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Rivian (RIVN) Expects EV Battery Shortage to Eclipse Chip Crisis

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Rivian Automotive RIVN has alerted that a shortage of electric-car batteries might soon eclipse the issues rising from the computer chip scarcity that has been battering the automotive industry. Rivian’s CEO recently commented on the situation.

Over the past two years, the chip deficiency has led companies to reduce production and trim electronic features like touch screens and seat heaters.

The situation has made automakers, looking to transition to electric cars, concerned about the upcoming dearth of EV batteries and the metals required to produce the lithium-ion batteries.

Rivian’s CEO opined that 90% to 95% of the battery supply chain does not exist presently and the global cell production represents a mere 10% of the requirement in the coming decade. Rivian's strategy for securing battery cells is diversification of suppliers and building up its capacity to create its own battery cells.

Although RIVN is a newcomer in the electric space domain that started off well, the company is limping to run at full capacity. It forecasts that it will operate at just 50% capacity this year, constrained by a shortage in key parts. The carmaker has cut its production targets for 2022 by half as a result. The company, however, restated its pledge to roll out 25,000 vehicles this year.

The semiconductor crisis is only the tip of the iceberg. A more grim situation looms ahead in the production of battery cells over the next two decades that the auto industry has to brace for.

Zacks Rank & Key Picks

RIVN currently carries a Zacks Rank #3 (Hold).

Better-ranked players in the auto space include BRP Group, Inc. DOOO, sporting a Zacks Rank #1 (Strong Buy), and Visteon Corporation VC and CNH Industrial CNHI, carrying a Zacks Rank #2 (Buy), currently. You can see the complete list of today’s Zacks #1 Rank stocks here.

BRP Group has an expected earnings growth rate of 9.1% for fiscal 2023. The Zacks Consensus Estimate for current-year earnings has been revised around 7.9% upward in the past 60 days.

BRP Group’s earnings beat the Zacks Consensus Estimate in all of the trailing four quarters. DOOO pulled off a trailing four-quarter earnings surprise of 68%, on average. The stock has declined 8.2% over the past year.

Visteon has an expected earnings growth rate of 104.3% for the current year. The Zacks Consensus Estimate for current-year earnings has been revised around 9.4% upward in the past 60 days.

Visteon’s earnings beat the Zacks Consensus Estimate in two of the trailing four quarters and missed in the remaining. VC pulled off a trailing four-quarter earnings surprise of 209.9%, on average. The stock has declined 14.2% over the past year.

CNH Industrial has an expected earnings growth rate of 2.2% for the current year. The Zacks Consensus Estimate for current-year earnings has been revised around 0.73% upward in the past 60 days.

CNH Industrial’s earnings beat the Zacks Consensus Estimate in all of the trailing four quarters. CNHI pulled off a trailing four-quarter earnings surprise of 63%, on average. The stock has risen 6.3% over the past year.


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