(The Epoch Times)—Amazon-backed electric vehicle manufacturer Rivian will be laying off a part of its workforce amid “challenging” economic conditions, the company said on Wednesday, sending its share price into a nosedive.
Rivian announced its Q4, 2023, and full-year results on Feb. 21, revealing that the company will be reducing its salaried workforce by roughly 10 percent. In an email to staff, CEO RJ Scaringe said that layoffs would be implemented on Thursday. “Our business is facing a challenging macroeconomic environment—including historically high interest rates and geopolitical uncertainty—and we need to make purposeful changes now to ensure our promising future,” he wrote, according to Business Insider.
The company told the outlet it employed 16,700 workers in total, which includes both salaried and hourly workers. In 2023, Rivian cut its workforce by 6 percent, which followed another 6 percent staff reduction implemented in the prior year.
Along with the layoffs, Rivian also announced that it expects to produce only 57,000 vehicles in 2024, far lower than the 81,700 units estimated by analysts polled by investment research firm Visible Alpha.
Following the announcement of workforce reductions and lower-than-expected 2024 production numbers, Rivian shares declined. At the end of Wednesday, the firm’s shares were at $15.39. By the end of Friday, shares fell to $10.07, a decline of almost 35 percent in just two days.
Year-to-date, shares have fallen by over 52 percent. Rivian’s $10.07 stock price is more than 90 percent less than the nearly $130 it was priced at back in November 2021.
The Amazon-backed EV maker’s share price collapse comes as many electric vehicle makers are readjusting expectations in the face of softer demand.
A Jan. 4 survey report from KPMG that polled 1,000 auto executives from 30 nations found that confidence in electric vehicles among automakers in the United States and other countries has dipped as many are concerned that their large bets on EVs may take longer to pay off.
“Just a year ago, executives were excited about the prospects for transforming the industry with new kinds of cars. Now, they remain optimistic, but they are more sober about how difficult it will be to manage the transition and preserve or increase profits,” it said.
While several news EV models are flooding the market, demand for the vehicles has “weakened,” KPMG stated while noting that some players may end up under “extreme pressure” as competition heats up.
In Rivian’s earnings release, CEO Scaringe admitted that the company will be facing “challenging macro-economic conditions” in the short term. As such, the firm is “aggressively focused on driving cost efficiency throughout the business.”
Dan Ives, managing director and senior equity analyst at Wedbush Securities, told the Los Angeles Times that Rivian’s vehicle projections for this year cast a “dark cloud around the story.”
“Cutting costs and headcount to reflect a softer environment and production issues … Rivian went from a Cinderella story to a horror show.”
Business Downgrade
Rivian was also hit with a downgrade on Friday, with UBS cutting its rating on the stock from “Buy” to “Sell.”
“We had been optimistic on [Rivian’s] product and brand ultimately winning out,” UBS analysts said in a note, according to Dow Jones Wire. However, “more tepid” demand for EVs now threatens the company, they wrote. The analysts cut their price target from $24 to $8.
Rivian’s current EV offerings, a full-size SUV and a pickup truck, start at around $70,000. UBS analysts noted that Rivian EVs were “high priced” and that there were risks to the company’s pricing and volume.
The EV maker plans to unveil its cheaper, next-generation EV R2 in March, which is expected to cost $45,000. However, UBS is not convinced it will have an immediate positive effect on the stock.
“Further out, [Rivian] growth is reliant on R2 … but we don’t believe production starts until late 2026, so meaningful financial impact isn’t until 2027—a long time to wait for a product the stock hinges on,” the note said.
A survey by Gallup last year showed that most Americans aren’t “completely sold” on EVs. Among poll respondents, only 12 percent said they were “seriously considering” buying an EV.
While 43 percent said they “might consider” such a purchase in the future, 41 percent stated they “would not buy” an EV.
Speaking to the Los Angeles Times, Jessica Caldwell, head of insights at Edmunds, said that “mass-market buyers have less income and a lot more questions.”
“We’ve been living in this wave of ‘Oh, EVs are great, they’re going to continue the accelerated growth and only going to get better,’ and now it seems like they’re (EV makers) hitting this reality point.”
Even though EV sales have seen growth over the past years, mass-market customers are not too taken with them due to issues like battery life, access to reliable charging stations, and vehicle range, she pointed out.
“It’s not always easy to set up a charger where you live … At the end of the day, for EVs to take off and become mass market, there needs to be major growth in infrastructure.”
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