The electric automaker Rivian said Wednesday it plans to cut 10% of its salaried workers, citing “challenging macroeconomic conditions.” The impact on Rivian’s workforce in Normal is not expected to be significant, given that the vast majority of its 8,000 local employees are hourly.
Rivian told employees about the job cuts earlier Wednesday, then broke the news publicly during its quarterly earnings call. Rivian founder and CEO RJ Scaringe pointed to “historically high interest rates and geopolitical uncertainty” and a need to “prioritize our growth areas of the business,” including the unveiling of the new R2 model in two weeks.
“These difficult decisions … enable us to maximize the amount of impact we can have as a company,” Scaringe said.
EV sales are expected to set another record in 2024, but they’ve softened as of late. Early adopters are in; the next chapter in electrification will depend in part on whether Rivian and others can win over mainstream buyers too. High interest rates – which make it more expensive to buy a car – aren’t helping.
Some legacy automakers have slashed EV production or reduced EV investments. Rivian has cut costs, including the 10% workforce reduction announced Wednesday. Rivian has 16,700 employees companywide. The company declined to say how many people in Normal will lose their jobs.
Scaringe called this an “interesting moment in time” for the EV industry, blaming a lack of choice in the EV market for any softening in demand. Rivian will be attacking that problem head-on March 7, when it reveals the new R2 model that’ll be made at a new plant in Georgia. The R2 will be a cheaper, smaller SUV – reportedly in the $40,000-$60,000 range – and will be Rivian’s first vehicle sold globally.
“We’re very bullish in the demand for that product,” Scaringe said.
In Normal, Rivian makes R1 pickups and SUVs, as well as its commercial delivery vans. Rivian made over 57,000 EVs in 2023 – more than double from the year before. And it’s getting faster; Rivian’s fourth quarter of 2023 was its most productive quarter yet – an annualized pace of over 70,000 units.
But production will be flat in 2024 – again about 57,000 vehicles. Part of that is because of the weekslong shutdown in Normal that’s expected during the second quarter of this year. That will allow for significant changes to supplier and component parts, lowering how much it costs to build each Rivian EV. They’ll also use the shutdown to increase overall production capacity in Normal, by around 30%.
“While the incorporation of new design changes impacts near-term production, we’re confident it better positions Rivian to be more profitable and competitive over the long-term,” Rivian chief financial officer Claire McDonough said Wednesday.
Rivian is losing money, just like EV pioneer Tesla did in its early years. Rivian posted a net loss of $1.5 billion in the fourth quarter of 2023. But quarterly revenue doubled – up to $1.3 billion. Rivian says it “expect to achieve modest gross profit in the fourth quarter of 2024.”
Rivian is McLean County’s second-largest employer, behind only State Farm.
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