Rivian Automotive(NASDAQ: RIVN) shares were dropping on Friday afternoon after the company made a surprising announcement. While most of the focus on the electric vehicle (EV) maker has recently related to the unveiling of its next-generation SUV, today's news was about its commercial delivery vans.
Shares plunged as much as 5.5% on news that the company has suspended production of the vans destined for e-commerce giant Amazon. While the stock clawed back some of that drop, it was still trading lower by 4.3% as of 2:30 p.m. ET.
Rivian's massive EV order
Amazon placed a standing order for 100,000 electric delivery vans from Rivian to be delivered through the end of the decade. As of late last year, Amazon said it already had 10,000 Rivian vans in its delivery fleet. And Amazon isn't just a customer for Rivian. As an early investor, Amazon holds nearly 160 million shares, representing more than 16% ownership in Rivian as of April 29.
But today Rivian announced it was forced to temporarily suspend production of the electric Amazon vans due to a shortage of parts. The company didn't note what specific part or supplier was involved with the production halt. A Rivian spokesperson released an email statement saying, "A part shortage has temporarily impacted our Electric Delivery Van (EDV) production. We expect to recover all missed production."
Sales to Amazon represented about 19% of revenue for Rivian in 2023. But Rivian said production of its consumer pickup truck and SUV are not affected by the part shortage. For investors, this news is ultimately a non-issue. For those considering buying shares, it could, in fact, be an opportunity to get a slightly discounted share price.
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Howard Smith has positions in Amazon and Rivian Automotive. The Motley Fool has positions in and recommends Amazon. The Motley Fool has a disclosure policy.
