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• Rivian did not specify which part is in short supply or identify the supplier responsible for the disruption.
• The halt has raised concerns among investors, contributing to a significant drop in Rivian's stock price.
• Wall Street analysts see upside in Rivian stock to $18 on average.

Rivian Automotive Inc. (RIVN) has temporarily suspended the production of its electric delivery vans (EDVs) for Amazon (AMZN), citing a parts shortage as the cause.

This move highlights ongoing supply chain challenges that have plagued the electric vehicle (EV) industry, including Rivian, in recent years.

The production halt has raised concerns among investors, contributing to a significant drop in Rivian’s stock price, which is now down more than 25% from its mid-July high.

When will Rivian resume production of EDV?
 

Rivian did not specify which part is in short supply or identify the supplier responsible for the disruption.

The company also refrained from disclosing when the production halt began or when it expects to resume operations.

In a statement, a Rivian spokesperson mentioned that the company “expects to recover all missed production,” but no further details were provided.

Importantly, the production of Rivian’s other vehicles, the R1S SUV and R1T pickup truck remains unaffected by the parts shortage.

Rivian currently manufactures all of its vehicles at its facility in Normal, Illinois, and plans to build a second factory in Georgia.

Despite the recent setback, Rivian’s stock remains up more than 60% from its year-to-date low of $8.40 in mid-April.

Amazon, the largest shareholder of Rivian with a 16% stake, is slated to receive 100,000 of the company’s EDVs by the end of the decade.

Sales to Amazon accounted for approximately 19% of Rivian’s total revenue in 2023, making the e-commerce giant a critical partner for the EV maker.

However, Amazon has yet to comment on Rivian’s recent production halt.

In April, Rivian temporarily shut down its factory for retooling and modifications, which the company recently acknowledged could slightly impact deliveries in the current financial quarter.

Despite these challenges, Rivian remains committed to producing 57,000 vehicles in 2024, maintaining its long-term production goals.

Is Rivian stock worth buying on the recent weakness?
 

Rivian’s stock has faced volatility, but some analysts believe the recent weakness presents a buying opportunity.

Wall Street currently holds a consensus “overweight” rating on the EV company, with an average price target of $18 per share, suggesting a potential 40% upside from current levels.

While Rivian’s stock remains unattractive to income investors due to its lack of dividend payments, its growth potential in the EV market continues to garner attention.

The company’s ability to navigate supply chain challenges and meet its production targets will be crucial in determining its future success.

As Rivian works to resolve its parts shortage and resume production of its EDVs for Amazon, investors will be closely watching for any updates on the situation.

The outcome of these efforts will likely play a significant role in shaping the company’s stock performance and its position in the competitive EV industry.

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