Rivian Cuts Workforce, Announces Lower Production; Shares Tumble

A Rivian electric pickup truck sits in a parking lot at a Rivian service center in South San Francisco on May 9, 2022. Justin Sullivan/Getty Images

Rivian will lay off 10 percent of its salaried workforce amid “challenging” economic conditions, the Amazon-backed electric truck maker stated on Feb. 21, sending its share price tumbling.

Along with the layoffs, Rivian also announced that it expects to produce only 57,000 vehicles in 2024, far below the 81,700 units estimated by analysts who were polled by investment research firm Visible Alpha.

The company stated that it employed 16,700 workers in total, which includes both salaried and hourly workers, it told Business Insider. In 2023, Rivian cut its workforce by 6 percent, which followed another 6 percent staff reduction implemented in the prior year.

Following the announcement of workforce reductions and lower-than-expected 2024 production numbers, Rivian shares declined. At the end of trading on Feb. 21, the firm’s shares were at $15.39. By the end of the day on Feb. 23, shares fell to $10.07, a decline of almost 35 percent in just two days.

Year-to-date, shares have fallen by more than 52 percent. Rivian’s $10.07 stock price is more than 90 percent lower than the nearly $130 it was priced at back in November 2021.

The EV maker’s share price collapse comes as many electric vehicle makers are readjusting expectations in the face of softer demand.

A Jan. 4 survey report from KPMG that polled 1,000 auto executives from 30 nations found that confidence in electric vehicles among automakers in the United States and other countries has dipped, with many expressing concerns that their large bets on EVs may take longer to pay off.

“Just a year ago, executives were excited about the prospects for transforming the industry with new kinds of cars. Now, they remain optimistic, but they are more sober about how difficult it will be to manage the transition and preserve or increase profits,” the report reads.

While several new models are flooding the market, demand for the vehicles has “weakened,” KPMG stated, while noting that some players may end up under “extreme pressure” as competition heats up.

Rivian founder and CEO R.J. Scaringe acknowledged in an earnings statement that the company will be facing “challenging macro-economic conditions” in the short term. As such, the firm is “aggressively focused on driving cost efficiency throughout the business.”

Dan Ives, managing director and senior equity analyst at Wedbush Securities, told the Los Angeles Times that Rivian’s vehicle projections for this year cast a “dark cloud around the story.”

“Cutting costs and headcount to reflect a softer environment and production issues ... Rivian went from a Cinderella story to a horror show.”

UBS Downgrade

Rivian was also hit with a rating downgrade on Feb. 23, with UBS cutting the stock to “Sell” from “Buy.”

“We had been optimistic on [Rivian’s] product and brand ultimately winning out,” UBS analysts said in a note, according to Dow Jones Wire. However, “more tepid” demand for EVs now threatens the company, they wrote. The analysts cut their price target to $8 from $24.

Rivian’s current EV offerings, a full-size SUV and a pickup truck, start at about $70,000. UBS analysts noted that Rivian EVs are “high priced” and that there are risks to the company’s pricing and volume.

The EV maker plans to unveil its cheaper, next-generation EV R2, which is expected to cost $45,000, next month. However, UBS isn’t convinced that it will have an immediate positive effect on the stock.

“Further out, [Rivian] growth is reliant on R2 ... but we don’t believe production starts until late 2026, so meaningful financial impact isn’t until 2027—a long time to wait for a product the stock hinges on,” the note reads.

A survey by Gallup last year shows that most Americans aren’t “completely sold” on EVs. Among poll respondents, only 12 percent said they were “seriously considering” buying an EV. While 43 percent said they “might consider” such a purchase in the future, 41 percent said they “would not buy” an EV.

Speaking to the Los Angeles Times, Jessica Caldwell, head of insights at Edmunds, said that “mass-market buyers have less income and a lot more questions.”

“We’ve been living in this wave of ‘Oh, EVs are great, they’re going to continue the accelerated growth and only going to get better,’ and now it seems like they’re (EV makers) hitting this reality point,” she said.

Even though EV sales have seen growth over the past years, mass-market customers are not too taken with them due to issues such as battery life, access to reliable charging stations, and vehicle range, according to Ms. Caldwell.

“It’s not always easy to set up a charger where you live. ... At the end of the day, for EVs to take off and become mass market, there needs to be major growth in infrastructure,” she said.