Rivian Automotive (RIVN) shares rose more than 10% to $29.66 on July 6, after the electric vehicle (EV) maker issued a positive update on its production progress. RIVN stock is still down more than 70% year-to-date.
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Rivian is among Tesla’s (TSLA) major challengers in the EV business. It has developed and launched three vehicle models: the R1T pickup truck, the R1S SUV car, and the EDV delivery van. The company is currently producing the vehicles at its only factory in Illinois. It plans to build another factory in Georgia to produce its second generation of vehicles, or the R2 models.
4,401 Vehicles Produced in Q2
The company produced 4,401 vehicles in Q2, almost doubling the Q1 production of 2,553 vehicles. Rivian reiterated its target of producing 25,000 vehicles in 2022. With just over 6,950 vehicles produced thus far, Rivian would need to make at least 9,000 vehicles in each of the remaining quarters of the year to hit its production target.
The company delivered 4,467 vehicles to customers in Q2, which rose sharply from the 1,227 units it delivered in the previous quarter.
EV Makers Are Ramping Up Production Amid Strong Demand
From Rivian to Tesla, EV manufacturers are working to boost their capacity as demand remains strong. Tesla plans to double production at its China plant to be able to produce more than a million cars annually. The company has also scheduled upgrades at its Giga Berlin facility to accelerate manufacturing.
For its part, Rivian aims to run its Illinois factory day and night almost throughout the week in the second half of 2022, according to a Wall Street Journal report. The plant has only been running a few days a week so far. Rivian has received more than 90,000 orders for its truck and SUV models. For the delivery van, the company has an order from Amazon (AMZN) to supply it with 100,000 units. The company’s Illinois facility can produce 150,000 vehicles annually.
A major challenge that EV makers face as they seek to accelerate production is the shortage of parts. The auto industry has been experiencing a semiconductor chip shortfall for a while now. If the CHIPS Act works as intended, the chip shortage that has rattled automakers may be a thing of the past in the long term.
Wall Street’s Take on RIVN
The Street is cautiously optimistic about Rivian stock with a Moderate Buy consensus rating, based on eight Buys, five Holds, and one Sell. The average Rivian price target of $49 implies 65% upside potential to current levels.
Bloggers Hold Neutral View
TipRanks data shows that financial blogger opinions are 56% Neutral on RIVN, compared to a sector average of 65%.
Key Takeaway for Investors
The update that Rivian is on track to meet its 2022 production target is important in several ways. In addition to boosting investor confidence in the EV stock, the rising production also promises to put Rivian on the track to profitability. The company has said that increasing output is more important than reducing losses. Rivian lost $1.6 billion in Q1.
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