Rivian is laying off 6% of its workforce as it is having issues cutting costs amid its production ramp – resulting in selling its electric vehicles at a massive loss.
While Rivian has been successfully ramping up production of its R1T and R1S electric vehicles over the last year, it hasn’t been able to reduce costs, and it’s becoming a real concern.
The company is not releasing its earnings until February 28, but it has already disclosed that it managed to ramp up production to 10,000 units in Q4 2022.
But the problem is that Rivian is losing a lot of money on every single one of those vehicles.
In Q3, the company was spending as much as three times what it charged per vehicle, and that’s before all the money it is spending to build out its service, sales, and charging infrastructure to support its growing fleet.
This is obviously not a financially sustainable business, and while investors are not too worried because Rivian still had $13 billion in the bank at the end of Q3, we need to see some improvements on the cost front.
In order to help cut costs, CEO R.J. Scaringe announced in an email to employees today that Rivian is laying off 6% of the workforce.
We contacted Rivian about the email that is circulating, and we will update the article if the company decides to comment.
I have been warning for a while that there are serious concerns about Rivian’s costs, but a lot of Rivian fans have been minimizing those concerns because of the huge cash position.
Sure, the cash position is nice, but we need to see some serious improvements in the gross margins. Otherwise, Rivian is just losing more money as it increases production, which has been the case so far.
As of the last report (Q3), Rivian brought in just over $500 million in revenue from selling a few thousand EVs, which is great, but it cost them almost $1.5 billion to build those EVs.
Top comment by Tom
These guys couldn't have gotten any luckier they IPO'd right at the top of the market, would have been toast otherwise.
Meanwhile, it is also spending nearly $1 billion a quarter in operating costs, which is to be expected as it expands its operations and infrastructure to support this growing fleet.
I don’t mind that too much, but we need to see a clear path to a positive gross margin on the vehicles, and so far, there isn’t one.
Without a meaningful improvement, Q4 is going to be a bloodbath with more vehicles produced.
Rivian has a great product, but if it can’t figure out how to make it profitable, it doesn’t have a great business.
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