Rivian cuts 1% of workforce in second round of layoffs this year

4:44 pm Thursday, April 18th, 2024

By Abhirup Roy and Akash Sriram

SAN FRANCISCO (Reuters) -Electric vehicle maker Rivian said on Wednesday it cut about 1% of its workforce – the second round of job cuts this year – as it reduces cost amid a broader slowdown in EV demand.

Shares of Rivian, up as much as 3.4% on Wednesday, pared almost all of its gains after the news. The shares closed up 1% on Thursday.

“This was a difficult decision, but a necessary one to support our goal to be gross margin positive by the end of the year,” the maker of R1S SUVs and R1T pickup trucks said in an email to Reuters, adding that the cuts were focused on staff supporting the business.

The move follows a 10% layoff at Rivian in February when the company disappointed investors with a lower-than-expected 2024 production forecast. As of Dec. 31, Rivian had 16,790 employees across North America and Europe, according to its annual report.

Reducing cost is crucial for Rivian as high interest rates to rein in inflation have hurt consumer demand for EVs that are typically more expensive than their gas-powered counterparts.

Rivian has been reducing costs by building some parts in house and re-negotiating supply contracts. It has also shut down its production line for an upgrade to increase efficiency and help reduce cost.

The company last month introduced its smaller, less expensive R2 SUVs and said it would start producing them at its existing U.S. factory instead of a planned new plant, to hasten deliveries in the first half of 2026 and save the company more than $2 billion.

But shares of Rivian hit a record low on Tuesday amid intensifying concerns around the souring consumer EV sentiment. Companies that bet billions of dollars on an all-electric future are now cutting prices to stoke demand and reducing costs to limit cash burn.

Market leader Tesla is laying off more than 10% of its global workforce, an internal memo seen by Reuters on Monday showed. Ford cut prices of some variants of its F-150 Lightning electric pickup truck by as much as $5,500, the Detroit automaker said last week.

Shares in Rivian, which is set to report first-quarter results on May 7, have lost nearly two-thirds of their value so far this year. Wednesday’s layoffs were first reported by an online media outlet called EV.

(Reporting by Abhirup Roy in San Francisco and Akash Sriram in Bengaluru; Editing by Franklin Paul and Lisa Shumaker)