Rivian sinks after the EV maker recalls 13,000 vehicles for potential steering-safety issue

• Rivian dropped as much as 11% Monday after EV maker said it was voluntarily recalling 13,000 vehicles.

• The company's CEO said that fastener "may not have been sufficiently torqued" during production.

• The recall affects nearly all of the vehicles Rivian has delivered year to date.

Rivian shares sharply dropped Monday after the electric vehicle maker said it was acting with "urgency" in voluntarily recalling thousands of vehicles over a possible steering-related hazard.

The company late Friday recalled 13,000 of its vehicles after a structural manufacturing error was discovered in seven cars. The fastener to the front steering knuckle "may not have been sufficiently torqued" when the vehicles were manufactured, Chief Executive Officer RJ Scaringe wrote in an email to staff that was reviewed by Insider.

The company's stock lost as much as 11% when it reached $30.16, the lowest price since mid-July, then pared the decline to 10%. The stock this year has tumbled by about 70%.

"In rare circumstances, the fastener has loosened fully," Scaringe wrote. "I want to reiterate that this is extremely rare, but it does reinforce why we are acting with urgency and caution."

A spokesperson for Rivian told Insider that vehicle exams at company service centers would be free and that the cost to perform a change was "not material." Exams should take a few minutes to perform.

"[This] is a black eye for Rivian as the company is just now starting to hit its stride on reaching its 25k production target for 2022 and has roughly 100k+ reservations in hand for its EV sport utility vehicles with clear momentum into 2023," wrote Wedbush analyst Dan Ives on Monday, noting that the Tesla challenger has delivered 14,3000 vehicles year to date.

"The last thing any Rivian investor wants to see in a shaky market is a broad recall that hurts the brand and gives some lingering credibility issues to production going forward," he said. The recall is a "speed bump" in Rivian's growth story, Ives added in reiterating its outperform rating and $45 price target on the company.

The recall shouldn't impact Rivian's production or delivery goals for 2022, he said.

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