Rivian Automotive Inc shares fell over 5% on Friday, opening at their lowest after the electric vehicle maker halved its production forecast, pointing to its struggles with soaring raw material prices and supply chain constraints.
Prices of lithium and nickel, key materials used in batteries that power electric vehicles, have skyrocketed due to the Western sanctions on Russia following its invasion of Ukraine.
That, in turn, has added to supply-chain disruptions, which have plagued the industry since the outbreak of the pandemic.
Rivian expects these challenges to extend through 2022.
“The recent spike in core raw materials raises serious issues with (battery electric vehicle) economics,” Wells Fargo analyst Colin Langan said, while highlighting the 130% rise in nickel prices and a 16% to 88% rise in prices of cobalt, lithium and aluminum this year.
Rivian shares have nearly halved in value since their blockbuster initial public offering in November. They opened at $38.32 on Friday and hit a fresh low of $38.
At least six brokerages, including Piper Sandler, trimmed their price targets on the stock. Piper, which has an “overweight” rating, however, said supply-chain constraints are temporary and might not be a big enough reason to sell the stock.
Rivian Chief Executive Officer R.J. Scaringe said the company was developing a portfolio of battery solutions, including lithium iron phosphate (LFP) chemistry, to hedge against soaring nickel prices.
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