Rivian (RIVN) bets on employee relocation to boost EV production at plant

Rivian (RIVN) is planning to boost EV production by moving some of its engineers closer to its Illinois factory, according to the Wall Street Journal.

After producing 24,337 EVs last year, slightly missing its goal of 25,000, Rivian is not taking any chances this year.

Rivian CEO RJ Scaringe said 2022 was a “challenging year” as the young EV maker scaled production of four products, including the R1T electric pickup, the R1S SUV, and two versions of its electric van, at low volumes in a massive factory designed for 150,000-vehicle output when fully operational.

As a result, Rivian’s losses swelled to over $6.7 billion in 2022 as the young electric vehicle maker balanced increasing production and cutting costs to drive efficiency. The woes continued this year, with Rivian recalling over 12,700 EVs earlier this year due to airbag deployment issues and the automaker revealing plans to raise over a billion in cash by selling green convertible notes.

Despite ongoing supply hurdles, Rivian added a second shift this past fall to increase production as it works to ramp its Normal, Illinois, factory to full capacity. However, according to a recent report from the Wall Street Journal, Rivian has bigger plans to boost EV output at the plant.

Rivian relocating engineers to boost EV production

A person familiar with the matter confirmed the plans to the WSJ, saying Rivian is expected to ask a “significant portion” of its manufacturing engineers to relocate to either the company’s factory in Illinois or its headquarters in Irvine, California. As part of a broader reorganization effort to accelerate output, Rivian is expected to ask any engineers who were hired to work remotely during the pandemic to move closer.

According to the source, Rivian has already had some conversations with employees, and some have opposed the move. The person said if employees are unwilling to relocate, Rivian plans to offer severance packages while looking to replace the roles with new hires.

The move comes as Scaringe emphasized driving profitability remains “equally important” with ramping production, saying on the company’s Q4 earnings call:

We are focused on reducing our bill of materials, conversion costs, logistics costs and overall operating expenses. Core to this is our close work with our supplier partners to lower our material costs through new engineering solutions.

Rivian has already cut 6% of its workforce in an effort to shave costs as it works toward profitability. The company is aiming to build 50,000 EVs this year, more than doubling its 2022 numbers.

Electrek’s Take

Rivian, like many automakers, is working to overcome big losses to boost electric vehicle output. Ford says it expects its EV business, Model e, to lose $3 billion this year after losing $6 billion combined over the past two years.

Tesla is the only automaker in the US selling EVs in high volume at the moment and profitably. To be fair, Tesla started several years (not to say others couldn’t have started sooner) before these companies and went through its own “production hell” while bringing the Model 3 to market.

Despite Rivian’s best efforts, the company is still losing money on each vehicle it produces. Losses are expected while Rivian ramps production, but the EV maker will need to start seeing margin improvements with the new cost-cutting measures.

Rivian ended the year with over $12 billion in cash, while the company claims it can fund operations through at least 2025 as it works to turn a profit.