Can Rivian Weather the Chip Shortage?

Rivian might have a leg up on other EV startups, but that doesn’t mean its success is set in stone. Can the company make it through 2022’s supply chain troubles?
Written by Andrew Koole
Reviewed by Kathleen Flear
Apr 24, 2022
2022 will put Rivian to the test. 
The EV startup proved itself to be one of the strongest competitors in its field—winning support from Ford and
Amazon
, beating everyone to the electric pickup truck segment, and raising $12 billion with its initial public offering—but this year will be when the rubber hits the road. 
Since delivering its first vehicle in September, the new company has hit a lot of speed bumps in the manufacturing process, the worst one being the ongoing
microchip shortage
. The obstacles have already forced Rivian to cut its production goal in half. 
But will the lowered expectations be enough to keep investors and consumers on board?
Jerry
, your car-ownership
super app
, took a closer look at the electric vehicle maker’s situation to give you a clearer picture of its future.

The chip shortage is harder on Rivian than other automakers

Every car company has to deal with the depleted supply of semiconductors. But for new brands like Rivian, the situation is more dire. 
You see, the reason the chip shortage is hitting the auto industry harder than others is because of the
pandemic
. When demand for vehicles plummeted during lockdown, chip suppliers sought out new customers. Automakers have had a tough time getting those suppliers back on board.
That plight is even more problematic for new companies like Rivian because they don’t have any prior relationships with chip makers. They also don’t have a history of hitting production targets—targets that are much lower than their older competitors. 

The lack of microchips has a domino effect on Rivian’s business

Without convincing chip suppliers to bet on them, Rivian will have a hard time convincing investors to do the same. 
Reuters
says the company’s shares already dropped 70% from its peak value, most of which was lost after they cut their annual production forecast to a mere $25,000 units.
CEO R.J. Scaringe says there’s still enough capital to keep going, but again, the lack of chips stalls the process. It’s a frustration that’s only heightened by productivity of the rest of Rivian’s assembly line. Scaringe says that of the 2,000 parts in an
R1T
, 0.5% of them are challenged.
Not all of those are microchips. The company is also feeling the pressure from rising raw material costs for their batteries. But at least, with enough cash, they can keep battery production moving. The inability to secure chips feels like a dead end.

The cost for a Rivian is rising, too

The two models Rivian has managed to produce, the R1T pickup and the R1S SUV, are pretty impressive machines. But good luck getting your hands on one of them. With production moving so slowly and the waiting list growing, it will take a long time.
On top of that, prices for the two EVS have risen over $10,000 above their original starting prices. The increased sticker price does not bode well for average
car insurance
rates, either.
If you do manage to have a Rivian delivered to your driveway, make sure to shop for coverage with Jerry. A licensed broker that offers end-to-end support, the Jerry app gathers affordable quotes, helps you switch plans, and can even help you cancel your old policy. 
And to ensure you always have the lowest rate, Jerry will send you new quotes every time your policy comes up for renewal, so you’re always getting the coverage you want at the best price. 
The average Jerry user saves over $800 a year on car insurance.
icon
Compare Car Insurance Quotes For Free
Jerry automatically shops for your insurance before every renewal. Members save $872/year.
rating primary
4.7/5
Rating on App Store
Start saving money!
12,000+ Reviews
Trusted by 3.5M car owners like you
National General
Allstate
AAA
Aig
Chubb
ClearCover
CSE
Dairyland
DirectAuto
Elephant Auto Insurance
Kemper
Libertymutual
Gainsco
Mapfre
Mercury Auto
Metromile
Nationwide
Plymouth Rock
Progressive
State Auto
Safeco
Travelers
Metlife
Bristol West
National General
Allstate
AAA
Aig
Chubb
ClearCover
CSE
Dairyland
DirectAuto
Elephant Auto Insurance
Kemper
Libertymutual
Gainsco
Mapfre
Mercury Auto
Metromile
Nationwide
Plymouth Rock
Progressive
State Auto
Safeco
Travelers
Metlife
Bristol West

You might also be interested

Easiest way to compare and buy car insurance

√
No long forms
√
No spam or unwanted phone calls
√
Quotes from top insurance companies
Find insurance savings — it's 100% free