Rivian needs to sharply ramp up EV production to meet 2022 targets — Wall Street is betting it can

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A Rivian R1T truck body lowered onto a chassis in the assembly line at the Rivian electric vehicle plant in Normal, Illinois. Georgia is giving the company $1.5 billion in subsidies to bring a new $5 billion EV plant to the southern state.
Brian Cassella | Tribune News Service | Getty Images

Electric vehicle startup Rivian Automotive told investors in March that it will produce 25,000 vehicles in 2022. It has three months and a seemingly tall order to get there.

Through the end of September, Rivian had built just 14,317 electric vehicles — meaning that it will have to build about 10,700 more between now and the end of December to deliver on its promise to investors.

Rivian is confident it can meet its goal. The company has reiterated that guidance several times since March, most recently on Monday when it announced its third-quarter production total.

Wall Street isn’t too concerned, either. As several analysts noted this week, Rivian just had its best quarter for production yet, with 7,363 EVs built between July and September. That’s more than it built in the entire first half of 2022, thanks to a second shift of workers added during the quarter — and thanks to management’s efforts to mitigate the supply-chain woes that Rivian faced earlier in the year.

The company’s stock is off 65% this year, underperforming broader market losses.

Rivian has been ramping up production at its Illinois factory at a relatively steady pace since early this year. So, while supply-chain factors could still complicate its efforts, its third-quarter result seems to put its full-year target in range, analysts say.

In a Monday evening note, Canaccord Genuity’s George Gianarikas pointed out that Rivian’s production rate has gone from an average of about 78 vehicles per week in the fourth quarter of 2021 to about 566 per week in the third quarter of 2022.

It’ll have to ramp up further, to an average of about 822 per week between now and the end of the year, to make its full-year goal.

“We estimate this is achievable,” Gianarikas wrote. Gianarikas rates Rivian’s stock as a “buy,” with a price target of $61. Rivian currently trades for about $35 per share.

Morgan Stanley’s Adam Jonas, in a short note Tuesday, wrote that while it’s possible that Rivian’s production will come in “slightly below” its guidance, if it makes “anywhere near” 25,000 vehicles for the year, that bodes well for its plan to make about 50,000 vehicles in 2023.

Jonas has an “overweight” rating on Rivian, with a price target of $60.

The bigger concern, according to RBC’s Joseph Spak, is Rivian’s 2023 targets. In a Monday night note, Spak wrote that 25,000 vehicles this year is “still feasible,” but Rivian’s plan to roll out new electric motors and revamped battery packs next year could introduce new production snags.

Spak has an “outperform” rating on Rivian’s stock, with a price target of $62.

Still, there are no guarantees that Rivian will meet its goal, or get close. The company has already cut its 2022 production guidance once, in March, when it said that ongoing global supply chain issues would limit its full-year production to 25,000 instead of the 50,000 investors had been expecting.

As recently as August CEO RJ Scaringe said Rivian was still working through supply chain constraints, and automakers continue to cite shortages of raw materials such as lithium and cobalt that are needed for battery production.

Rivian is expected to report its third-quarter financial results — and to provide additional color on the status of its production ramp — in early November.

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