Rivian CEO tells staff the company is carrying out a ‘major’ cost-cutting effort

Electric vehicle maker Rivian is planning a “major” cost-cutting drive and will be “as thoughtful as possible as we consider any reductions,” CEO RJ Scaringe wrote in a memo to employees. Scaringe sent the note in response to reports that Rivian is planning up to 700 or so layoffs, primarily among non-engineering teams.

“This is not how we intended for you to hear about this,” he wrote. “We had hoped these very sensitive and complex conversations would have stayed within Rivian until we could address them more comprehensively.” Scaringe will share more information during an all-hands meeting scheduled for this Friday.

Rivian is pausing certain non-manufacturing hires, Scaringe wrote, while the company is “adopting major cost down efforts” to reduce its outlay on materials and operating expenses. “We will always be focused on growth, however, Rivian is not immune to the current economic circumstances and we need to make sure we can grow sustainably,” Scaringe told employees in the memo, which was first reported by Bloomberg. He added that the company is “financially well positioned and our outlook remains strong”

Scaringe added that Rivian will prioritize some programs and halt some others as it restructures certain aspects of the business. Earlier this year, Rivian said it would focus on a few areas for the time being. For one thing, the company is focused on increasing production of its R1T, R1S and electric delivery van, as TechCrunch notes. Other priorities include building out EV charging and service infrastructure, speeding up development of the next-generation R2 platform and finding more efficiencies for costs and operating expenses.

The company has nearly doubled its headcount over the last year to more than 14,000 employees, but it has been beset by problems, such as the supply chain crisis and the state of the economy. It has also delayed deliveries of the R1S SUV several times.

While Rivian expects to eventually build around 600,000 vehicles a year between its existing factory in Normal, Illinois and a plant that’s expected to open in Georgia in 2024, the company forecasts that it will build 25,000 EVs this year. As of earlier this month, Rivian had a backlog of 71,000 EV orders. It also has a contract to build 100,000 delivery vehicles for Amazon by the end of the decade. Right now, though, the company seemingly isn’t able to keep up with demand.

A Rivian spokesperson shared the full memo with Engadget:

Hi Team,

I’d like to address the news reports that are circulating about restructuring at Rivian. The reports speculate broadly on many intricate internal discussions about our business so I wanted to offer more clarity.

As discussed in recent all hands meetings, we’ve been working to focus our business in order to stay ahead of the changing economic landscape. We are financially well positioned and our outlook remains strong, but to fully realize our objectives it is critical that our strategy supports our sustainable growth as we ramp towards profitability. Earlier this year, we outlined our core strategic priorities for the next 18 months:

1) Ramping and enhancing R1 and EDV

2) Accelerating R2 development

3) Continuing to ramp our go-to-market capabilities, including our charging and service infrastructure

4) Optimizing costs and operating expenses across the business

As a result, we’ve implemented changes across Rivian, including prioritizing certain programs (and stopping some), halting certain non-manufacturing hiring and adopting major cost down efforts to reduce material spend and operating expenses. We also began the process of aligning the organization as a whole to ensure we are as focused, nimble and efficient as possible to achieve our priorities and objectives.

The hardest part of this process has been working through our organization to assess the size and structure of our teams and how well this aligns with our strategic plan. Our team is the core of Rivian and we are working to be as thoughtful as possible as we consider any reductions. We will always be focused on growth, however, Rivian is not immune to the current economic circumstances and we need to make sure we can grow sustainably. Every decision about our team is being assessed through the lens of our strategic priorities, not as a mechanism to simply reduce costs. Our team will continue to grow in support of our production ramp and product roadmap.

This is not how we intended for you to hear about this. We had hoped these very sensitive and complex conversations would have stayed within Rivian until we could address them more comprehensively. However, because information is coming out unofficially, I wanted to personally address it. I’ll be sharing more this Friday at our scheduled All-Hands meeting.

Thank you everyone.

RJ