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Cut 10%! A new force laid off a large number of staff

2024-04-24 Update From: AutoBeta NAV: AutoBeta > News >


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On February 21, Rivian, a new American power brand, announced in its fourth-quarter 2023 earnings report that Rivian would lay off 10% of its workforce due to slowing demand for electric vehicles and reducing costs. Rivian shares fell more than 14% in after-hours trading after the news.

In fact, this is not the first time Rivian has initiated layoffs. In an effort to cut costs, Rivian cut jobs by 6% in July 2022 and February 2023, respectively. This is Rivian's third round of layoffs and the highest percentage of layoffs. A Rivian spokesman said the cuts would affect salaried employees and a small number of non-manufacturing hourly workers, but did not say how many or exactly when.

Rivian currently has 16700 salaried and hourly employees, and more than 1000 employees are expected to be affected by the 10% layoff.

Rivian, like most of the new car-making companies, is still losing money, and against this background, Rivian may have no choice but to tighten his belt by laying off workers. According to earnings data, Rivian's fourth-quarter revenue was $1.32 billion; up 99.10% from $663 million a year earlier, higher than analysts 'expectations of $1.26 billion; but a net loss of $1.52 billion narrowed from a loss of $1.72 billion a year earlier, with the market expecting a loss of $14.33. In terms of auto production and sales, Rivian produced 17541 vehicles in the fourth quarter, which was higher than analysts 'expectations of 16574 vehicles, and delivered 13972 vehicles, which was lower than analysts' expectations of 14302 vehicles.

As a new power brand in the United States, Rivian was once regarded as Tesla's biggest competitor, however, Rivian's position in the auto market is far inferior to Tesla. According to the data, Rivian was founded in 2009 and is headquartered in Elvin, California. It was originally a Mainstream Motors automobile manufacturer specializing in sports cars in the United States. In 2010, the founder renamed Mainstream Motors Rivian and transferred it from sports cars to pure electric pickup trucks. At the 2018 Los Angeles Auto Show, Rivian launched the all-electric pickup R1T and the all-electric SUV R1S, among which the all-electric pickup R1T was widely favored and invested by well-known companies such as Ford and Amazon, and Bezos himself promoted it, which was also the incentive to drive its share price skyrocketing.

On November 1,2021, Rivian was listed on NASDAQ at $78, rising to $119.46 in intraday trading and closing at $100.73, with a total market capitalization of $85.9 billion. In an interview on the day of its listing, founder RJ Scaringe revealed that Rivian must grow rapidly to reach production of at least 1 million electric vehicles per year by 2030. Rivian's long-term plan is to build four assembly plants around the world, a second plant in the U.S. in addition to its existing plant in Normal, Illinois, and one in Europe and one in China.

Only two days after listing, Rivian's market value once exceeded $100 billion, surpassing Ford and GM, but it didn't last long. Rivian's production increase plan was disrupted due to supply chain chaos, causing its production costs to rise. According to the data, Rivian produced only 1015 vehicles and delivered only 920 vehicles in 2021.

According to the latest data, Rivian production in 2023 was 57232 vehicles; delivery was 50122 vehicles. In November 2023, Rivian announced an increase in its full-year production forecast to 54,000 units when it announced its third-quarter financial results. From the full-year production situation, Rivian's production in 2023 was higher than its proposed full-year production forecast of 54,000 units. However, for this year's production and sales target, Rivian expects to produce 57,000 vehicles in fiscal 2024, which is basically the same as 2023 production, but far below the 80,000 vehicles expected by analysts. Rivian explained: "Economic and geopolitical uncertainties, especially historically high interest rates, have affected its expectations for 2024. Rivian CEO R. J. Scaringi said "challenging macroeconomic conditions" were behind the weak manufacturing outlook.

In fact, not only Rivian, Fisker and Lucid, both new power brands in the United States, are having a hard time. In addition to Rivian, Fisker may face the risk of being delisted because its share price closed below $1 per share for 30 consecutive trading days; Lucid also lowered the price of its models on February 16 by 1%-10%. The industry believes that behind the price reduction is the continuous drop in delivery volume. According to the data, Lucid delivered 6001 vehicles in 2023, with revenue of US $595.3 million and loss of US $2.8 billion.

Back to Rivian, in fact, Rivian cut costs by laying off employees or was forced to do so. In August 2023, media reported that Rivian CEO said Rivian did not need to raise funds until the end of 2025, even though the company was implementing some expensive projects, but the business focus was on increasing production and reducing costs, and bluntly stated that its profit target was very clear. According to the financial report, Rivian's total revenue in 2023 was US $4.434 billion (about 31.896 billion yuan), up 167.4% year-on-year, a record high, but losses continued, with annual losses of US $5.432 billion (about 39.076 billion yuan). At the end of 2023, Rivian had cash and cash equivalents of $7.86 billion.

From the current development of Rivian analysis, Rivian's situation is not optimistic. At present, the domestic new energy automobile market has entered the red sea stage, and the market competition is quite fierce, and Rivian's new car delivery situation is far less than some domestic second-tier new car-building forces. Under this background, it is still unknown whether Rivian's cash and cash equivalents can support Rivian until 2025. What is certain is that if Rivian still fails to boost its voice in the market and boost new car deliveries in the next two years, it will only be a matter of time before it is abandoned by the market.

With only two years to go until 2025, Rivian has little time and opportunity left. Rivian is scheduled to launch an affordable R2 electric SUV in Europe next month with a target price of less than $50,000. It is unclear whether the car will boost sales after it goes on sale.

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