The layoffs come as Rivian works to turnaround its struggling business, six months after announcing a drastic reorganization in an effort to turn around its operation. Rivian’s layoffs bring the company’s headcount down to about 1,000 employees from over 1,500 at the beginning of 2019.
Rumors about layoffs at Rivian have been swirling for weeks, and the company has finally confirmed the cuts. The memo leaked to Reuters says that up to 130 employees will be let go across all departments – from engineering and marketing down to support. Rivian is hoping to consolidate its activities across multiple offices, but the impact of these layoffs on the company’s future remains to be seen.
Despite the layoffs, Rivian has maintained its positioning as a clean energy technology company. The memo cited increased investment in developing lithium ion battery technology and electric car platforms, among other initiatives.
The decision to eliminate manufacturing jobs at Rivian Inc.’s Normal, Illinois factory comes as the electric sports car maker grapples with a weakening economy and pricing pressure from Tesla and other automakers. While the cuts won’t affect production of the company’s Mission E models, they will reduce operating costs in what has been an increasingly difficult market for automakers.
In the memo, Scaringe said that to deliver over the long-term, they will focus their resources on ramp and their path to profitability while ensuring they have the right set of future products, services and technology that will continue to challenge convention. He stated that in 2022, they took steps to focus their product portfolio and drive a lower cost structure. Continuing to improve their operating efficiency on their path to profitability is a core objective and requires them to concentrate their investments and resources on the highest impact parts of their business. This includes the continued ramp of R1 and EDV production as well as the launch of their high-volume R2 platform. With these changes, it seems that Scaringe is focused on continuing down its current path towards profitability while also developing new products for future innovation.
The industry has dubbed this an EV price war, with both Tesla and Ford discounting their vehicles in order to draw more people into the market. This strategy has had some success, as sales have been steady despite the discounts. However, if prices continue to drop too low, it may cause people to switch back to cars that typically last longer and don’t require charging.
With the Ford F-150 Lightning price still hovering above $40,000, Rivian may have a hard time convincing consumers to switch to one of its all-electric trucks. However, should other lower priced options become available on the market, Rivian’s premium vehicles could suffer sales declines.