Another day, another company announces it’s laying off 6 percent of employees. Today, that company is Rivian, the EV automaker that had one of the biggest IPOs of 2021 but has since struggled to hit its targets as manufacturing and supply chain problems mount.
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 electric delivery van.
According to Reuters, the layoffs are expected to effect 840 employees at the Irvine, California-based company
According to 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, which was forwarded to The Verge by a spokesperson. “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.”
It’s been a turbulent year 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 6 percent of its workforce in an attempt to refocus its business.
Rivian, which sells its vehicles at $67,500 and up, 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.
Price will remain a thorny issue for Rivian
Some configurations of Rivian’s electric truck and SUV will almost certainly be too expensive to qualify for the credit, which could depress demand. Rivian bumped up the prices on both of its models by 20 percent last year, sending its stock price tumbling and forcing Scaringe to issue a public apology.
Tesla’s price cuts are expected to hurt other EV companies, like Rivian, Lucid, and Arrival, which recently announced it was laying off 50 percent of its staff. Unlike Tesla, which earned $12.6 billion in revenue at near-17 percent operating profit margins last year, or Ford, which may have earned close to $8 billion (according to analyst estimates), Rivian isn’t currently earning anything despite the high prices of its vehicles — and isn’t expected to earn anything before 2030, according to analysts polled by S&P Global Market Intelligence.