Rivian Automotive is laying off 6% of its workforce in an effort to cut costs as the EV maker, already grappling with falling cash reserves and a weak economy, braces for an industry-wide price war.
The company is focusing resources on ramping up vehicle production and reaching profitability, Chief Executive R.J. Scaringe said in an email to employees on Wednesday announcing the job cuts. Reuters obtained a copy of the email.
Layoffs at Rivian come amid falling EV prices kicked off by cuts made recently by Elon Musk-led Tesla
(TSLA) and Ford Motor Co.
The price cuts by Tesla and Ford are expected to hurt EV upstarts such as Rivian, Lucid Group and British startup Arrival, which Monday said it would lay off half its staff.
Despite a blockbuster initial public offering in November 2021, Rivian’s shares have fallen nearly 90% from their peak that month to Tuesday’s close. Rivian’s stock was trading down 4% on Nasdaq on Wednesday, paring some losses after news of the job cuts.
“We must focus our resources on ramp and our path to profitability,” Scaringe said in the email, in which he apologized to employees for the necessity of the cuts.
A Rivian spokesman confirmed the email was sent, but declined further comment.
“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,” CFRA Research analyst Garrett Nelson said. “We think that is what’s behind this decision.”
Rivian is focusing on ramping up production of its R1 trucks and EDV delivery vans for top shareholder Amazon.com and launching its R2 platform, he said. “The changes we are announcing today reflect this focused roadmap.”
Irvine, California-based Rivian, which has about 14,000 employees, will let go of about 840 staff in a move that will not affect manufacturing operations at its plant in Normal, Illinois.
Rivian, which has been losing money on every vehicle it builds, narrowly missed its full-year production target of 25,000 vehicles last year as it dealt with supply-chain disruptions caused by the COVID-19 pandemic. It had previously halved that target.
To further conserve its cash, Rivian late last year shelved plans to build delivery vans in Europe with Mercedes. Rivian had earlier pushed back by a year to 2026 the planned launch of a smaller R2 vehicle family at the $5 billion plant it is building in Georgia.
Last July, Rivian, which is scheduled to report fourth-quarter results on Feb. 28, laid off staff and suspended some programs as part of a broader restructuring.
The company has a market valuation of $17.8 billion. Its cash and cash equivalents stood at $13.27 billion as of Sept. 30, 2022, down from over $18 billion a year earlier.