has severely impacted production capabilities, despite Rivian managing to manufacture 13,157 vehicles and deliver 10,018 in the third quarter.
Rivian remains cautiously optimistic about its delivery outlook, maintaining expectations for a slight increase over last year, with a projected range of 50,500 to 52,000 vehicle deliveries. However, the updated guidance indicates the company is on track to produce fewer vehicles this year compared to 2023.
The production setback comes amid broader challenges for the electric vehicle industry, as rising interest rates and inflation are pushing consumers toward more cost-effective alternatives. The escalating cost of owning an EV, combined with economic uncertainty, has dampened demand, leading some potential buyers to opt for cheaper, conventional vehicles in the current market climate.