Rivian halts production of electric vans for Amazon

EV maker Rivian Automotive (RIVN) is halting production of its electric delivery vans for Amazon (AMZN) tied to reports of supply chain constraints and auto part shortages. Madison Mills and Seana Smith break down this story and if it is expected to impact Rivian's future earnings.

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This post was written by Luke Carberry Mogan.

Transcripción del vídeo

Let's get to some trending takers that we are watching this morning.

Turn off with Rivian shares under pressure down over 2% after the company temporarily suspending production of its commercial delivery vans.

They're used by Amazon, and they say this is due to a shortage of certain parts.

According to multiple reports and the production, H is really just the latest in a series of supply chain issues for that have come over the past two years.

Amazon has already responded for their part in this, saying that they're aware of the concerns around production issues.

They don't expect an impact.

Rivian has a deal for 10 100,000 of these vans being supplied to Amazon by the end of the decade.

They've already got about 15,000 in use, so the big question is whether or not that is going to be able to continue.

In the short term, it's not necessarily likely to negatively impact rivian earnings moving forward.

But it does play to that broader narrative of Rivian struggling to keep up with their own supply chain, and this is something that came up in their latest earnings print after their earnings results earlier in August, the stock went down about 10%.

They were not able to hit analysts expectations for second quarter revenue, and their cash burn was also higher than anticipated.

Yeah, I, I think there's still a lot of questions because we didn't really get too many details from R just in terms of what, exactly that part is where we are seeing that shortage.

They're very confident, in fact, that they are going to make up for this lost time.

But they didn't really give a timeline of exactly what that would be.

So I think some of that uncertainty and lack of clarity surrounding this delay is really what's putting pressure on the stock and off just about 2% here in today's trading.

Remember that Ribon also produces all of its vehicles at that one factory in Illinois.

They do have a second factory pledge for Georgia, but right now they do plan or they do manufacture, produce all their vehicles at that one factory.

So they are saying that some of the workers that are being affected by this do have the opportunity to continue their work at that factory.

But again, lots of questions about what exactly that timeline looks like?

Where, exactly?

That shortage or what the shortage, what the part is that they're having shortage, uh, issues with, and then exactly how long it's going to take to maybe get back to those original estimates.