Rivian Is Cutting Jobs. The Stock Fell.

The Rivian R2 is due out in 2026. The lower-cost SUV is expected to boost sales of the electric vehicle start-up. (Getty Images for Rivian)

Key Points

• Rivian plans to reduce its workforce by about 4.5%, impacting nearly 15,000 employees, due to a changing operating environment.
• Slower-than-expected EV adoption and the expiration of the $7,500 federal tax credit are challenging U.S. EV makers.
• Tesla’s operating profit margins decreased to 5.8% in the third quarter from 10.8% in the third quarter of 2024.

Electric-vehicle makers are battening down the hatches, preparing for some stormy weather. When the skies will clear is hard to say, but a recent announcement from Rivian shows it could take a while.

Rivian CEO R.J. Scaringe sent a memo to employees Thursday that laid out plans to cut the company’s workforce by about 4.5%. The EV start-up had almost 15,000 employees at the end of 2024.

Rivian shares traded as high as $13.27 but closed at $12.98, down 0.8%, while the S&P 500 and Dow Jones Industrial Average gained 0.8% and 1%, respectively.

“These are not changes that were made lightly,” said Scaringe in the note viewed by Barron’s. “With the changing operating backdrop, we had to rethink how we are scaling our go-to-market functions.” Changes are being made in vehicle operations, service, and marketing organizations.

Things have been tough and getting tougher for U.S. EV makers lately. Slower-than-expected EV penetration has put a lid on sales and plagued profitability aspirations.

Rivian is expected to sell about 43,000 EVs this year. Two years ago, Wall Street projected 2025 sales of 116,000 vehicles. Rivian isn’t expected to generate positive gross profits this year. Two years ago, analysts projected 2025 gross profits of $1.3 billion.

The loss of the $7,500 federal EV purchase tax credit, which expired in September, only makes it more challenging to sell EVs to Americans.

The expectations of lower sales, at potentially lower prices, are driving decisions across the industry. Earlier this month, General Motors took a $1.6 billion charge to write down some EV investments. In July, Ford Motor took $500 million in charges related to EV programs and battery capacity.

And on Thursday, when reporting third-quarter numbers, Ford CEO Jim Farley said changing environmental standards would ease the need to sell electrified vehicles for compliance purposes. He sees EVs accounting for about 5% of U.S. new car demand, down from a recent 10%.

Growth beyond that will depend on cheaper EVs with prices that start at about $30,000.

Tesla, for its part, sold a record number of EVs in the third quarter, but operating profit margins were 5.8%, down from 10.8% reported in the third quarter of 2024.

“The competition is getting tougher…Chinese [auto makers] are expanding globally,” added Farley on Thursday. “And the industry faces lower returns due to EV overcapacity and global pressures.”

With that as the backdrop, it makes sense Rivian is looking to cut costs. That doesn’t ease the pain for affected employees, though.

Coming into Friday trading, Rivian stock was down about 2% so far this year, but up about 29% over the past 12 months.

Write to Al Root at allen.root@dowjones.com