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George Soros Backs Bet on Rivian as Ford Delivers Bad News

The upstart EV manufacturer has just confirmed its production target of 25,000 vehicles in 2022.
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Rivian  (RIVN) - Get Rivian Automotive, Inc. Class A Report got scared but the electric vehicle maker made up for it well. 

The young manufacturer of electric SUVs and pickups has just cleared some of the many doubts hanging over its short-term future. 

The Irvine, Calif.-based company confirmed its production target of 25,000 vehicles in 2022, despite supply chain disruptions, chip shortages and soaring raw material prices. These problems have made it difficult to increase production rates.

"Based on our latest understanding of the supply chain environment, we reaffirm the annual guidance provided during our fourth quarter and fiscal year 2021 earnings call of 25,000 total units of production," the company said in a letter to its shareholders.

As of May 9, the carmaker has produced ~5,000 vehicles.

"Supply chain continues to be the bottleneck of our production. This challenge has continued across a small handful of technical components such as semiconductors, as well as a few non-semiconductor components," Rivian explained.

An Affordable Midsize Electric SUV

"Since March 31, 2022, we have been forced to stop production for longer periods than anticipated, resulting in approximately a quarter of the planned production time being lost due to supplier constraints."

But "encouragingly, as we demonstrate our production ramp, our suppliers are leaning in to help ensure we can achieve our targets," the company added.

kbb elec R1T-Sedona Rivian

Rivian also said it ended the first quarter with $17 billion in cash, which seems sufficient to launch an affordable midsize SUV, R2, in a new plant.

"We have optimized our product roadmap and associated operating expenses to ensure we have a path to launch R2 in Georgia in 2025 with our current cash on hand," the company explained.

Rivian signed an agreement with authorities in the U.S. state of Georgia in early May. This agreement will enable the carmaker to accelerate the construction of a $5 billion factory east of Atlanta. That'll be the second vehicle-production site for the company after Normal, Ill.

Construction is scheduled to begin this summer, with the first vehicles expected to roll off the line in 2024. Once manufacturing operations are fully ramped up, the facility will be able to produce as many as 400,000 vehicles a year.

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The agreement will also give Rivian, which was founded in 2009 and went public in 2021, $1.5 billion in public subsidies from Georgia. The carmaker currently produces three vehicles in its factory in Normal: the R1T electric pickup, the R1S electric SUV, and the RCV electric commercial van.

As of May 9, Rivian recorded over 90,000 net R1T preorders from consumers in the U.S. and Canada, including 10,000 preorders since its price increases in March, with an average price of over $93,000, the company said.

These numbers show that demand for Rivian vehicles remains strong.

Ford Is Selling, Soros Is Buying

Rivian shares, which had lost 78% of their value to $22.79 since January before the announcements on May 11, have since gained 29.61% to $26.70 in two trading sessions. 

This did not, however, prevent Ford  (F) - Get Ford Motor Company Report, one of Rivian's major shareholders, from selling additional shares. In a document filed, on the evening of May 13, with the Securities and Exchange Commission, the legacy carmaker indicated that it sold 7 million Rivian shares the same day at a price of $26.88. Ford now owns only 86.95 million Rivian shares. 

This is the second time in less than a week that Ford has sold Rivian shares. On May 9, the auto giant sold 8 million Rivian shares at a price of $26.90.

After increasing in value in 2021, Ford's stake in Rivian has fallen sharply since January, causing major losses for the automaker. Ford’s stake in Rivian was valued at $5.1 billion on March 31, down more than half from $10.6 billion at the end of 2021, the company said.

Ford competes with Rivian, with the all-electric pickup F-150 Lightning.

Rivian Lead

If Ford sells, other Rivian shareholders maintain their confidence in it. This is the case of the e-commerce giant Amazon  (AMZN) - Get Amazon.com, Inc. Report, which keeps its 17.74% stake intact as of Dec. 31.

"Rivian is an important partner for Amazon, and we are excited about the future," a spokesperson said in an emailed statement. "Putting 100,000 electric delivery vehicles on the road by 2030 is no small feat, and we remain committed to working with Rivian to make it a reality.”

The legendary investor George Soros has also just given Rivian a great mark of confidence. Indeed, Soros Fund Management has increased its stake in the automotive group. 

The firm held nearly 20 million Rivian shares -- 19,835,761 -- as of Dec. 31 valued at $2 billion. But as of March 31, Soros Fund Management has purchased just over 6 million additional Rivian shares -- 6,045,000 -- according to a May 13 filing with the SEC. 

In all, the billionaire's fund owns just over 25.88 million Rivian shares, valued at just over $691 million at the closing Rivian share price on May 13.