Struggling electric vehicle maker Rivian lays off more than 800 workers

Rivian laid off more than 800 workers this week in a move intended to help speed the struggling electric truck maker back to profitability.

Company founder and CEO RJ Scaringe sent an email earlier this month to staff announcing the layoffs, and the workers were officially laid off Thursday, the company told CBS MoneyWatch in a statement. Redundancies add up to range of problems Rivian has experienced since it was made public at the end of 2021.

Rivian, seen as a direct competitor to Tesla, said the corporate streamlining will help it increase vehicle production and speed development of newer models such as its R2 platform. Scaringe said in the email that rising inflation is hurting the company’s bottom line and that the layoffs are necessary for Rivian to achieve its goals of “sustainable growth as we move toward profitability.”

“Over the past six months, the world has changed dramatically with inflation hitting record highs, interest rates rising rapidly and commodity prices continuing to rise, all of which have contributed to the tightening of bond markets. world capitals,” the email said.

Inflation in the US, while not reaching record highs as Scaringa wrote, has risen to a annual rate greater than 9% — the fastest pace in four decades.

Rivian had about 14,000 employees before this week’s layoffs. Those affected will receive 14 weeks of paid compensation, and their medical expenses will be paid until the end of the year. Rivian plans to announce second-quarter earnings on August 12.

Rivian reported a net loss of $1.6 billion in the first quarter of 2022, compared with a loss of $414 million in the same period last year. The company posted revenue of $95 million in the first quarter, compared to no revenue a year earlier.

Founded in 2009, Rivian saw its stock soar after the company went public last November, making it one of the most valuable car manufacturers in the world. Rivian’s vehicles have also received positive reviews from the automotive community, with its all-electric R1T named Truck of the Year by MotorTrend in 2022.

Scaringe told employees in the email that the company is well positioned financially. The company still has billions in cash, largely thanks to Amazon, one of its largest shareholders. Amazon CEO Jeff Bezos also gave Rivian a big boost in 2019 when he placed an order for 100,000 electric delivery trucks.

But 2022 has been a much tougher road for the ambitious electric vehicle maker. Despite strong investments from Amazon and Ford, Rivian’s stock has fallen 67% this year. In March, Rivian announced price increases for its vehicles, then backtracked just two days later after backlash from angry customers.

Ford reported a loss of $3.1 billion in the first quarter of 2022 and blamed most of that loss about his multi-million dollar investment in Rivian.

Rivian has also been affected chronic delays in production due in part to supply shortages, including semiconductors. Its factory in Illinois is capable of making 150,000 vehicles a year, but this year the company expects to release only 25,000. For customers who have purchased a Rivian truck, the wait to receive it is now over a year.

Despite those challenges, Rivian’s vehicles are in high demand and the company will likely resume expansion soon, said Dan Ives, an equity analyst at Wedbush Securities, noting that Rivian plans to build a new $5 billion plant. dollars outside of Atlanta, Georgia.

But Ives also said investors want to see the company tighten its belt financially amid ongoing supply chain disruptions and the U.S. flirts with recession. Rivian’s move to cut jobs was to show Wall Street that the company can cut costs, Ives said.

“They are cutting costs because they read the room and follow what is happening [with layoffs] to Facebook, Microsoft, Apple and Tesla,” he said.