Rivian laid off greater than 800 employees this week in a transfer aimed toward serving to pace the struggling electrical truck maker towards profitability.
Firm founder and CEO R.J. Scaringe despatched an electronic mail earlier this month to employees asserting the layoffs, and employees had been formally let go on Thursday, the corporate informed CBS MoneyWatch in a press release. The layoffs add to a vary of issues Rivian has skilled since going public in late 2021.
Rivian, seen as a direct competitor to Tesla, mentioned the company streamlining will assist it ramp up car manufacturing and speed up improvement of newer fashions like its R2 platform. Scaringe mentioned within the electronic mail that hovering inflation is hurting the corporate's backside line and that the layoffs are crucial for Rivian to attain its objectives of "sustainable progress as we ramp in the direction of profitability."
"Over the past six months, the world has dramatically modified with inflation reaching file highs, rates of interest quickly rising and commodity costs persevering with to climb — all of which have contributed to the worldwide capital markets tightening," the e-mail learn.
Inflation within the U.S., whereas not at file highs as Scaringa wrote, has surged to an annual price of greater than 9% — the quickest tempo in 4 a long time.
Rivian had about 14,000 workers earlier than this week's layoffs. These affected will obtain 14 weeks of paid severance, and their well being care prices can be paid till the top of the yr. Rivian plans to announce second-quarter earnings on August 12.
Based in 2009, Rivian noticed its inventory skyrocket after the corporate went public final November, making it one of many most precious automakers on the earth. Rivian's automobiles even have obtained constructive evaluations from the automotive group, with its all-electric R1T named Truck of the Yr by MotorTrend in 2022.
Scaringe informed workers within the electronic mail that the corporate is well-positioned financially. The corporate nonetheless has billions in money, thanks largely to Amazon, one among its greatest shareholders. Amazon government chairman Jeff Bezos additionally gave Rivian an enormous enhance in 2019 when he positioned an order for 100,000 electrical supply vehicles.
However 2022 has been a a lot rougher street for for the formidable EV maker. Regardless of hefty investments from Amazon and Ford, Rivian's inventory has plummeted 67% this yr. In March, Rivian introduced worth hikes on its automobiles, then backtracked solely two days later following a backlash from offended clients.
Ford reported $3.1 billion in losses throughout its first quarter of 2022 and blamed most of that loss on its multimillion greenback funding in Rivian.
Rivian has additionally been suffering from power manufacturing delays due partially to produce shortages, together with of semiconductors. Its Illinois manufacturing facility is able to making 150,000 automobiles a yr, however this yr the corporate is anticipating to roll out simply 25,000. For purchasers who've bought a Rivian truck, the wait to obtain it's now greater than a yr lengthy.
Regardless of such challenges, Rivian's automobiles in excessive demand and the corporate will probably resume its growth quickly, mentioned Dan Ives, an fairness analyst for Wedbush Securities, noting that Rivian plans to construct a brand new $5 billion plant simply exterior of Atlanta, Georgia.
However Ives additionally mentioned buyers wish to see the corporate tighten its belt financially amid ongoing supply-chain disruptions and the U.S. flirts with recession. Rivian's transfer to chop jobs was about displaying Wall Avenue that the corporate can slash prices, Ives mentioned.
"They're reducing prices as a result of they're studying the room and following what's occurring [with layoffs] at Fb, Microsoft, Apple and Tesla," he mentioned.