Rivian (NASDAQ:RIVN) announced a recall of nearly 7,800 R1S and R1T electric vehicles (EVs).
The company said a software update has been deployed to fix a problem with the accelerator pedal. Customers are being urged to install the update. The recall only impacts cars made between June 2021 and October 2022.
RIVN stock fell 10% on Jan. 2 and another 3% overnight. Fourth quarter deliveries fell 10.2% below the previous quarter, to 13,972. Rivian is due to announce fourth-quarter results on Feb. 2; a loss is expected.
The shares were due to open this morning at $20.46, a market capitalization of just under $20 billion.
A 21st Century Recall
When most cars are recalled, owners need to take them to a dealer for a repair. But Rivian’s pedals are controlled by silicon chips. These can be “repaired” remotely by software. In the case of the accelerator pedal, Rivian said drivers can also avoid an incident in several ways. They can adjust the temperature in the passenger cabin, depress the brake pedal, or press the “park” button. This will keep the car from moving forward while the driver’s feet are off the accelerator.
Tesla (NASDAQ:TSLA) did a similar software recall when problems were observed in its self-driving software.
Bulls insisted the Rivian results were “better than expected.” They noted that Rivian’s stock price was rising before the news came out. Despite the recall and delivery news, Rivian stock is up almost 20% over the last year. Others noted that Tesla also faced challenges when it was 15, as it fought to scale production.
RIVN Stock: What Happens Next?
While Rivian is considered the biggest challenger to Tesla among American EV makers, its production pales in comparison to Nio (NYSE:NIO), XPeng (NASDAQ:XPEV) or Li Auto (NASDAQ:LI), also traded in New York.
Its main advantage over them is that it’s selling a large pick-up, the kind of car Americans prefer.
As of this writing, Dana Blankenhorn did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
