Rivian Plans 6 Percent Workforce Reduction, Business ‘Bleeding Cash’: Report

A Rivian electric pickup truck sits in a parking lot at a Rivian service center in San Francisco, Calif., on May 09, 2022. Justin Sullivan/Getty Images

American electric vehicle manufacturer Rivian plans to cut down its workforce in an attempt to control costs as the company battles falling cash reserves and a potential price war with competitors.

Rivian intends to lay off 6 percent of its workforce, CEO R.J. Scaringe said in an email to employees on Wednesday. Rivian is estimated to have 14,000 employees. While apologizing to staff for implementing the job cuts, Scaringe insisted that the company needs to prioritize profitability and production. He did not provide a timeline of when the layoffs would take place. The firm intends to hold a meeting for workers on Friday to discuss the matter.

“Continuing to improve our operating efficiency on our path to profitability is a core objective and requires us to concentrate our investments and resources on the highest impact parts of our business,” Scaringe wrote in the email seen by The Epoch Times. “The changes we are announcing today reflect this focused roadmap.”

California-based Rivian has been losing money on the cars it manufactures. According to a report by Reuters, the cost of goods sold for Rivian was around $220,000 per car versus the average selling price of $81,000 in the third quarter.

The company has been forced to reduce its production target. In a bid to conserve cash, Rivian shelved plans to build delivery vans together with Mercedes in Europe.

“They’re bleeding cash and would like to grow at a much faster rate, but they continue to struggle with their EV production ramp and have been unable to meaningfully drive down unit costs … We think that is what’s behind this decision,” said CFRA research analyst Garrett Nelson about the job cuts, according to the outlet.

Rivian Plans

Rivian is currently aiming to ramp up the production of its R1S and R1T vehicles in an attempt to boost profitability. The firm is also making delivery vans for Amazon. It is planning on manufacturing more affordable R2 electric trucks.

Rivian intends to produce these trucks in large numbers, and is constructing a $5 billion factory in Georgia for manufacturing. However, shipping of R2 trucks won’t begin until 2026.

Rivian had previously announced layoffs in July last year, when it declared that 6 percent of employees would be terminated. That layoff was triggered due to concerns about a rapidly changing economy and worries about inflation.

Since its initial public offering (IPO) in November 2022, Rivian’s share price has fallen by more than 83 percent as of Feb. 2. Meanwhile, Rivian is gearing up for an electric vehicle (EV) price war against brands like Tesla and Ford Motors that have announced price reductions in recent weeks.

Tesla and Ford Price Cuts

In mid-January, Tesla announced cutting down the price of some of its EVs by up to 20 percent. The company reduced the price of its base Model 3 car by $3,000, the performance model by $9,000, and Model Y by around $13,000.

In a press release on Jan. 30, Ford announced price cuts for the models of its top electric vehicle, the Mach-E, with reductions in the range of $900 to $5,900.

“We are not going to cede ground to anyone. We are producing more EVs to reduce customer wait times, offering competitive pricing, and working to create an ownership experience that is second to none,” said Marin Gjaja, chief customer officer, Ford Model e.

“Our customers are at the center of everything we do—as we continue to build thrilling and exciting electric vehicles, we will continue to push the boundaries to make EVs more accessible for everybody.”

In addition to Rivian, other EV upstarts are also expected to be affected by the price cuts. Some of the startups might not be in a position to engage in a competition of price as they struggle with the high cost of raw materials and production. Moreover, these firms do not have the advantage of large output like Tesla.