American Electric Vehicle (EV) Manufacturer and Automotive technology company, Rivian, has slashed its workforce by 10%, amid an increasingly competitive EV market and macroeconomic challenges.
The company made this disclosure during its fourth quarter (Q4) earnings report. Speaking on the layoff of some part of its workforce, founder and chief executive of the company RJ Scaringe in an email sent to employees disclosed that the company is facing a challenging macroeconomic environment.
In his words,
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“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”.
Due to these several challenges, Rivian has carried out several rounds of layoffs in its short history. The company let go 6 percent of its workforce both in July 2022 and May 2023. This current round of layoffs is expected to affect over a thousand workers at the Irvine, California-based company, which has a combined workforce of 16,700 salaried and hourly employees.
A spokesperson said the layoffs would mostly affect the company’s salaried employees, as well as a limited number of hourly non-manufacturing workers.
During the fourth quarter earnings report, the company said that it would likely not produce any more vehicles than it did in 2023. Rivian disclosed tights it made 57,232 vehicles in 2023, of which 50,122 were delivered. It expects to produce 57,000 vehicles in 2024, roughly the same number it made in 2023.
Scaringe boasted that Rivian produced the best-selling electric vehicle over $70,000 last year. In its shareholder letter, Rivian said it expected deliveries to be the same this year although it expects to achieve a “modest gross profit” by the end of 2024.
During an earnings call with investors, Rivian’s CEO said the company was focused on reducing costs, most notably by shrinking the number of electronic control units (EUs) found in each vehicle. He also talked up the imminent release of R2, despite the fact that the vehicle won’t go into production until late 2026.
“We’re in a very interesting moment in time where there is a lack of choice of highly compelling EV products in that $45 to $55,000 price range,” he said.
Rivian will unveil its new smaller and less expensive consumer models, the R2S SUV and R2T pickup, in March, but those vehicles are not expected to be in production until 2026.
On the broader EV market, it is worth noting that sales of electric vehicles have not expanded as rapidly in the past year as they had before, and automakers have blamed high-interest rates for some of that slow-down.
Coupled with pressure from Chinese competitors, major U.S. and European auto manufacturers are pushing hard to cut electric vehicle costs so they can have price tags and profit margins.
This has spurred giant EV maker Tesla to aggressively cut prices of its vehicles, which has put pressure on other automakers. Ford, for instance, recently announced it was deeply cutting prices of its Mustang Mach-E, a direct competitor to the Tesla Model Y SUV.
The arrival of lower-cost Chinese EVs has no doubt added new impetus to European automakers’ ongoing efforts to develop more affordable models.
Rivian to cut 10% of staff – LinkedIn News
Slowing demand for electric vehicles is hitting Rivian. The company announced plans to eliminate 10% of its salaried jobs, while production this year is expected to match that of 2023 levels at 57,000 vehicles, missing analysts’ estimates. Rivian blames “economic and geopolitical uncertainties and pressures, most notably the impact of historically high interest rates.” The electric truck maker has been trying to challenge Tesla, but has faced supply-chain issues and related problems, as it works to boost production and reduce losses. Rivan laid off workers last year and in 2022.
- Major automakers, including GM and Ford, have been walking back investments in “battery factories and other facilities” tied to electric vehicle production, notes The Wall Street Journal.
- Rivian rival Lucid said it was only increasing its EV output by 500 vehicles this year.
- EV sales in the U.S. rose 47% last year, compared to about 70% growth in 2022.