Rivian Layoff 10% Staff and Lowers Production Forecast for 2024

[SRO]

Pretty sure the $XX,000 "loss per vehicle" is always a misleading number that takes total amount Rivian has ever spent (including Georgia plant, years of R&D) divided by number of vehicles sold. People need to stop treating it like a marginal loss. Every additional vehicle sold makes that number better, not worse. Correct me if I said anything inaccurate.

I hope pretty sure is correct. Problem is they are deliberately producing fewer Rivians. Hopefully things will turn around. R2 can’t come soon enough.

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[kshivark]

I see a blatant optimism around R2 on the forum, assuming it is going to be a magic pill which will solve all Rivians problem towards profitability. What will make or break R2 are multiple factors including the product itself, the pricing, the demand, the competition and a lot more. There is heavily entrenched competition in the 5 seat 40-60 K segment with more competition coming before 2026. R1 is a good product in a niche 3 row segment. R2 does not have the luxury of being a niche. R2 will have to compete with refreshed M3 and MY backed by heavy competition from the Korean twin and American giants. The market is acting in a rational way while factoring R1 demand problem and uncertain/unpredictable R2 future.

 

[Sculpix]

I hate to see anyone get laid off, but it’s hard to ever say just how much of a sign it is for the company overall. I feel like pretty much any company could lose 10% of salaried workers at any time and be completely fine.

This is the way I feel. I've been in tech for over a decade - both startups and large companies - and have pretty much seen it all. Been caught in layoffs a couple times myself and it sucks every time.

From the outside looking in, Rivian is a classic story of a company that grew too large too quickly. They aren't as streamlined as far as processes go. A great example is today when I had a support engineer reach out to try and find me a new vehicle when I already have a delivery planned next week.

I can't speak for the leadership in the customer-facing departments but from an operations perspective it usually boils down to two things: people and process. If you've optimized your processes but aren't able to deliver, you likely have a people problem as in not enough people. In Rivian's case I think it's the opposite.

A RIF isn't as much of a concern if they can use it to hire better leadership and support current leaders who are trying to improve internal processes. Businesses like to talk a lot about COGS in terms of tangible costs, but they often don't consider the hidden costs like support time and the cost of development (ex: devs losing time due to a slow CI/CD process instead of spending time optimizing it). At least this is the case in the software world. Can't speak for EV manufacturers.

 

[Rivian_Hugh_III]

From Shareholder letter. Explains how Rivian anticipates getting to modest gross profit in Q4 2024:

This image and data makes me concerned that late 2024 R1’s will be cheaper vehicles in a qualitative sense. Up until now I’d figured the refresh would bring benefits to the consumer but it’s hard to imagine them cutting and saving so much while improving the quality. Hopefully they’ll make a big deal about the R1.5’s in a way that drives interest.

 

[SeaGeo]

It's always "wait until" with the fanboys. Meanwhile RIVN has done nothing but lose money for me and many others. I would have been better off in TSLA.

The future is getting dim, every EV maker is cutting prices and that's with a jumping economy. GM recently stated their going to go more into plug in hybrids and regular hybrids, seems like the right move to me.

You'd have been better buying Toyota stock in 2020 than Tesla too...

Assuming generally a third of Rivian sales are R1S, and divide by 12 months gets you in the same range as what Kia EV9 did last month.

The majority of their sells are R1S.

 

[R1Tom]

This image and data makes me concerned that late 2024 R1’s will be cheaper vehicles in a qualitative sense. Up until now I’d figured the refresh would bring benefits to the consumer but it’s hard to imagine them cutting and saving so much while improving the quality. Hopefully they’ll make a big deal about the R1.5’s in a way that drives interest.

I agree. Everyone seems to think the refresh is somehow going to make the best product even better....but I think in reality the real goal is get the cost substantially lower, which I will be shocked if that product doesn't suffer in someway. Which will then be real tough to sell unless it also coincides with a lower consumer cost.

All of which I am good with. There is alot about the R1 I love, but judging by alot of comments I see on these forums, there seems alot of interest in much lower cost and content versions of the R1. Less power and greater efficiency as well as less features all coupled with a lower entry point likely increases demand.

I still hope they make niche high end versions with 1000+hp QM for performance nuts like me, but seems most want mega efficiency and lower cost.

 

[Electrified Outdoors]

No more evasive than any other responsible CEO. Thousands of jobs and livelihoods at stake. He simply has to have the discipline to choose his words carefully, and not over-promise. With these earnings reports, as with any (from investor POV), you really have to take it in with your own emotions in check. None of them would paint a rosy picture just so the investors can feel warm and fuzzy. They, as responsible captains, have to take care to manage risk.

As pessimistic as it seems, his words echo a broader economic sentiment that you would find if you read about other sectors in the economy. The key indicators are all over the place. No one knows exactly what to make of it. Uncertainty is rampant. Caution is abundant, even with the fed (if you listen to what they say). Plus, this is an election year. And what you find in the market in any election year is uncertainty. His words may not be what you wanted to hear, but it's not out of line from the broader landscape. If he painted a rosy picture while everyone else is sounding cautious, I would be worried. Like any storm, this too shall pass. Until the next. So it goes. And, at least there are steady hands at the helm of this ship (take comfort in that).

I feel for those affected by layoffs. Especially if they loved their work and believed in the company's mission—because this would feel like a personal betrayal. Jobs... they tend to teach you to care less.

Very well stated!

 

[simplyrivian]

I assume they also have to start building the runway to sell in Europe. That must require a tight ship in the US.

 

[Ecupip]

Anyone else considering selling their vehicle? It's starting to give me some anxiety, I don't want to be stuck with an $80k paperweight. Maybe worst case scenario is they get bought out by someone instead of shutting down?

Not at all. I plan to keep the R1 as long as possible.

However, I've noticed a BIG uptick in listings for R1's recently. I would expect to see some price fluctuations soon with as many that are hitting the market.

 

[Carscott]

Yup, and stock tanks as a result. I think Rivian's guidance has always been to under promise. Obviously this isn't going to be a banner year with interest rates the way they are, but I bet their real internal estimate is more than a duplicate of last year.

The layoffs are concerning though, but likely on the heels of the hard development that went into the R2 and to make way for the employment bump coming as the Georgia plant starts to break ground. Right now they need to focus their resources on staying afloat until R2 rolls of the line.

That said, if anybody was waiting to get an R1, I'd do it now. Why do you ask? Because the refresh is likely to have some cost cuts and more cutting will come in the years following. You'll lose little niceties that add up to dollars for Rivian. This first edition of both vehicles was exactly how they wanted everything to be, design, components, quality, etc. These cars should cost a lot more than what we paid which is what new companies need to draw interest. Your first shot needs to be a slam dunk and aside from some new car issues, I feel like it's a solid package. The next version might not be noticeably different, but I be you it's going to be a lot of small things like the number of fasteners, metal gauge, number of welds, frame parts, plastic parts going from paint to mold in color, metal finishes changing, wrapped parts going to straight plastic, etc.

Same thing that Tesla went through.

I’m in this boat. Pre order holder who’s previous most expensive car ever bought was $41K Canadian. Hard to buy the vehicle when the company has such a huge cash burn to get R2 even running. I love the R1S and think it is great value for money but wish R2s were coming off the line or EDVs were going to more buyers to help with company health concerns. Also I am wondering if Rivian wants my order vs a fresh order right now. As a share holder I am very comfortable for Rivian to prioritize new orders to drive revenues.

 

[Electrified Outdoors]

Lots are full of them out here in Oregon, dealers are offering $3500 off MSRP and Kia is offering $3750 cash back. Doesn’t feel like they are selling that fast.

Consumers are choosing to defer large purchases. If they have to buy, they are buying cheaper product. They are doing this because of increased borrowing costs and economic uncertainty.

Rivian needs more incentives but should not engage in a race to the bottom. Since they are charging for RAN now, I think Rivian should consider free public charging incentives as those work well for competitors. Kia gives you 1000 kwh on EA.

The Kia is still an expensive vehicle and while it's decent I'm not overly impressed with it. I think R1S is a better value.

 

[evhelphub]

I see a blatant optimism around R2 on the forum, assuming it is going to be a magic pill which will solve all Rivians problem towards profitability. What will make or break R2 are multiple factors including the product itself, the pricing, the demand, the competition and a lot more. There is heavily entrenched competition in the 5 seat 40-60 K segment with more competition coming before 2026. R1 is a good product in a niche 3 row segment. R2 does not have the luxury of being a niche. R2 will have to compete with refreshed M3 and MY backed by heavy competition from the Korean twin and American giants. The market is acting in a rational way while factoring R1 demand problem and uncertain/unpredictable R2 future.

The R2 reveal timeline is no accident. Rivian is banking on getting a lot of reservations and positive PR for the brand. Based on the price point, it will also bring in a lot of new eyes and massively expand the potential customer base.

The crucial issue is, Rivian will need to be able to show that customers are lining up for the R2 and demand is there. They will use this data to earn the additional investments or capital needed to sustain operations until R2 can be ramped.

If R2 fails to generate interest in 2024 things will be a bit more shaky.

 

[PBRAZ]

At last check, Rivian was losing $30k per R1. To turn a profit, you need volume to overcome your fixed labor and overhead costs (you'll save a bit on COGS, but not materially so). With the flat production outlook for 2024, it doesn't look good for cash burn. Sure it has Saudi money, but no pockets are infinite.

To me the R2 at $40k - $50k MSRP is a race to the bottom. Rivian has to do it to build (or maintain) topline for investors and shareholders, but a race to the bottom nonetheless. The company is simply too young and inefficient, and by shifting from 1st gear to 5th so quickly, it will eventually stall out. If they are losing $30k on an $80k - $100k MSRP, their loss on the R2 could easily be double. It's a tough spot for sure.

 

[elektrode]

Down 17.5% an hour before open.

Daaaiiiimmmnn!

 

[stucker43]

Why would Rivian not come up with and offer an accessory battery pack that could slide in the gear tunnel and add another 150 miles of range give or take to help sale those on the fence that need towing and have range anxiety ? This could be a high profit accessory that customers would be willing to pay to have peace of mind.

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