Electric truck and SUV company Rivian will lay off hundreds of employees to try to save money as federal support for electric vehicle adoption wanes under the Trump administration.
The layoffs come less than a month after the expiration of a federal tax credit that once saved many customers $7,500 on new electric vehicles and $4,000 on used vehicles. Experts said sales would falter without the credit, which ended Sept. 30.
Irvine-based Rivian plans to lay off more than 600 workers, a company spokesperson confirmed, or about 4.5% of its workforce. The company had just under 15,000 employees at the end of last year.
“We have made the very difficult decision to make a number of structural adjustments to our teams,” CEO RJ Scaringe wrote in a memo to employees Thursday. “Given the changing operating environment, we have had to rethink how we adapt our go-to-market functions. »
Rivian wasn’t the only tech company to announce cuts this week, with Meta laying off 600 employees within its artificial intelligence department on Wednesday in an effort to streamline operations and reduce bloat. Meta has revamped its approach to AI in recent months as it competes with OpenAI and Google.
Last month, Rivian experienced a small round of layoffs that affected about 200 employees, or 1.5% of the workforce.
Demand for electric vehicles is stagnating as the market becomes saturated and vehicles become harder to buy, said Karl Brauer, an analyst at iSeeCars.com.
President Trump’s reversal of Biden-era electric vehicle incentives, as well as recent auto tariffs that make cars and parts more expensive, are contributing to the slowdown.
Rivian reported a 32% increase in vehicle sales to 13,201 in the third quarter, but lowered its sales estimate for the full year. The company now plans to deliver between 41,500 and 43,500 vehicles in 2025, up from 46,000 previously.
Brauer said the layoffs are indicative of problems in the sector, particularly for companies such as Rivian and Tesla that produce only electric vehicles and no gas alternatives.
“Electric vehicle production is going to be reduced across all companies due to lower demand,” Brauer said. “For pure-electric manufacturers, they’re probably already feeling it.”
Sales of electric vehicles in California in 2024 remained stable compared to previous years, the Times reported, raising questions about whether automakers can meet the state’s ambitious mandates for sales of zero-emission vehicles.
To boost sales, Rivian is preparing to launch a new, more affordable model that is expected to start at $45,000. The company’s current cheapest model is the R1T pickup, which is priced around $71,000. This price level is unattainable for many consumers, especially with the loss of the federal tax credit.
Tesla, the electric vehicle giant led by Elon Musk, launched cheaper versions of its Model 3 and Model Y vehicles earlier this month. The launch, however, did not impress investors and analysts said the new prices are not low enough to trigger a buying spree.
The new Model 3 Standard starts at $36,990, which is $5,500 less than the existing version of the car. The Model Y Standard starts at $39,990, which is $5,000 less than its more expensive counterpart.
Tesla shares remained stable after the company reported its third-quarter results earlier this week. The company recorded a 6% year-over-year increase in total automotive revenue.
Yet Tesla’s numbers fell short of analyst estimates, and Musk has yet to deliver on his long-promised robotaxi project. Rivian releases its results on November 4.
Following the announcement of the upcoming layoffs, Rivian shares rose more than 1% on Thursday. Its shares have shown little change so far this year, while the tech-heavy Nasdaq Composite Index has risen more than 15% over the same period.
Rivian and other electric vehicle makers enjoyed a temporary sales boost before the tax credit expired, with customers rushing to get the discount while it was still available.
National sales of new electric vehicles jumped 19% in July compared to last year, Cox Automotive said, and sales in Orange County were up 7% in July compared to the previous month.
Now that the credit has been eliminated, the drop in sales could be sharp, Brauer warned. Rivian could get a boost when it releases its cheaper model, but the company needs to conserve its funds in the meantime.
“Rivian recognizes this and is reconfiguring its production plans and cost structure accordingly,” Brauer said. “That’s why they fire people.”
