Persistent Supplier Issues Deal Major Revenue Blow to Rivian

Rivian recently reported third-quarter revenue of $874 million, falling over 12% short of analysts’ forecasts. This revenue miss comes as the electric vehicle startup faces significant production issues tied to a shortage of a critical component in its recently launched flagship R1S SUV and R1T pickup trucks. Last month, the company revised its annual production estimates downward to 47,000–49,000 vehicles, citing an “acute” supply issue for a part of its Enduro motor system.

The Enduro motor, which debuted in Rivian’s R1 models in 2023, reflects Rivian’s ambitious strategy to develop key components in-house and reduce its reliance on third-party suppliers. This effort to become more vertically integrated, however, has presented unexpected challenges. In this case, a supplier bottleneck related to the Enduro motor disrupted production substantially, affecting Rivian’s ability to meet demand and generate anticipated revenue. Rivian CEO RJ Scaringe acknowledged the difficulties of this quarter, emphasizing that resolving the issue is one of the company’s top priorities. He expressed confidence that the problem is temporary, although it has undeniably created significant challenges in the short term.

Production issues weren’t the only obstacle Rivian encountered this quarter. Although Rivian managed to produce 13,157 vehicles, it delivered only 10,018, revealing a gap that suggests softer-than-expected demand for its high-priced EVs. The gap between production and delivery hints that market demand, as well as supply chain constraints, may be affecting the company’s revenue.

Rivian has also adjusted its full-year financial outlook, now anticipating a loss of $2.82–$2.87 billion in adjusted earnings, slightly higher than the previous guidance of a $2.7 billion loss. Year-over-year, Rivian’s Q3 revenue dropped by 34.6%, down from $1.33 billion in the same period last year. Despite the revenue decline, Rivian succeeded in reducing its operating losses to $1.1 billion this quarter by cutting operating expenses. The company also reported earning $8 million from the sale of regulatory credits, a small but notable contribution to its revenue.

These financial setbacks come as Rivian seeks to streamline operations and focus on cost control while positioning its flagship R1T pickup, R1S SUV, and commercial delivery vans—primarily sold to Amazon—as core product lines. Rivian has started producing a new, more expensive tri-motor variant of the R1 vehicles, which could provide financial relief by driving up revenue per vehicle. This variant not only targets customers seeking high performance but could also help mitigate some supply chain issues by diversifying the product lineup and alleviating pressure on the Enduro motor.

Meanwhile, Rivian is advancing its next-generation platform, known as the R2. This midsize SUV platform is expected to play a critical role in the company’s future growth, catering to a broader market segment. During the earnings call, Scaringe highlighted that the R2 platform represents a “fundamental driver of Rivian’s growth,” suggesting it will be pivotal in establishing Rivian’s long-term presence in the EV market.

To support the R2 platform’s development, Rivian announced a key partnership with LG Energy Solution (LGES), a prominent battery supplier. Under this new agreement, LGES will supply 4695 cylindrical battery cells for the R2 platform, which will be produced at LGES’s facility in Queen Creek, Arizona. This collaboration aims to secure a stable battery supply for the R2 vehicles, which are set to begin production in the first half of 2026. Securing a reliable battery supplier is crucial for Rivian as it looks to prevent the kind of supply chain disruptions it has experienced with the Enduro motor.

Rivian’s strategy reflects a commitment to overcoming near-term production obstacles while setting the stage for future growth with the R2 platform and higher-end R1 variants. By expanding its product offerings and securing critical supply chain partnerships, Rivian aims to stabilize its operations and achieve a more sustainable growth trajectory in the competitive EV market. With the R2 expected to play a central role in Rivian’s lineup, the company is betting on its ability to capture a broader customer base and move past the supply chain difficulties that have impacted its performance so far.