After a year of tough losses including the shrinking of of its market cap, Rivian's (RIVN) future appears to be challenging.
Jim Chen, Rivian's chief lobbyist who worked on state laws to get lawmakers to adopt direct-to-consumer sales by car manufacturers, is leaving the electric vehicle startup, the latest in a string of departures, according to the Wall Street Journal.
Several other senior level executives have also resigned in the past few months, including Rivian's head of supply chain and general counsel.
Similar to other startups, Rivian is cutting back on costs as it attempts to ramps up production sales of its trucks and burn through less cash.
Chen started at Rivian in 2018 and focused on selling Rivian's trucks directly to consumers instead of at dealerships, a hurdle that is common for companies only manufacturing EVs such as Tesla (TSLA).
He is expected to work through the end of February and is leaving by mutual agreement, a Rivian spokeperson told the WSJ.
Chen had a similar regulatory and policy role at Tesla starting in 2010. He left in 2016 after serving as its vice president of regulatory affairs and deputy general counsel.
Besides Chen, Rivian's head of manufacturing and chief operating officer also left within the past year.
Rivian's Financial Woes
Rivian has faced an uphill battle since it started producing trucks in 2021 and went public with a lofty valuation of $86 billion during the first day of trading.
Since the company went public, investors have been less enthusiastic and shares fell by 76%.
Last year was a tough year for the truck company - Rivian nearly missed its production target in 2022 and its shares fell by a whopping 69.7% in the past year, lowering its market cap to 16.79 billion.
Cash flow has also shrunk to $13.8 billion at the end of September. Rivian will report its earnings on Feb. 28.
Rivian also laid off 6% of its 14,000 employees last July in an effort to preserve cash.
CEO RJ Scaringe said the company delayed the launch of its cheaper R2 trucks and SUVs until 2026 so that its future plant in Georgia would have sufficient time for production.
Unlike Tesla, which slashed prices by 7-20%, enabling its customers to take advantage of the latest tax credit of $7,500 offered by the Biden administration under the Inflation Reduction Act, Rivian's trucks are more costly and do not qualify.
Both Rivian’s R1T pickup and R1S SUV sell for below the $80,000 limit, but once other features and options are added, the total cost does not meet the threshold, the company said.
Rivian had predicted that it could ramp up its production of its vehicles in 2022, but the company was beset by major disruptions related to the supply chain, which led it to halve its initial production target of 50,000 vehicles mid-year.
While Rivian lowered its goal to only produce only 25,000 vehicles over the whole year, even this lower bar could not be reached. The group only produced 24,337 vehicles.
The fourth quarter was a turning point as Rivian manufactured 10,020 vehicles at its only plant in Normal, Illinois, delivered 20,332 vehicles for the whole of 2022, including 8,054 in the fourth quarter.
In an email to employees Scaringe said Rivian could have improved its production figures if supply chain issues had not forced the company to shut down the plant for 20 days and disrupted another 50 days of production.
Bad weather also forced Rivian to shut down the plant for five more days, Scaringe said.
Shares of Rivian are up slightly by 2.54% during this month.
