Rivian Loses Its Shine as Investors Fret About Production Delays

Rivian, a maker of electric vehicles that aspires to compete with Tesla, completed an initial public offering last year that raised nearly $14 billion. Its shares quickly soared, and the company briefly had a stock market value that was nearly twice that of Ford Motor.

But three months after Rivian’s debut on the stock market, investors are worried that the company may not quite live up to its promise because it has had trouble increasing production of its pickup trucks, sport-utility vehicles and delivery vans. Though Rivian is still worth about $55 billion, its stock has fallen by nearly two-thirds from its peak and is well below its I.P.O. price.

Investors’ anxiety about Rivian’s prospects can be traced in part to its failure to meet a modest goal of producing 1,200 vehicles for individual buyers in 2021. The company also appears to be struggling to provide delivery vans to Amazon, one of its largest investors and its main customer for that vehicle. It hasn’t helped that Rivian’s chief operating officer left at the end of last year after less than two years on the job and the news came out in a press report, not a Rivian announcement.

Auto experts have long thought that Rivian, which is also backed by Ford and T. Rowe Price, is one of just a few young electric vehicle companies that could challenge Tesla, the market leader. But Rivian could squander a chance to establish itself before Tesla and auto giants like Ford and General Motors begin mass-producing electric vehicles that compete with Rivian’s pickup and S.U.V.

“The biggest issue: They need to produce two cars at a pace where they do not lose this window of opportunity,” said Dan Ives, an analyst and managing director at Wedbush Securities. “And that’s what keeps investors up at night.”

Rivian’s chief executive, R.J. Scaringe, told analysts on a conference call in December that it had been “an incredibly tough challenge” to raise production of the two consumer vehicles and the delivery van. Like the rest of the industry, the company has been hit hard by shortages of computer chips and other parts.

But Mr. Scaringe and Rivian have been unwilling to share some basic details. For example, the company hasn’t disclosed whether it met its 2021 goal to start delivering vans to Amazon, and wouldn’t comment when asked. Amazon, which is expecting as many as 100,000 from Rivian in the coming years, and which recently also ordered vans from Stellantis, the owner of Ram, Fiat and other brands, declined to say whether it received the vans last year.

Rivian has not told investors how many vehicles its factory would be capable of producing by the end of the year or how much of its current order backlog of some 70,000 pickups and S.U.V.s it would fulfill this year.

“Supply chain issues remain a global concern — one that Rivian is managing through strong supplier relationships and collaboration,” a spokeswoman, Amy Mast, said in an email, adding that the company would provide more information on March 10 when it reports its latest financial results. Last year, Rivian made 1,015 vehicles.

The company also did not tell investors that its chief operating officer, Rod Copes, a Harley-Davidson veteran, left the company last year. Public companies and those in the process of listing their shares generally disclose the departures of top executives. The news was first reported by The Wall Street Journal.

Ms. Mast said Mr. Copes had a “phased transition from Rivian in fall 2021, prior to the I.P.O.” and retired in December, after the offering.

Mr. Copes, 55, said in an interview that he did not leave Rivian because of concerns about his performance or because there were problems with production. He said that he had achieved key goals and that the structures were in place for Rivian’s ramp-up in production. “It was a smooth and seamless transition,” Mr. Copes said.

But corporate governance experts think Rivian ought to have disclosed his impending departure to investors during the I.P.O., given his senior role. “If they knew he was leaving, the optimal disclosure would have been to identify their C.O.O. but indicate that he was leaving,” John C. Coffee Jr., a professor at Columbia Law School, said in an email.

According to one former executive, Rivian has a poor management culture.

The executive, Laura Schwab, said she was fired last year from a high-ranking sales and marketing position after expressing concerns about what she called the “boys’ club culture” and “gender discrimination” at the company. She filed a lawsuit in state court in California accusing Rivian of violating the state law prohibiting employment discrimination and retaliation.

Ms. Schwab said she had been part of 30 vehicle introductions in prior auto industry jobs, including at Aston Martin and Jaguar Land Rover. Soon after arriving at Rivian, she said, she felt compelled to express concerns that the company was in danger of missing delivery targets.

“The production line doesn’t go from zero to thousands of cars overnight; it just doesn’t work that way,” she said.

Her lawsuit asserts that Mr. Scaringe and a few top male executives made big decisions without input from others.

Rivian and Ms. Schwab are in arbitration proceedings and have agreed to put a stay on the court case. The company would not comment on her criticism about delivery targets and production planning.

Ms. Mast said Rivian did not discriminate against Ms. Schwab. “We dispute Ms. Schwab’s allegations, which do not reflect the values and culture of our company,” she said. “We intend to vigorously defend ourselves against her claims.”

Rivian has one factory, in Normal, Ill., where it eventually plans to produce 150,000 vehicles a year, and in December it announced plans to build a second, in Georgia, with capacity for 400,000 a year. Rivian has a large cash hoard — close to $20 billion after raising money in the I.P.O. and a debt offering — something Tesla didn’t enjoy for many years after it started making cars.

Building and equipping factories costs billions of dollars. As Tesla’s hair-raising difficulties in ramping up production in 2018 demonstrated, going from making a few thousand vehicles to tens of thousands is difficult even when supply chains are functioning normally.

Mr. Scaringe, who has a Ph.D. from M.I.T., founded Rivian in 2009. He and his team spent years designing and engineering its pickup truck, which starts at $67,500. But analysts said the company might not have many more years to get those trucks on the road.

Ford will start selling an electric version of its best-selling F-150 pickup truck this spring. G.M., which just started selling an electric Hummer pickup, will add an electric Chevrolet Silverado in 2023. Ram, Tesla and others are working on similar products.

Garrett Nelson, an analyst at CFRA Research, estimates that there are 50 new electric vehicle models coming to market before 2024. That number could well go up as automakers try not to get left behind in a global transition to battery-powered cars and trucks. “There’s a lot of new supply coming and a lot of competition,” he said.

But Mr. Nelson added that Rivian could still live up to Wall Street’s expectations. That’s because the company has won over auto critics who say that its pickup truck, the R1T, is among the best on the market today. MotorTrend named the R1T its truck of the year for 2022.

And analysts say that, while Rivian’s delayed production could benefit its competitors, just getting some trucks and S.U.V.s out onto the roads this year could generate interest among buyers who are eager for electric vehicles that are bigger and more versatile than Tesla’s Model 3 and Model Y. Those vehicles are meant for use in cities and suburbs, not for hauling lots of gear into the outdoors on unpaved trails, things that the R1T does with aplomb, according to car reviewers.

“We’re optimistic on Rivian’s models,” Mr. Nelson said. “They’re really filling a void.”

There also appears to be significant demand for Rivian’s S.U.V., the R1S, which is as spacious as the large conventional S.U.V.s made by G.M., Ford and Toyota and is larger than other electric utility vehicles like the Model Y and Ford’s Mustang Mach-E.

Tommy Taylor, a lawyer from St. Louis with three children, said he had ordered the R1S, which starts at $70,000, because it promised to be more spacious than other electric S.U.V.s. “The Rivian falls right into my budget for my next car, and there just isn’t anything that is pulling me away from it,” he wrote in an email.

Some customers say the wait for Rivian vehicles has become frustrating. Joe Paduda, a consultant from New Hampshire who has reserved an R1T and an R1S, said the company told him that the truck would arrive this March or April but that the S.U.V. wouldn’t be ready until the first half of 2023.

“The company seems to be completely focused on broad-based marketing and branding and pays little attention to the people who have actually committed to buy one of their vehicles,” Mr. Paduda said in an email.

Some customers who have given Rivian $1,000 deposits have been waiting for years, and anybody who makes a reservation now is unlikely to take delivery for a while. Rivian said in November that it would take until the end of 2023 for it to fulfill all of the R1T and R1S reservations on its books at the time.

Devoted fans will probably wait, but others may grow impatient and opt for a model from a different automaker.

“Rivian has a clear advantage,” said Mr. Ives of Wedbush. “If you look at preorder reservations, they are two times where most people thought it would be a year ago. But they have to produce the vehicles right now.”