Rivian Takes a Big Step to Address Its Biggest Issue

When a fencer moves too far back to avoid danger, they end up with their back against the wall in the sport of fencing.

As a result, they have no choice but to confront their foe.

This is the position in which Rivian Automotive (RIVN) - Get Rivian Automotive, Inc. Class A Report, a young electric vehicle manufacturer, finds itself. After missing its production targets, the automaker now realises that it must act and confront its problems.

So take action.

Former Nissan executive Tim Fallon has been named vice president of manufacturing operations. He takes over from Erik Fields, a former Nissan executive. Fields was only in charge for 16 months.

"Tim Fallon has joined the Rivian team as the Vice President of Manufacturing, starting Monday, February 14," Miranda Jimenez, a representative, told TheStreet in an email. "He'll be based in Normal, Illinois, at the Rivian automobile manufacturing."

Fallon comes to Rivian after a 15-year stint at Nissan, where he was Vice President of Manufacturing at the Nissan Canton Vehicle Assembly Plant in Canton, Mississippi.

Rivian's decision comes as the company strives to persuade critics and investors that it can handle higher production rates. When Rivian delivers its quarterly results on March 10, the automaker is likely to provide an update on its production situation.

The company, which has Amazon (AMZN) - Get Amazon.com, Inc. Report (17.74 percent, according to FactSet) and Ford (F) - Get Ford Motor Company Report (11.42 percent) as shareholders, admitted to supply chain issues and plans to ramp up production during its quarterly earnings in December.

"Launching and ramping up manufacturing of three different vehicles in a matter of months is a huge undertaking. This production ramp necessitates a parallel ramp of our supply chain, product staff hire and training, equipment setup, and quick iterations through production quality loops. Given the situation of our global supply chain, the tight labour market, and, of course, the issues from Covid, these challenges have been amplified "RJ Scaringe, the company's CEO, stated.

Scaringe, on the other hand, was upbeat.

"Hundreds of our suppliers are increasing their production to match our vehicle ramp rate, just as we are scaling our manufacturing facilities. Our procurement team has stayed agile and continues to collaborate with our suppliers at all levels to address difficulties arising from our supply chain delay to market and the Covid pandemic. Given the supply chain's volatility, we decide to carry higher inventory levels than originally envisaged to ensure that we have parts to construct on a constant basis. The good news is that none of our supply chain issues appear to be long-term systemic difficulties "According to the CEO.

Nonetheless, the markets were unconvinced by these comforting words. Rivian's stock dropped substantially after its initial public offering (IPO) on November 9. It has since steadied, but it is still trading below its IPO price of $78 per share. Rivian's shares ended the day on Wall Street at $66.37, down 15% from its initial public offering. On November 16, it reached a new high of $172.01.

The excitement surrounding the upstart electric vehicle manufacturer's IPO stems from the fact that it provides larger and bulkier models that have the ability to respond more to consumer desires than Tesla (TSLA) - Get Tesla Inc Report automobiles, for example. Rivian's lineup includes the R1T truck, which starts at $67,500, and the R1S SUV, which starts at $70,000.

Bloomberg reports that the Illinois automaker has lately upped production rates. Rivian is now generating about 200 delivery-ready units per week, up from roughly 50 per week at the end of December.

Rivian has just gained the trust of two legendary hedge fund managers.

Soros Fund Management, the investment firm of legendary investor George Soros, bought about 20 million shares last quarter, according to a Securities and Exchange Commission filing. When Soros Fund Management purchased the stock, it was worth $2 billion, but it is currently worth around $1.33 billion.