Electric vehicle maker Rivian is planning a “big” cost-cutting effort and will be “as prudent as we can when we consider all the cuts,” CEO RJ Scaringe wrote in a memo to employees. Scaringe sent the note in response to reports that Rivian is planning about 700 layoffs, mostly from non-engineering teams.
“That’s not how we intended you to know,” he wrote. “We had hoped that these very sensitive and complex conversations would remain with Rivian until we could address them more fully.” Scaringe will share more information during an all-hands meeting scheduled for this Friday.
Rivian is pausing certain off-production shots, Scaringe wrote, while the company “embarks on a major cost-cutting effort” to reduce its spending on materials and operating costs. “We will always focus on growth, but Rivian is not immune to the current economic circumstances and we need to ensure we can grow sustainably,” Scaringe told employees in the memo, first reported by Bloomberg. He added that the company is “financially in good shape and our outlook remains strong”
Scaringe added that Rivian will prioritize some programs and halt others as certain aspects of the business are restructured. Earlier this year, Rivian said it would focus on a few areas for now. For one, the company is focused on ramping up production of its R1T, R1S, and electric vans, TechCrunch notes. Other priorities include expanding EV charging and service infrastructure, accelerating development of the next-generation R2 platform, and seeking greater efficiencies in cost and operating expenses.
The company nearly doubled its headcount to more than 14,000 employees last year, but has been plagued by issues such as the supply chain crisis and the state of the economy. The delivery of the SUV R1S was also delayed several times.
While Rivian expects to build around 600,000 vehicles per year between its existing plant in Normal, Illinois and a plant expected to open in 2024, the company forecasts it will build 25,000 electric vehicles this year. Earlier this month, Rivian had a backlog of 71,000 EV orders. It also has a contract to build 100,000 delivery vehicles for Amazon by the end of the decade. For now, however, the company doesn’t seem able to keep up with demand.
A Rivian spokesman shared the full memo with Engadget:
Hello team,
I would like to respond to the news circulating about the restructuring at Rivian. The reports, by and large, speculate on many complicated internal discussions about our business, so I wanted to provide more clarity.
As discussed in recent all-hands meetings, we have worked to focus our business to stay ahead of the changing economic landscape. We are in good financial shape and our prospects remain strong, but in order to fully achieve our goals it is critical that our strategy supports our sustained growth as we move towards profitability. Earlier this year we outlined our key strategic priorities for the next 18 months:
1) Ramping and improvement of R1 and EDP
2) Accelerating R2 development
3) Further expansion of our go-to-market capabilities, including our charging and service infrastructure
4) Optimizing costs and operational expenses across the enterprise
As a result, we’ve made changes at Rivian, including prioritizing certain programs (and halting some), retiring certain non-manufacturing adjustments, and implementing broad cost-cutting measures to reduce material spend and operational costs. We have also started to align the organization as a whole to ensure we are as focused, flexible and efficient as possible to achieve our priorities and goals.
The most difficult part of this process was the work done by our organization to assess the size and structure of our teams and how well this aligns with our strategic plan. Our team is the core of Rivian and we work to be as considerate as possible when considering cuts. We will always focus on growth, but Rivian is not immune to the current economic circumstances and we need to ensure we can grow sustainably. Every decision made about our team is evaluated against our strategic priorities, not as a simple cost-cutting mechanism. Our team will continue to grow in support of our ramp-up and product roadmap.
We did not intend for you to experience this in this way. We had hoped that these very sensitive and complex conversations would remain with Rivian until we could address them more fully. However, since information comes out unofficially, I wanted to address them personally. I’ll share more at our scheduled all-hands meeting this Friday.
Thank you all.
R.J
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