Electric vehicle upstart Rivian said Wednesday it will rein in costs, including by laying off some salaried workers, while maintaining its current levels of production as it looks to start construction this year on its future Georgia factory.
The California-based maker of electric trucks, SUVs and delivery vans said it will cut 10% of its salaried workforce as it faces softness in the EV sales market. The company declined to disclose how many of its 16,700 employees are salaried and could be impacted. It’s the startup’s third round of layoffs since July 2022.
Rivian expects to start vertical construction in the coming months on its $5 billion factory near Social Circle, an hour east of Atlanta, where it will build its R2 model line, a mass-market vehicle with a lower starting price that the company expects will appeal to more consumers. Rivian plans to unveil the R2 on March 7.
Rivian CEO R.J. Scaringe said he remains committed to the scale of the Georgia project, which Rivian has said will employ 7,500, despite concerns over EV demand.
“The way we’ve approached our Georgia facility is to build out the plant across two phases,” Scaringe said in a Wednesday evening call with investors. The factory will have the capability to produce 400,000 EVs, and Scaringe said each phase should represent roughly half that capacity.
As a startup in a highly competitive industry, Rivian has yet to turn a profit.
Rivian reported $1.3 billion in revenue during the fourth quarter, roughly the same as the third quarter and nearly double what Rivian reported in the last three months of 2022. The company’s net loss for the fourth quarter was $1.6 billion, its highest quarterly loss in 2023. But Rivian narrowed its loss by 12% compared to the last three months of 2022.
Rivian reported $4.4 billion in revenue and $2.3 billion in net losses in 2023. The company finished the year with $7.9 billion in cash and cash equivalents.
The company assembled 17,541 plug-in vehicles at its Illinois plant during the three months that ended in December, up about 8% compared to last year’s third quarter. The company produced 57,232 EVs in 2023, exceeding its annual production goal by more than 3,000.
Despite steadily increasing production over the past two years, Rivian forecast that production will be flat this year as it shifts its focus to various cost-cutting measures. Rivian said it will again produce 57,000 EVs in 2024 while cutting manufacturing costs.
Rivian said it still expects to lose money for the full year in 2024, though the company said it believes it will enter the black and turn a modest profit in the fourth quarter.
The production goal was well below Wall Street expectations, with analysts polled by Visible Alpha expecting the goal to be more than 81,000 EVs in 2024, according to Reuters. Rivian shares dipped more than 15% as of 7 p.m. Wednesday in after-hours trading.
The end of last year also marked a slump in deliveries, which Rivian executives said they anticipated “due to seasonality.”
Though Rivian deliveries improved in the fourth quarter of 2023 compared to the same period a year earlier, the company continues to grapple with canceled orders. About $445 million in losses came from write-downs on the value of inventory, including canceled orders, roughly matching the third quarter.
“To this day, one of the most common questions we get from customers is, ‘How quickly can I get my vehicle?’” Scaringe said. “Managing that dynamic of customers wanting the immediate gratification of buying a vehicle and getting it in a week or two with the customers that have been waiting (years) is a balance that we’re learning to navigate.”
Though electrification is seen as the auto industry’s future, there’s growing concern that too many consumers remain hesitant to switch to a fully electric car, with adoption lagging industry predictions. Rivian, Lucid and other EV makers have seen their stock prices hammered in recent months due to worries over consumer demand.
“Our business is not immune to existing economic and geopolitical uncertainties,” Scaringe said. “… We need to recognize only 7% of the market has electrified, meaning that really we’re talking about how to get the 93% of the market that’s not buying an EV to get excited about the product.”
In a letter to shareholders, Rivian said its order book, which it stopped disclosing last year, has “notably reduced over time” due to increased deliveries and “incurred cancellations due to macro and customer factors.”
The company also said it is re-negotiating supplier costs and expects to shut down its production lines in the middle of the year to incorporate new cost-saving technologies. Those changes, while slowing down production in the short-term, will pay off with better efficiency and price margins going forward, company executives said.
Rivian’s current consumer vehicles, the R1T truck and R1S SUV, are typically priced at more than $70,000. Rivian hasn’t disclosed the R2′s expected sticker price, but Forbes reported the R2 will cost $45,000, significantly less than Rivian’s current models, and within reach of more car-buyers. That price also would make R2 buyers eligible for federal EV tax credits.
___
© 2024 The Atlanta Journal-Constitution
Distributed by Tribune Content Agency, LLC.
