Due to the EV price war, Rivian was forced to lay off employees. The weak economy and decreasing cash reserves are also contributing factors.
In an effort to prepare for what is quickly developing into a price war between automakers for EVs, While other brands, such as Volkswagen, maintain their insistence that they will not follow suit, Tesla and Ford have already made price reduction announcements. However, Rivian is refusing to take any chances, likely due to its startup status. It also has to deal with a weak economy right now to help keep its cash on hand. About 840 of Rivian's approximately 14,000 employees are being let go.
Reuters obtained an email that Founder and CEO R.J. Scaringe sent to employees. "Our path to profitability and ramping up production must be the primary focus of our resources," Scaringe wrote. A "core objective" is to enhance the automaker's operational effectiveness.He also apologized to employees for the layoffs and confirmed that manufacturing jobs at Rivian's Illinois plant will not be affected.The R1T and R1S, as well as Amazon's all-electric delivery vans, require those factory workers to increase production. Additionally, Rivian is working on the smaller R2 platform, which has been put off until 2026 because it is an essential part of the company's future.
According to Scaringe's writing, "The changes we are announcing today reflect this refocused roadmap," it does not appear that those assigned to the R2 project will be affected by the layoffs. Rivian barely missed its 2022 production target and has been losing money on each vehicle it produces. It primarily attributed this to supply chain issues related to the pandemic.A crucial component of Rivian's production future, a new $5 billion manufacturing facility in Georgia, appears to still be under construction. The cost-cutting measures taken by Rivian are not novel. It put a commercial van deal with Mercedes on hold in December, which would have seen the two companies jointly invest in and run a new EV van factory in Europe. Last summer, it also laid off some employees.
As of September 30, Rivian had $13.27 billion in cash and cash equivalents on hand, and its current market valuation is $17.8 billion. That number was $18 billion a year earlier. Rivian went public in the latter half of 2021 and raised nearly $12 billion. However, its shares have since lost nearly 90% of their value, which is why the company has decided to halt its plans for expansion.
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