**Rivian Faces Production Woes as Component Shortage Impacts Deliveries**

Irvine, California-based electric vehicle manufacturer Rivian introduced significant updates to its adventure vehicles—the R1S SUV and R1T pickup truck—earlier this year. The updates included enhanced electronics, new software developed with Epic Games's Unreal Engine, and redesigned batteries for improved range. However, a notable feature in the new R1 series aimed at cutting costs has presented challenges.

Starting last year, Rivian began producing its own electric drive units, known as the "Enduro." These units integrate the gearbox, power inverter, and electric motor into a single entity, significantly reducing the cost of manufacturing each vehicle. The Enduro units are now used in dual-motor, triple-motor, and quad-motor variants of the R1S and R1T.

Despite these advancements, Rivian reported disappointing Q3 2024 earnings that missed analysts' expectations. The company posted net losses of $1.1 billion, alongside Q3 revenue of $874 million, down 35% from $1.3 billion in the same period last year. They attribute much of this downturn to a shortage of a key component for the Enduro motor, stemming from a miscommunication with their supplier, Essex Furukawa, which provides the copper windings.

The situation has become so critical that Rivian had to lower its annual production guidance from 57,000 vehicles to a range of 47,000 to 49,000. CEO RJ Scaringe acknowledged the issue's impact on production during an earnings call, stating, "This has been a tough quarter for us because of some of those supply chain or supply ramp challenges, and one of those suppliers in particular has limited our production quite substantially."

Despite the setbacks, Rivian is optimistic about its future plans, particularly its mass-market R2 model set to debut around 2026. The R2 is a mid-size electric SUV targeting a base price of around $45,000, intended to compete with Tesla's Model Y. "The R2 program is advancing. From a timing point of view, it's on track," said Scaringe, emphasizing the model's cost efficiency and alignment with Rivian's brand ethos.

In a parallel announcement, Rivian revealed a new partnership with LG Energy Solution Arizona to supply next-generation 4695 cylindrical batteries, which promise to offer six times the capacity of the current 2170 cells. This collaboration marks a pivotal step for both companies in their EV ambitions.

To mitigate current challenges, Rivian is banking on its high-performance tri-motor R1S and R1T models, which are less expensive to produce than their quad-motor predecessors but offer better performance. Scaringe projected an uptick in the average selling price of R1 vehicles in Q4 due to increased tri-motor sales.

Currently trading on NASDAQ under the ticker RIVN, Rivian's stock saw a 2.44% increase, closing at $10.30 per share.