Electric truck and SUV company Rivian will lay off hundreds of employees in an attempt 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 ones. Experts say without the credit, which ended Sept. 30, sales will fall.
Irvine-based Rivian plans to lay off more than 600 workers, a company spokesman 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 changes across our teams,” CEO RJ Scaringe wrote in a note to employees Thursday. “Given the changing operating landscape, we have had to rethink how we scale our go-to-market functions.”
Rivian wasn't the only tech company to announce layoffs this week: On Wednesday, Meta laid off 600 employees in its artificial intelligence division to streamline operations and reduce bloat. In recent months, Meta has changed its approach to artificial intelligence, competing with OpenAI and Google.
Last month Rivian had smaller round layoffs that affected about 200 employees, or 1.5% of the workforce.
According to iSeeCars.com analyst Karl Brauer, demand for electric vehicles is slowing as the market becomes saturated and the cars become harder to afford.
President Trump's reversal of Biden-era EV 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 sales. car sales to 13,201 in the third quarter, but lowered its full-year sales estimate. The company now expects to deliver between 41,500 and 43,500 vehicles in 2025, up from 46,000.
Brower said the layoffs highlight problems in the industry, especially for companies like Rivian and Tesla, which only make electric vehicles and don't make gas-powered alternatives.
“EV production will be reduced by every company due to falling demand,” Brower said. “Electric vehicle manufacturers are probably already feeling this.”
Electric vehicle sales in California in 2024 are unchanged from previous years. The Times newspaper reports this.raising questions about whether car manufacturers will be able to meet ambitious government requirements 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. At the moment, the company's cheapest model is the R1T pickup, which costs about $71,000. This price is out of reach for many consumers, especially with the loss of the federal tax credit.
Tesla, the electric vehicle giant run by Elon Musk, has released cheaper versions of its Model 3 and Model Y vehicles earlier this month. However, the launch failed to impress investors and analysts said the new prices were not low enough to trigger a surge in buying.
The new Model 3 Standard starts at $36,990, which is $5,500 cheaper than the existing version of the car. Model Y Standard starts at $39,990, which is $5,000 less than its more expensive counterpart.
Tesla shares remained steady after the company reported third-quarter earnings earlier this week. Total vehicle sales revenue increased 6% compared to last year.
Still, Tesla numbers fell short of analyst estimates, and Musk has yet to deliver on his long-promised robotaxi venture. Rivian will report its earnings on November 4th.
Following news of the upcoming layoffs, Rivian shares rose more than 1% in trading on Thursday. Its shares are little changed this year, while the tech-heavy Nasdaq Composite Index is up more than 15% over the same period.
Rivian and other electric vehicle makers have benefited from temporary surge in sales before the tax credit expires because customers hurried to get a discount while it was still available.
National sales of new electric vehicles jumped 19% in July compared with last year, and sales in Orange County increased 7% in July compared with the previous month, according to Cox Automotive.
Now that the loan has been cancelled, the drop in sales could be steep, Brauer warned. Rivian could get a boost by releasing its cheaper model, but in the meantime the company needs to save money.
“Rivian recognizes this and is changing its production plans and cost structure as a result,” Brower said. “That's why they fire people.”
