Rivian’s Stock Slump After Recall Announcement

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Rivian, an electric car maker based in Silicon Valley, announced that it would recall an undisclosed number of its EVs after learning of some issues with the car’s braking systems. After the announcement, Rivian’s stock price dropped by roughly 8% in intraday trading on Friday, June 7th. The company has not provided more details about the recall at this time and didn’t give any indication of how many cars might be affected by the issue.

After the electric vehicle manufacturer said late Friday that it is recalling more than 12,000 cars – virtually every EV it has produced to date – to ensure that a nut in the vehicles’ steering component was correctly tightened, shares of Rivian Automotive dropped dramatically on Monday.

The stock of Rivian dropped by around 7% at the close of trading after occasionally dropping by more than 10% during the day.

All 12,212 Rivian R1T pickup trucks, R1S SUVs, and some of the EDV delivery vans the business built for Amazon are included in the recall, but the company believes that just approximately 1% of them have the problem.

Since beginning production in the autumn of 2021, Rivian has produced around 15,300 automobiles as of the end of September. By the end of the year, the business aimed to build 25,000 automobiles.

A front suspension fastener that may not have been completely tightened in some vehicles is the source of the flaw. According to Rivian, if the fastener isn’t secure, it can impact the alignment of the front wheels, which might result in noise, vibrations, and a different steering sensation.

The fastener may occasionally come entirely free, according to Rivian, which might result in a loss of steering control and possibly a collision.

Recalls are occasionally issued by almost all automakers. Investors are worried about Rivian’s due to the large numbers involved and the possible outcomes if a fastener comes totally loose.

Although vehicle recalls are common and this one is probably not expensive, Rivian is “under a harsh spotlight,” and additional quality or production difficulties may harm the company’s reputation with investors, according to Wedbush analyst Dan Ives, who regularly monitors Rivian.

Ives stated, “This is a black eye for Rivian.

According to Rivian, there have been seven complaints of problems that could be connected to the fastener in question. It is not aware of any accidents caused by the flaw.

The fix is straightforward: The fasteners will be examined and, if necessary, tightened, by Rivian’s service facilities. Customers who are impacted have been informed by Rivian, and repairs are expected to be finished in 30 days.

The expense of the recall won’t likely make a dent in Rivian’s huge cash reserve. At the end of the second quarter, the business had $15.5 billion on hand, significantly more than most competing EV companies.

The value of Rivian’s shares has decreased by about 70% since the year’s commencement.

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