Rivian cuts workforce by 10%, lower EV production projections

Rivian, the electric vehicle (EV) manufacturer, is set to unveil its much-anticipated R2 series on March 7. However, the company is facing challenges as it announces a 10 percent reduction in its salaried workforce, sending its shares tumbling by 17 percent. Rivian also disclosed that it anticipates producing fewer EVs this year than analysts had initially projected.

During the fourth-quarter earnings call on Wednesday, CEO R.J. Scaringe addressed the workforce reduction, attributing it to “challenging macro-economic conditions,” including the impact of historically high-interest rates affecting monthly vehicle payments.

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“Our business is not immune to existing economic and geopolitical uncertainties, most notably the impact of historically high-interest rates, which has negatively impacted demand,” explained Scaringe.

Despite the job cuts, Scaringe reaffirmed Rivian’s commitment to the electrification of the automotive industry. This reduction in the workforce is a cost-saving measure and follows similar cuts made in 2023 and 2022. The company reported a fourth-quarter net loss of $1.52 billion, an improvement from the $1.72 billion loss recorded in the same quarter the previous year.

Rivian’s production projections for 2024 stand at 57,000 vehicles, the same as in 2023. Analysts, however, had anticipated a higher production figure of over 81,000 vehicles for this year. The company also predicts an adjusted loss of $2.7 billion, citing the impact of historically high-interest rates. Additionally, a production shutdown is planned for several weeks in 2024 to upgrade the production line, aiming for increased efficiency and reduced costs.

The upcoming R2 model, set to be revealed on March 7, is crucial for Rivian’s future. The EV will be underpinned by a new platform with improved technology. However, production is not slated to begin until 2026 at a new $5 billion factory in Georgia. Until then, Rivian will rely on sales of its existing R1S and R1T models to sustain its operations.

“R2 represents the essence of our brand while targeting the significant midsize SUV segment, a massive market with limited compelling EV options beyond Tesla,” said Scaringe during the earnings call.

While the R2’s unveiling is imminent, customers will have to wait until 2026 before the model hits the production line, posing a challenge for Rivian to sustain production and sales in the interim.