Rivian announced its losses in late 2022, missing the target of making 25,000 vehicles. The automaker struggles with supply chain issues delaying production. Now it announces its second layoff in less than 7 months where 6% of its employees will be cut off.
The layoffs also come amid a looming EV price war, in which Tesla and Ford have lowered prices on their flagships vehicles. Other automakers have said they are not ready to slash prices on their own EVs, but analysts predict that more companies will follow. Rivian currently sells three models: the R1T truck and the R1S SUV, as well as the EDV, which stands for the electric delivery van. As stated by Reuters, the layoffs are expected to affect 840 employees at the Irvine, California-based company, which has a total workforce of 14,000 employees. Workers based at Rivian’s Normal, Illinois-based plant will not be affected, the company said.
In a memo to employees, Rivian CEO RJ Scaringe said the layoffs are part of a broader cost-cutting effort meant to help put the company on a path to profitability. “In 2022, we took steps to focus our product portfolio and drive a lower cost structure,” Scaringe said in the memo, according to the Verge. “Continuing to improve our operating efficiency on our path to profitability is a core objective and requires us to concentrate our investments and resources on the highest impact parts of our business.”
Rivian IPO
This year has been turbulent for Rivian, which saw the high from its 2021 IPO fade quickly as it confronted many of the challenges of auto manufacturing. It narrowly missed its full-year target of delivering 25,000 vehicles and has seen its stock price plummet over 75 percent over the course of the year. This isn’t the first time Rivian has laid off employees, nor is it the first time that it specifically laid off the same percentage of workers. Last July, the company said it would let go of 6 percent of its workforce in an attempt to refocus its business.
The automaker sells its vehicles at $67,500 and up. It has yet to say whether it plans to slash prices in response to Tesla and others. But the company’s main problem isn’t demand but issues around supply, as it continues to ramp up production to get vehicles to customers in a timely fashion. Price will remain a thorny issue for Rivian. Under the EV tax credits contained in the Inflation Reduction Act, pricier EVs (sedans that are over $55,000 and pickup trucks and SUVs over $80,000) would be ineligible for the $7,500 tax credit.