Rivian Faces Tough Times, Announces Layoffs

Rivian, the electric vehicle (EV) company, is tightening its belt once again. Founder and CEO RJ Scaringe revealed in a companywide email that the company is axing 10% of its salaried staff and a limited number of non-manufacturing hourly workers. This move aims to trim expenses amidst a challenging market for EVs, particularly for its forthcoming affordable model, the R2.

This marks the third round of layoffs for Rivian since July 2022, when it initially slashed 6% of its workforce, followed by another 6% reduction in February 2023. Despite more than doubling its EV production and shipments in 2023 compared to 2022, Rivian still ended up with over $5.4 billion in losses for the year.

Looking ahead, Rivian expects to produce around 57,000 electric vehicles throughout 2024. To achieve this, the company is planning to temporarily shut down its sole factory in Normal, Illinois, for upgrades aimed at boosting production rates by approximately 30%.

However, even with these efforts, Rivian foresees another hefty loss of about $2.7 billion in 2024. Consequently, it is intensifying its company-wide cost-saving measures, which include revamping vehicle design and engineering, streamlining manufacturing processes, and, unfortunately, completing more layoffs.

In terms of financials, Rivian reported a fourth-quarter revenue of $1.3 billion, doubling the previous year’s figure. Its full-year revenue also soared to $4.4 billion, driven mainly by EV sales. Despite the revenue growth, the company reported a net loss of $1.5 billion for the fourth quarter, albeit a slight improvement from the same period in 2022.

Rivian has been striving to reduce losses per vehicle, so far with mixed success. While it has narrowed down the loss per unit delivered to $43,372 in Q4 2023, there’s still a considerable gap to bridge before reaching profitability.

Scaringe emphasized the need for urgency and efficiency during an earnings call, highlighting the team’s commitment to enhancing operational effectiveness as they navigate through challenging times.

The announcement of layoffs and the company’s financial outlook have had a significant impact on Rivian’s stock, with shares plummeting more than 15.6% in after-hours trading.

As Rivian braces for what lies ahead in an uncertain economic landscape, its focus remains on strategic growth areas, including the launch of new models like the Peregrine and R2, along with investments in enhancing its market reach.