Tesla's '2016-2018' Woes Vs. Rivian's Current Challenges: Munster Highlights 1 Key Difference

Electric vehicle startup Rivian Automotive Inc. (NASDAQ: NVDA) reported on Tuesday its fourth-quarter revenue that missed expectations and also issued underwhelming 2023 production guidance.

What Happened: Rivian joined Ford Motor Co. (NYSE: F) with the recent “EV production troubles,” Deepwater Asset Management co-founder Gene Munster tweeted following a review of the earnings report. He noted that the company blamed the supply chain for the soft production guidance.

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Lucid Group Inc.'s (NASDAQ: LCID) issue, however, has to do with demand, Munster said.

The fund manager recalled Musk’s acknowledgment of a “production hell” in 2016 and said many were bracing for the other EV startups to experience the same challenges.

“The difference is in 2016-2018 Tesla’s challenge was ramping production, going from 84,000 to 245,000,” Munster said. Rivian’s issues, however, are supply chain and the company still has to go through the hardest part of the delivery ramp from 50,000 units to 200,000 units, he said. “This likely will start in 2024,” Munster added.

At Tesla’s Investor Day on March 1, the fund manager expects to hear upbeat comments about production and demand, which the market is already expecting.

Why It’s Important: Analysts currently view Rivian as the only company from among the new crop of EV startups that will likely give Tesla a fight. Barclays analyst Dan Levy said in a recent note that if he were to identify any start-up EV maker who is closest to Tesla, it would be Rivian.

Tesla’s successful ramp is a function of its first-mover advantage, geographically diversified production and almost full vertical integration. With vertical integration, the Elon Musk-led company is able to circumvent supply-side challenges to a larger extent and also keep a tight lid on costs.

Price Action: Rivian closed Tuesday’s session 4.61% higher, at $19.30, but plunged 9.95%, to $17.39, in after-hours trading, according to Benzinga Pro data.

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