Rivian Automotive Inc. has announced significant changes within the company, including the layoff of more than 600 employees as part of a restructuring effort. This step coincides with Rivian’s overall excitement to roll out the company’s next-generation SUV, the R2, due in 2026. The R2 SUV will be much more affordable than Rivian’s existing R1 family of vehicles. On the surface, this lineup doesn’t look much different than Rivian’s R1T pickup and R1S SUV.
The restructuring comes with RJ Scaringe taking on the role of interim chief marketing officer after these cuts. Scaringe acknowledged the challenges the company has faced, stating, “It was wrong and we broke your trust in Rivian.” Yet his remarks point to the bigger challenge that continues to hang over Rivian’s head. Such as when one major increase in March 2022 increased the costs of R1 vehicles by almost 20%!
Rivian explained this price hike by blaming increased pressures from supply chain shortages and inflation. These increased challenges have led the company to refocus itself on producing more affordable models, such as the R2. With their new R2 SUVs, the company plans to massively scale up production. Today’s announcement marks a significant strategic shift from the traditional utility business model, taking aim at capturing a broader and deeper market share.
In 2021, Rivian finally delivered its first R1 trucks starting late in the year. Recent and dramatic shifts in the federal and state markets have further unraveled this web of operations. Tariffs imposed during President Trump’s administration and the loss of the federal EV tax credit have further strained Rivian’s ability to meet production and sales goals. Accordingly, Rivian expects to ship many more vehicles in 2025 than in the interim years combined.
Earlier this week, Rivian laid off 840 employees and announced changes to the management structure. The company recently reached a $250 million settlement with shareholders over a class action lawsuit. The lawsuit was triggered by the company raising its exorbitantly high prices. Those allegations include accusations that Rivian hid how much it was going to cost to produce its R1 vehicles in its IPO filings. Despite agreeing to the settlement, Rivian has denied any wrongdoing, emphasizing that this agreement does not equate to an admission of fault.
“denies the allegations in the suit and maintains that this agreement to settle is not an admission of fault or wrongdoing” – Rivian (from a press release)