SAN FRANCISCO, Feb 1 (Reuters) – Rivian Automotive (RIVN.O) is laying off 6% of its workforce in a bid to cut costs as the electric vehicle maker, already struggling with dwindling cash reserves and an economy weak, is preparing for a full-scale industry-price war.
The company is focusing its resources on ramping up vehicle production and achieving profitability, chief executive RJ Scaringe said in an email to employees announcing the job cuts on Wednesday. Reuters obtained a copy of the email.
The layoffs at Rivian come amid falling prices for electric vehicles, triggered by recent cuts by Tesla (TSLA.O) and Ford Motor Co (FN), led by Elon Musk.
Price cuts from Tesla and Ford are expected to hurt electric vehicle newcomers such as Rivian, Lucid Group (LCID.O) and British startup Arrival, which announced on Monday it would lay off half of its staff.
Despite a successful initial public offering in November 2021, Rivian shares were down nearly 90% from their peak that month through Tuesday’s close. Rivian’s stock traded down 4% on the Nasdaq on Wednesday, paring some losses after the job cuts were announced.
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“We need to focus our resources on the ramp and our path to profitability,” Scaringe said in the email, in which he apologized to employees for the need for the cuts.
A Rivian spokesperson confirmed the email was sent, but declined further comment.
“They are bleeding money and would like to grow at a much faster rate, but they continue to struggle with their electric vehicle production ramp and have not been able to significantly reduce unit costs,” said Garrett Nelson, analyst at CFRA Research. “We believe that is what is behind this decision.”
Rivian is focused on ramping up production of its R1 trucks and EDV delivery vans for major shareholder Amazon.com (AMZN.O) and launching its R2 platform, it said. . “The changes we are announcing today reflect this focused roadmap.”
Irvine, Calif.-based Rivian, which has about 14,000 employees, will lay off about 840 people in a move that won’t affect manufacturing operations at its Normal, Illinois plant.
Rivian, which has lost money on every vehicle it builds, narrowly missed its production target of 25,000 vehicles for last year due to supply chain disruptions caused by the COVID pandemic. -19. He had previously halved that target.
To conserve more cash, Rivian at the end of last year scrapped plans to build delivery vans in Europe with Mercedes (MBGn.DE). Rivian previously pushed back a year to 2026 the planned launch of a smaller R2 family of vehicles at the $5 billion plant it is building in Georgia.
Last July, Rivian, which is due to report its 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 were $13.27 billion as of September 30, 2022, up from more than $18 billion a year earlier.
Reporting by Akash Sriram in Bengaluru and Abhirup Roy in San Francisco Editing by Ben Klayman and Nick Zieminski
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