Pricing pressures multiply, EV maker Rivian plans to lay off 10% of its workforce

According to tech blog TechCrunch, Rivian is laying off 10% of its workforce in an attempt to cut costs in an increasingly tough electric vehicle market, putting more pressure on its future more affordable electric vehicle, the R2. Rivian may launch the R2 electric car on March 7, 2024, a mass-market model with a lower starting price.

The company's founder and CEO, RJ Scaringe, said in a company-wide email that a limited number of non-manufacturing hourly workers will also be cut. He noted that the company is grappling with significant losses and is working to streamline operations to ensure a sustainable future.

This is the third round of layoffs at the electric vehicle company since Rivian laid off 6% of its workforce in July 2022. The company's last layoff occurred in February 2023, affecting 6% of its workforce.

"We made significant steps to improve efficiency in 2023 compared to the fourth quarter of 2023 and the fourth quarter of 2022, with gross profit per vehicle improving by about $81,000," Scaringe said on Wednesday's earnings call. ”

International e-commerce understands that Rivian produces all-electric pickups, SUVs and commercial vans. The company reported a loss of more than $43,000 per vehicle delivered in the fourth quarter of 2023.

The company more than doubled the number of electric vehicles produced and shipped in 2023 compared to 2022. But Rivian still lost more than $5.4 billion this year. The company plans to produce 57,000 vehicles in 2024, a figure well below analysts' forecasts of 81,700 due to necessary factory upgrades and slowing demand for electric vehicles affected by rising interest rates.

In addition, the company plans to temporarily close its only plant in Normal, Illinois, for a production line upgrade aimed at increasing productivity by about 30%.

Rivian said it expects to lose about $2.7 billion in adjusted 2024 and decided to "continue to implement a company-wide cost transformation plan." This includes changing the design and engineering of vehicles, improving manufacturing efficiency, and laying off more employees. The company said it expects capital expenditures to reach $1.75 billion in 2024, up from $1.03 billion last year, driven by additional investments in its next-generation technology, future Georgia plant and listed business.

Affected by the negative news of production plans and profit loss guidance and layoffs, Rivian's US stock price fell more than 15.6% in after-hours trading on Wednesday (21st).

"Our business faces a challenging macroeconomic environment, including historically high interest rates and geopolitical uncertainty, and we now need to make targeted changes to ensure our promising future," Scaringe said in an email to the company. "We must strategically prioritize our business growth areas, including the launch of Peregrine and R2 and investing in our go-to-market capabilities."

Rivian reported fourth-quarter revenue of $1.3 billion on Wednesday, more than double the $663 million in the same period in 2022. Rivian reported full-year revenue of $4.4 billion, up from $1.66 billion in 2022. Most of the revenue comes from the sale of its electric vehicles. The company received approximately $39 million from the sale of regulatory credit in the fourth quarter and approximately $73 million for the full year.