JEFF BEZOS-BACKED RIVIAN PLANS SECOND ROUND OF LAYOFFS
- Rivian is planning more layoffs after Tesla cut 14,000 employees last week
- Rivian has also halted construction of its $5 billion Georgia production plant
- READ MORE: Americans reveal what they REALLY think of their electric cars
EV-maker Rivian is planning a second round of layoffs for the year amid a drop in demand for electric vehicles.
The Jeff Bezos-backed company cut 10 percent of its 16,790 employees across North America and Europe in February and is now planning to let go another one percent.
Bezos has invested $700 million into the carmaker, making him the largest shareholder, with Amazon owning a 17 percent stake in the company.
The latest round of layoffs follows Tesla owner Elon Musk's decision to remove a whopping 14,000 jobs in factories across the country this week.
Despite Rvian's sales doubling in 2023, it is reportedly facing the same downfalls as other companies after electric vehicle enthusiasts already bought their cars, meaning less enthused car buyers aren't joining the throng to give up their gas-guzzling alternative.
After Rivian's job cuts, its shares dropped from 3.4 percent on Wednesday to just one percent by the end of the following day.
'This was a difficult decision, but a necessary one to support our goal to be gross margin positive by the end of the year,' Rivian told Business Insider.
Rivian laid off six percent of its workerforce to reduce costs in February 2023 and laid off 20 battery cell development workers in December of the same year.
The company has taken steps to reduce costs by building some of its car parts in-house and re-negotiating its supply contracts.
This comes as Rivian slashed the prices for its all-electric R1T pickup and R1S SUV by $3,100 each in response to an ongoing trend of other companies dropping their EV prices.
Data showed that the company delivered over 50,000 EVs last year in total.
Last month, Rivian also announced it was halting construction of its $5 billion manufacturing plant that was set to open in Georgia in 2026.
Instead, the company chose to move the production of its more cost-effective R2 EV to its existing plant in Normal, Illinois, saving it $2.25 billion.
The R2 is a smaller, less expensive SUV that costs $45,000 compared to the R1's price tag of $76,700.
Rivian's cost-cutting initiatives mirror Elon Musk's decision to cut 10 percent of Tesla's workforce citing the company's rapid growth and the duplication of certain job functions as the reason for the layoffs.
'As we prepare the company for our next phase of growth, it is extremely important to look at every aspect of the company for cost reductions and increasing productivity,' Musk said in a letter to staff.
Tesla has faced a drop in sales this year, according to its 2024 Q1 report that revealed it delivered 20 percent fewer EVs compared to the previous quarter prompting its shares to fall 4.9 percent after the announcement.
'Let's call this what it is: While we were anticipating a bad [first quarter], this was an unmitigated disaster 1Q that is hard to explain away,' Wedbush Securities analyst Dan Ives told The Washington Post.
If Tesla doesn't turn around its drop in sales, Ives added: 'Some darker days could clearly be ahead that could disrupt the long-term Tesla narrative.'
DailyMail.com has reached out to Rivian and Tesla for comment.
Read more 2024-04-19T14:52:57Z dg43tfdfdgfd