Rivian (RIVN) is getting ready for the challenging times that are to come. The fledgling electric vehicle company, which is widely regarded as one of Tesla‘s greatest competitors, is working to protect its projects from being derailed by a potential economic downturn.
In order for the business to keep up with the huge demand, production rates are now being increased. The company reported that its order book contained more than 90,000 vehicles as of the ninth of May when it published the results of its first-quarter operations in May. This phase of raising production rates is taking place during a challenging time for the whole automotive industry. This phase is one of the most critical in the life and existence of an automotive company.
The epidemic of covid-19, which results in suppliers being penalized, has caused severe disruptions to supply chains. The assembly of cars is becoming increasingly difficult as a result of a lack of chips and the skyrocketing prices of raw materials such as nickel, palladium, and cobalt. All of these obstacles simply serve to drive up expenses, which further increases the amount of money that startup automakers like Rivian lose.
“Supply chain continues to be the bottleneck of our production. This challenge has continued across a small handful of technical components such as semiconductors, as well as a few non-semiconductor components. “In May, Rivian communicated with its shareholders through a letter.
The net loss for the first quarter was $1.6 billion, which is significantly higher than the loss of $414 million that was recorded for the same period in 2021. According to the corporation, the majority of the increased losses were attributable to higher operating losses.
Rivian is planning a 5% reduction in the size of its workforce.
In the second fiscal quarter, which will expire this month, Rivian anticipates incurring capital expenditures of $2.6 billion. The business reported that it has $17 billion in cash as of the 31st of March and claimed that this money will be adequate to support its spending through the debut of its next model, a vehicle with lower costs named R2, at a new factory that is scheduled to open in Georgia in 2025.
Nevertheless, the corporation would wish to exercise some cost restraint. It has been reported by Bloomberg News that Rivian has plans to eliminate hundreds of workers. These layoffs would only affect roles that were not related to production, including teams with redundant responsibilities.
According to Bloomberg, which cites unnamed sources familiar with the situation, Rivian intends to lay off approximately 500 of its 14,000 employees, which is 5% of the overall workforce. Rivian started out as a private company but eventually became public in 2021. It operates manufacturing facilities in Irvine, California; Normal, Illinois; and Plymouth, Michigan; these facilities create three different types of electric vehicles: the R1T pickup truck, the R1S SUV, and the RCV commercial van. Additionally, it can be found in Canada and the United Kingdom.
The impact of this news was seen in the stock price of Tesla, which ended the trading day on July 11 at $29.93, down 6.44 percent. Rivian’s stock price has dropped by 71.1 percent so far this year.
If Rivian goes through with these employment layoffs, which are scheduled to be announced in the next few weeks, the company will be following in Tesla’s footsteps in terms of how it handles its workforce. Around two hundred people were let go from Elon Musk’s company in the California office that was working on its auto pilot technology one month ago.
Musk sent a warning to the entire firm in an email that was delivered in June “A “super bad” feeling about the global economy and a warning about potential job losses were both expressed.
Additionally, the tech magnate issued a warning that: “As a result of becoming overstaffed in several areas, Tesla has decided to implement a 10% reduction in the number of salaried employees.