Rivian said on Wednesday it would cut its workforce by 10% and forecast EV production this year that widely missed estimates, hurt by downtime for factory upgrades and slowing demand for electric vehicles due to high interest rates.
Shares of the company tumbled about 17% in extended trading after Rivian said it expects to produce 57,000 vehicles in 2024, well below estimates of 81,700 units, according to eight analysts polled by Visible Alpha. It produced 57,232 vehicles last year.
“We firmly believe in the full electrification of the automotive industry, but recognize in the short-term, the challenging macro-economic conditions,” CEO RJ Scaringe said in a statement on Wednesday.
Amazon.com-backed Rivian has been burning through cash to ramp up production of its R1S SUV and R1T pickup trucks as it spends on building a new factory in Georgia and loses thousands of dollars on every vehicle it builds.
The company’s cash burn comes at a time when demand for EVs has slowed, with Tesla CEO Elon Musk warning that high interest rates are making cars unaffordable.
After shying away from reducing the price of its vehicles last year despite a price war sparked by Tesla, Rivian this month cut the price of its R1T pickup trucks and R1S SUVs by $3,100.
Meanwhile, Lucid also forecast production for 2024 that was much lower than Wall Street’s expectations, even after it cut prices of its Lucid Air luxury electric sedans last week.
Rivian’s cash and cash equivalents were $7.86 billion at the end of the December-quarter, compared with $7.94 billion in the preceding three-month period.
It also recorded a 10% fall in deliveries in the fourth quarter, missing estimates, citing lack of deliveries to Amazon in the three-month period to focus on the holiday period.
However, revenue for the October-December period stood at $1.32 billion, above Wall Street estimates of $1.26 billion, according to LSEG data.
Rivian has been posting a loss on every vehicle it sells and expects to record its first quarter of positive gross margin later this year.
The company’s R2 platform, which is expected to be cheaper and smaller, is set to be unveiled early next month.
The company reported a net loss of $1.52 billion for the fourth quarter ended Dec. 31, compared with a loss of $1.72 billion a year earlier.