Rivian Warns of Ukraine War Effect on EV Business

Rivian cites conflict in Ukraine as one of the factors that will present challenges to its business in the foreseeable future, from component supply issues to the prices of raw materials.The EV maker has indicated that increases in the prices of metals including lithium, nickel, aluminum, and cobalt poses a risk to its own financial performance and ability to produce vehicles.The EV maker has attempted to introduce higher than expected prices for several vehicle trims in March, before rolling them back days later due to customer backlash.Despite starting production the R1T pickup and R1S SUV in late 2021, Rivian is facing some considerable challenges in 2022 as it works to increase its output, while also contending with a number of issues common to the automotive industry at the moment. In its latest SEC filing days ago the EV maker forecasts “significant expenses and continuing losses for the foreseeable future,” citing the effects of the conflict in Ukraine, among others, as factors that will have a bearing on demand for its vehicles and the company’s success. Related Story Ukraine War Promises More Chaos for Automakers “Our business depends in large part on our ability to develop, manufacture, market, and sell our vehicles,” Rivian said in the filing. “Our initial deliveries for the R1T and R1S were delayed, and our production ramp is taking longer than originally expected due to a number of reasons. The cascading impacts of the COVID-19 pandemic, and more recently the conflict in the Ukraine, have impacted our business and operations from facility construction to equipment installation to vehicle component supply.”Rivian is just one of the latest automakers to indicate the challenges now posed by uncertainties in the supply of raw materials and other components as a result of the war in the former Soviet republic, which had already prompted halts in production for several automakers, including Volkswagen, Audi, Mercedes-Benz, Porsche, and Renault. Rivian’s warnings are aimed at longer term issues that could continue to affect the auto industry in the coming months and years, and they concern other disruptions the auto industry has already seen in the past two years. Rivian has started production of its SUV model, which is not inexpensive, but it remains to be seen how many units it will be able to produce in 2022. Rivian “We have experienced and may continue to experience cost fluctuations or disruptions in supply of input materials that could impact our financial performance,” the automaker said in the filing. “For example, the recent global semiconductor supply shortage is having wide-ranging effects across the automotive industry, and has impacted our operations and financial performance, along with those of many automotive suppliers and manufacturers that incorporate semiconductors into their products. In addition, there have been very sizable increases in recent months in the cost of key metals, including lithium, nickel, aluminum, and cobalt with volatility in pricing expected to persist for the foreseeable future.”Rivian has already attempted to head off the challenges related to the rising prices of metal and other components, revealing surprisingly higher than anticipated prices for its full lineup in early March leading to immediate customer backlash. The response from reservation holders prompted Rivian to backpedal on the pricing structure the same week. Related Story Update: Rivian Reverses Sudden Price Hikes The EV maker’s warning regarding the prices of metals like aluminum and nickel is currently seen as a special threat to EV makers, as Russia has been a historically key supplier of these metal for the auto industry and suppliers, with the country’s metallurgical industry now facing western sanctions. Aside from higher prices for battery packs sourced from suppliers, automakers also face the prospect of the availability of these metals declining sharply, as Russia contemplates counter-sanctions, and could withhold raw materials from certain companies or countries altogether.Closer to home, Rivian also cites the pace of vehicle electrification as well as energy prices among other risk factors it faces in the near and mid term, while also cautioning that a sudden increase in the popularity of EVs could also affect its future success, if it happens without growth in battery cell production.While Rivian has certainly mentioned a number of these factors in the past, familiar enough now to industry watchers, it’s still striking how frequently the war in Ukraine is mentioned in Rivian’s filing. At the moment it’s clear that Rivian and Tesla aren’t the only automakers that have attempted to raise vehicles prices as a result of these pressures, in Tesla’s case by as much as $10,000 for one model, and that other automakers are likely to institute significant price hikes in the coming weeks as well, while also facing new pandemic related disruptions. SIGN UP