Rivian shares were up 1% at the time of writing as investors await second-quarter delivery numbers due on Thursday.
- CEO RJ Scaringe told Axios the R2 vehicle represents an existential test.
- He dismissed demand as a concern for R2, instead highlighting supply chain worries.
- Memory chip supplies are tightening now because of explosive AI demand.
Rivian Automotive (RIVN) CEO RJ Scaringe reportedly has concerns about the impact of the ongoing memory chip shortage on the company’s new electric R2 SUV ramp, which is expected to make or break its future.
Shares of Rivian were down 0.5% at the time of writing, as investors await the company’s second-quarter delivery numbers slated to be announced on Thursday. Rivian started customer deliveries of the R2 in June.
The vehicle, priced around $50,000 and below Rivian’s R1 offerings, is expected to expand its total addressable market, but company executives have warned that the new SUV is expected to drive volume only to the end of the year.
High-Stakes Moment For Rivian
The $50,000 R2 has drawn strong consumer demand. Scaringe told Axios the vehicle represents an existential test.
“If R2 doesn’t go well, the whole company is not designed properly,” he told Axios at last weekend’s Aspen Ideas Festival. “Make or break sounds negative, but it’s actually the plan.”
As per Scaringe, demand is not the issue for the R2.
“I think the biggest risk for R2 is actually on the supply side, and there’s a lot of unknowns here,” he reportedly said.“The whole semiconductor space is gonna be quite constrained,” Scaringe continued. “By far my biggest worry about ramping R2 isn’t demand. It’s, you know, can we get enough parts to build cars? We’re quite nervous about global supply.”
Memory chip supplies are tightening now because of explosive AI demand. Major tech firms, including Apple, have already raised prices to offset surging costs. “I think it is helpful for the world to see that even somebody as big and capable as Apple had to raise prices,” Scaringe told Axios. “I mean, these are not like rounding error costs.”
The chip concerns are not limited to Rivian. General Motors (GM) and Micron Technology (MU) announced a Strategic Customer Agreement on Wednesday to lock in long-term supply of memory and storage chips for GM’s next-generation vehicles. The deal covers products used in AI-powered cabin features and advanced driver-assistance systems.
EV giant Tesla (TSLA), meanwhile, is pushing ahead with its Terafab semiconductor project to meet exploding demand for advanced AI chips that existing suppliers cannot deliver fast enough. The joint venture with SpaceX (SPCX) and xAI, announced in March, aims to build a vertically integrated fab in Texas capable of producing logic chips, memory and advanced packaging under one roof — targeting up to one terawatt of annual AI compute for vehicles, robotaxis, and Optimus robots.
“We either build the Terafab, or we don’t have the chips, and we need the chips, so we build the Terafab,” Elon Musk said.
How Did RIVN Retail Traders React?
On Stocktwits, retail sentiment around RIVN stock stayed within the ‘bearish’ territory over the past 24 hours, while message volume rose from ‘low’ to ‘normal’ levels.
A Stocktwits user voiced optimism for Q2 delivery numbers being better than the first quarter’s. “One thing the street loves is Under Promising, and Over Delivering. The second half of this year is going to be amazing from a fundamentals point of view, and the number one reason for increasing accumulation,” they wrote.
Another user voiced hopes for the company divulging the split between R1 and R2 deliveries in its upcoming delivery report.
RIVN stock has fallen 12% year-to-date.
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