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Rivian Automotive (RIVN -3%) hits a pothole today after Bloomberg reported that the electric vehicle maker paused its Amazon (AMZN) delivery truck production due to part shortages. Today's announcement does not affect the production of its truck and SUV, the R1T and R1S. Also, AMZN reportedly mentioned that the issues should not have much impact. Nevertheless, it comes as another setback in a long line of hurdles RIVN has had to clear throughout its time as a publicly traded company.

• RIVN was coming off a decent quarterly report last week. While earnings estimates were missed, RIVN did reiterate its FY24 guidance, including the production of 57,000 vehicles and low-single-digit delivery growth yr/yr. A constant problem for RIVN, however, has been expenses. The company continues to lose money on every vehicle produced.
• Temporary pauses in production are nothing new at RIVN, which shut down production at its Normal, IL facility in April for a few weeks and plans to halt production again for over a month during 2H25 to upgrade equipment ahead of its 1H26 R2 launch. Still, hiccups in production, including delivery vans to AMZN, can exacerbate the company's margin woes.
• On the plus side, investors still have RIVN's joint venture with Volkswagen (VWAGY) to be excited about. As previously announced, Volkswagen invested $1.0 bln into RIVN, with up to $4.0 bln in planned additional investments. However, to earn the additional funds, RIVN must meet definitive agreements, achieve certain milestones, and receive regulatory approvals. These factors add some uncertainty over whether RIVN will ultimately receive the total $5.0 bln. Production snags only hike this uncertainty.

Shares of RIVN are up nicely from 2024 lows. However, they still trade around 35% lower this year, reflecting an overall bearish sentiment. The company's reiterated FY24 production and delivery guidance is encouraging, as is its confidence in reaching around 25% gross margins and high-teens adjusted EBITDA margins over the long run. We like that the company is focused on cutting expenses and expanding its addressable market with the upcoming launch of its lower-cost R2 model. However, while production interruptions are one thing, the currently unfavorable macroeconomic environment is another. When combining the two, RIVN has a tall hill to climb to realize the total potential investment from Volkswagen and ultimately reach its long-term financial goals.