Rivian Automotive (RIVN.O), is laying off 4.5% of its workforce, or over 600 employees, an internal email showed on Thursday, as the electric-vehicle maker contends with weakening demand following the expiry of key U.S. tax credits.
The expiration last month of a $7,500 U.S. federal tax credit for purchases and leases of new EVs has largely boosted prices and is expected to hit sales through the rest of the year for automakers such as Rivian already grappling with mounting cost pressures.
“These are not changes that were made lightly,” Chief Executive Officer RJ Scaringe said in an email to staff. “With the changing operating backdrop, we had to rethink how we are scaling our go-to-market functions.”
The layoffs are part of a consolidation of various operations into Rivian’s service, sales and marketing units, Scaringe said. He added the company also planned to hire a chief marketing officer.
Rivian shares closed 1.3% higher on Thursday.
Rivian has struggled to achieve consistent profitability due to costs related to ramping up production, President Donald Trump’s tariffs on imported parts and intense competition from Tesla (TSLA.O), opens new tab and traditional automakers.
High tariffs on imported auto parts have driven up manufacturing costs and forced EV makers to revamp supply chains, curb reliance on foreign components and boost U.S. investment in line with administration policy.
Analysts expect Rivian’s quarterly revenue to surge 71.5% and loss to narrow, when it reports third-quarter results after markets close on November 4.
This month, the company lowered the midpoint of its annual deliveries forecast, despite reporting a nearly 32% jump in the third quarter, largely driven by a last-minute rush to grab the now-expired federal incentive.
Rivian is focusing on improving manufacturing efficiency and streamlining operations at its Normal, Illinois plant to align costs with the weaker near-term demand outlook, while preparing for its next-generation R2 models, which are expected to broaden its reach beyond the luxury segment.
The company expects the R2 model to open up a lower-price segment, competing with Tesla’s best-selling Model Y crossover, and counterbalance soft demand for its pricier R1 vehicles.