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 more than 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.
Those issues and bad weather forced the company to shut its Normal, Illinois, facility for weeks, which also hurt production.
“The issue we have is that the supply constraint is, by far and away, the biggest constraint,” Chief Executive R.J. Scaringe said in a conference call with analysts.
“We wish we could have the components still to fully run the plant across all lines, across multiple shifts, but that’s not the case.”
Rivian said in a shareholder letter on Tuesday it expects supply chain challenges to persist into 2023.
The company said it aims to produce 50,000 cars this year, compared with analysts’ estimate of 67,170 units, according to Visible Alpha.
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’s plummeting.
Shares of Rivian fell 8.4% to $17.68 in extended trading. Â
Also unnerving investors are concerns around weakening demand for EVs as interest rates rise and fears of a looming recession seep in.
Last week, rival Lucid forecast 2023 production well short of analysts’ expectations and reported a major drop in orders during the fourth quarter.
The company did not provide an update on the number of orders it typically reveals every quarter – a gap CFRA analyst Garrett Nelson said was a “red flag”.
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.
Rivian, which posted a gross loss of $1 billion in the fourth quarter, forecast gross profit next year.
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.
(Reporting by Akash Sriram in Bengaluru and Abhirup Roy in San Francisco; Editing by Krishna Chandra Eluri, Richard Chang and Gerry Doyle)
