Rivian’s ambitious goals for sustainable electric vehicles foiled by global part shortages

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Rivian via Wikipedia

The first Rivian R1T rolls off production lines in September, 2021. Since then, product shortages have made Rivian’s manufacturing process increasingly difficult.

Anagha Sudhindra, Copy Editor

As the world further descends into a state of environmental crisis, major corporations are attempting to find alternatives to their carbon-emitting, pollution-dumping processes.

Rivian Automotive Inc., an American electric vehicle automaker founded in 2009, has taken the mission of “Preserving the natural world. Forever.” Set to upturn the automotive industry with its electric truck (R1T) and electric SUV (R1S) and backed by huge corporations Amazon.com and Ford Motor Company, Rivian became the hot, new, sustainable manufacturer. 

But unfortunately, Rivian has had a rocky start. Due to global shipping discrepancies and part shortages, Rivian failed to meet supply quotas in 2022, issuing a warning of production cuts by nearly 50%. 

In a letter to shareholders, the company expressed, “As we continue to ramp up our manufacturing facility, manage supply chain challenges, face continued inflationary pressures and minimize price increases to customers in the near term, we expect to recognize negative gross margins throughout 2022.” Investors hesitantly await Rivian’s upturn, but with a global supply chain crisis, Rivian’s prospects look doubtful. In particular, Rivian lacks batteries and semiconductor chips. This chip shortage began in 2020 and has only worsened, particularly affecting the electric vehicle (EV) industry.  

Rivian’s unfortunate decline stemming from the current bear market comes as devastating news when their sincere mission of sustainability is brought into consideration. 

They lack raw materials and burn through cash while implementing changes to keep up with demand and manufacturing, creating many internal problems that disadvantage Rivian in the EV market. Rivian stock has been on a steady decline, currently 80% less than its IPO. 

Senior Salar Cheema expressed his concern for Rivian’s decline. “Considering Rivian’s innovative ideas and robust plans for the future, it’s surprising that its stock has started to drop. With the global shift to electric vehicles, I expected that companies such as Rivian and Tesla were destined to continue growing,” he stated. 

Society has taken on a higher degree of environmental consciousness, which is of utmost necessity as the Earth degrades at an incomprehensible rate. Rivian’s electric delivery trucks and SUVs were to take the EV market by storm, introducing a new facet to sustainable shipping. 

Experts even predicted Rivian to rival and even overtake Tesla, the major EV manufacturer, but Rivian’s rough beginning prevented such grand success. 

A green economy just might be the new, nascent initiative to heal the financial detriments of the pandemic. But with Rivian taking a blow from COVID-19, recovery and prosperity in the green market for this company seem too distant and unattainable. Shareholders bank on stock prices rising in the long run, but new companies such Rivian are often over-hyped and over-purchased just after their release, leading to very short term success.  

However, many still believe Rivian will eventually gain wealth after global supply chain issues decrease. Junior Trevor Zimmerman has hope for Rivian’s eventual prosperity. “I think it is normal for smaller companies and startups such as Rivian to struggle a little in the beginning. Tesla struggled in the beginning, just like several other tech startups, so it is kind of the process all companies go through especially in [a downward] economy.” he stated. 

“But I do think they will be pretty successful. Rivian is one of the only companies that has started delivering electric trucks and vans. I think they will be successful for being this early in the game,” Zimmerman concluded.

The company has been struggling to produce delivery vans for Amazon, one of Rivian’s largest customer and supporter. Amazon’s thirst for EVs seems unquenchable as their grander goals of sustainability come into play. Amazon aims for net zero carbon emissions across all functions by 2040. Its delivery goals include net zero carbon emission for 50% of all shipments and 100,000 custom electric delivery vehicles from Rivian by 2030. But with Rivian in such a precarious position, Amazon’s net worth was also slightly compromised. 

The various production discrepancies and shipping crises stemming from the pandemic have surpassed immediate victims. The effects of these phenomena ripple outwards and affect the nation’s entire economy. Rivian’s struggles with product manufacturing were severely exacerbated by the pandemic, but as the global market starts to heal, Rivian’s success might take an upwards trend.