U.S. electric car maker Rivian announces 10% layoffs

Automotive Author: EqualOcean News, Sun Chang Feb 22, 2024 12:45 PM (GMT+8)

On February 21, while releasing its fourth-quarter financial report, the American electric vehicle manufacturer Rivian(Rivian Automotive, Inc.) announced that it would suffer a loss of US$5.4 billion in 2023 and plan to lay off 10% of its employees.

Rivian RS1

The financial report stated that the company expects to produce 57,000 electric vehicles in 2024, which is far lower than the market expectation of 80,000 vehicles. The annual output will not be higher than that in 2023. After the news was released, Rivian's stock price fell 17% after the market closed that day.

Founded in 2009, Rivian currently produces autonomous and electric vehicles and is headquartered in California. Rivian raised more than $13.5 billion in financing following its initial public offering in November 2021 and was named to Time magazine's 2022 list of the 100 Most Influential Companies in March 2022. However, since the beginning of 2023, many of the company's senior executives have resigned, and the company laid off 6% of its employees in May 2023.

Rivian did not disclose the specific number of layoffs, but including salaried and hourly employees, the company currently has a total of 16,700 employees. The layoffs are expected to affect more than 1,000 employees.

Regarding losses in 2023, Rivian CEO RJ Scaringe explained, "Our business is facing a challenging macroeconomic environment—including historically high interest rates and geopolitical uncertainty—and we need to make purposeful changes now to ensure our promising future," He believes that the recent macroeconomic environment makes consumers more conscious and price-sensitive, which will also affect the production and sales of Rivian electric vehicles.

In response, Rivian this month launched a lower-end version of its current car that's $3,100 cheaper. Still, Rivian said it expects deliveries in the current quarter to be 10-15% lower than in the already weak fourth quarter, and that its bookings have declined due to factors such as cancellations. At the same time, Rivian has been working to reduce its cash burn by renegotiating supply contracts and manufacturing some components in-house. The company said it expects profit margins to improve by the end of the year, in addition to cost benefits from the production line upgrade.

Rivian will launch the second-generation R2 model next month, a smaller and more affordable compact SUV. Rivian investor Vitaly Golomb said the R2 SUV "has a lot of advantages" The company plans to start production in 2026.