Snarled Supply Chain Paralyzes Rivian Delivery Van Production For Amazon

Shares of Rivian Automotive dipped slightly in premarket trading after a Bloomberg report revealed that production of its electric commercial van had been paused due to a parts shortage. 

Rivian confirmed the production halt at the EV van’s assembly lines in Normal, Illinois. No specifics were given about the part shortage or a timeline for restarting production lines. 

A company spokesperson said part shortages are all too common across the industry, adding that production for the R1 electric pickup and SUV models has been unaffected. 

“We’re aware that Rivian encountered short-term production issues this month, and we don’t expect it to impact us,” an Amazon spokesperson told Bloomberg. 

In 2019, Amazon founder Jeff Bezos placed a $7 billion order for 100,000 electric delivery vans by the end of this decade. So far, about 15,000 are in service. 

According to Bloomberg, “The interruption marks another production hiccup for the EV maker as it works toward boosting output of its EV lineup next year.” 

Rivian shares in premarket trading in New York are down around 1%. Shares have been range bound between $40 and $10 handles for the last two years – basing – amid a downturn in the EV space and a resulting price war by Tesla to protect market share.

In late June, Volkswagen announced a billion dollar investment in Rivian to develop the next-gen EV architecture. This was a crucial lifeline for the company amid the downturn.

There’s a potential for the EV downturn to bottom after the Federal Reserve embarks on the interest rate-cutting cycle, which could begin as soon as next month. Lower rates would make car-buying more affordable again for average folks.