Rivian is laying off 6 percent of its employees in an attempt to cut costs amid dwindling cash reserves and a weakening economy – not to mention the industry-wide price war that has just begun.
In an email to employees seen by Reuters, Rivian CEO RJ Scaringe announced the job cuts, explaining that the company is focusing resources on ramping up vehicle production and becoming profitable.
The layoffs come as EV prices are falling in the wake of cuts made recently by Tesla and Ford in the United States. The price cuts are expected to affect EV startups like Rivian and Lucid, which are a long way from becoming profitable despite selling their vehicles at prices nearing $100,000 or well above (in Lucid's case).
"We must focus our resources on ramp and our path to profitability," RJ Scaringe said in the email; he also apologized to employees for the necessity of the cuts. A Rivian spokesman confirmed the email was sent, but declined to make further comments.
The CEO added that Rivian is focusing on ramping up production of its R1 trucks and EDV delivery vans for Amazon, as well as launching the R2 platform. "The changes we are announcing today reflect this focused roadmap,” Scaringe said.
Gallery: Rivian Manufacturing Plant In Normal, IL
Rivian will let go about 840 of its 14,000 employees in a move that will not affect manufacturing operations at its plant in Normal, Illinois. The company said it recently added a second shift at the factory, which will allow it to continue to ramp production.
Rivian built just over 25,000 vehicles in 2022, its first full year of production. The plant recently managed to achieve a record of 200 vehicles produced in a single day.
Despite these positive developments, Rivian is still losing money on every vehicle it builds. In the third quarter of 2022, the company was spending as much as three times what it charged per vehicle – and that was before taking into account the money spent on service, sales and charging infrastructure.
Luckily, Rivian still had $13.27 billion in cash and cash equivalents as of September 30, 2022, thanks to the blockbuster initial public offering (IPO) in November 2021. However, the cash reserves were down from over $18 billion a year earlier.
To further preserve its cash, Rivian late last year shelved plans to build delivery vans in Europe with Mercedes-Benz. Earlier on, the company also pushed back the planned launch of a smaller R2 vehicle series to 2026. Rivian's shares have fallen nearly 90 percent from their peak in November 2021 to January 31's close.
