Rivian Automotive Inc (NASDAQ:RIVN) shares ran into a speed bump Monday morning after the company announced a voluntary recall of most of its EVs.
What Happened: According to a letter CEO R.J. Scaringe sent to customers late Friday, Rivian recalled about 13,000 of its electric vehicles after the company identified steering fastener issues.
"While we’ve only seen seven reports potentially related to this issue across our fleet to date, even one is too many," Scaringe said in the letter.
In rare circumstances, the fastener could come completely loose and cause the loss of steering control, the company said. The recall will allow Rivian to double-check that the fastener in its vehicles’ steering assembly is properly tightened.
The recall included all Rivian R1T pickups and R1S SUVs produced through late September, as well as a few of the vans made for Amazon.com, Inc. (NASDAQ:AMZN).
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Since starting production late last year, Rivian produced about 15,300 vehicles. The company recently said it produced 7,363 vehicles in the third quarter and remained on track to deliver on its previously provided annual production guidance of 25,000.
Why It Matters: Wedbush analyst Dan Ives weighed in on Monday about the recall in a new note to clients, calling it a "black eye" for Rivian.
Although the recall was specifically related to a structural issue, "which should be easily resolved in vehicles once brought in for service," it doesn't look good for the startup who was just beginning to ramp up production efforts, Ives said.
Still, the recall was just a "slight step back" for Rivian, the Wedbush analyst said.
"It's a speed bump in the Rivian growth story in our opinion ... we maintain our Outperform and $45 price target and do not believe this recall impacts the company's 2022 production or delivery goals," Ives said.
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CNBC's Phil LeBeau expressed a similar sentiment Monday on CNBC's "Squawk On The Street."
"It is significant. I'm not trying to diminish it. But at the same time keep in mind there are no accidents involved, there are no deaths or fatalities," LeBeau said.
He explained that the recall required Rivian to simply tighten a fastener and the company believed it can complete the recall within a month.
"The bad news is this raises questions about whether or not these guys can ramp up their manufacturing and do it in a smooth fashion, not only in the fourth quarter but over the next couple of years," he said.
RIVN Price Action: Rivian has a 52-week high of $179.47 and a 52-week low of $19.25.
The stock was down 9.78% at $30.53 at time of publication Monday, according to Benzinga Pro.
Photo: Courtesy of Rivian.
