Rivian shares open lower after company announces big recall

Production of Rivian R1T electric pickups on April 11, 2022 at the company’s plant in Normal, Illinois.

Michael Wayland/CNBC

Rivian Automotive shares are set to open sharply lower on Monday after the electric vehicle maker said late Friday that it is recalling more than 12,000 vehicles – almost every electric vehicle it has produced to date – to double-check that fasteners in a vehicles steering funds has been correctly tightened.

Rivian shares fell more than 7% shortly after the US market opened on Monday.

All Rivian R1T pickups and R1S SUVs manufactured before the end of September, as well as some EDV vans the company has built for Amazon — 12,212 vehicles in total — are subject to the recall, although the company estimates that only about 1% of them are defective.

By the end of September, Rivian had built around 15,300 vehicles since production began in the fall of 2021. The company has set itself the goal of reaching production of 25,000 vehicles by the end of the year.

The defect is related to the mounting in the front suspension, which on some vehicles may not have been fully tightened. If the fasteners are not tightened, Rivian says it can affect front wheel alignment, potentially causing vibration and noise and altering steering feel.

In rare cases, the clasp can come loose completely, Rivian says, a situation that could lead to loss of steering control and possibly an accident.

Almost all automakers recall vehicles from time to time. But the Rivian-related numbers, and the possible repercussions if the clasp comes loose completely, are worrying investors.

Wedbush analyst Dan Ives, who closely follows Rivian, said in a Monday morning note that while vehicle recalls are common and this one is unlikely to be expensive, Rivian is “in the spotlight” and further quality or manufacturing issues could damage the company’s position with investors.

“It’s a black eye for Rivian,” Ives wrote.

Rivian stated that it is aware of seven reported issues that may be related to the fastener in question. No injuries related to the malfunction have been reported.

Repair is simple: Rivian service centers will check the fasteners and tighten if necessary. Rivian has notified affected customers and plans to complete repairs within 30 days.

The cost of the recall is unlikely to affect Rivian’s significant cash holdings. The company had $15.5 billion at the end of the second quarter, much more than most competing electric vehicle startups.

Rivian shares are down about 69% since the start of the year.

Source link

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button