TLDR
- Rivian is reducing its workforce by 4.5%, cutting approximately 700 positions from its 15,000-person team
- The EV maker agreed to pay $250 million to settle a 2022 securities class action lawsuit
- Expected 2025 sales of 43,000 vehicles fall drastically short of the 116,000 units projected two years ago
- Loss of the $7,500 federal EV tax credit in September adds pressure to an already difficult sales environment
- The settlement clears the path for Rivian to focus on its R2 mass-market vehicle launching in early 2026
Rivian is making tough decisions as the electric vehicle market cools. CEO R.J. Scaringe informed employees Thursday that the company will cut 4.5% of its workforce, affecting roughly 700 workers.
The cuts hit vehicle operations, service, and marketing teams. “These are not changes that were made lightly,” Scaringe wrote. “With the changing operating backdrop, we had to rethink how we are scaling our go-to-market functions.”
The stock traded up 0.2% in premarket activity at $13.12. Year-to-date, shares are down 2% but have gained 29% over the past 12 months.
Legal Settlement Clears Deck for R2 Launch
Separately, Rivian reached a $250 million agreement to settle securities class action litigation from 2022. The case was pending in the United States District Court for the Central District of California.
While denying any wrongdoing, Rivian chose to settle and move forward. The company will fund the payment through insurance and available cash.
Court approval is still required before the settlement becomes final. Management says resolving the litigation allows the team to concentrate on bringing the R2 vehicle to market in the first half of 2026.
Sales Reality Check
The numbers tell a stark story. Rivian expects to deliver about 43,000 vehicles this year compared to Wall Street’s 116,000-unit forecast from two years ago.
Gross profits remain negative. Analysts had predicted $1.3 billion in gross profits for 2025 back in 2023.
The September expiration of the $7,500 federal EV tax credit compounds the challenge. Ford CEO Jim Farley noted Thursday that EV demand now sits around 5% of U.S. new car sales, down from 10% recently.
Lower-priced models starting around $30,000 will be necessary for growth. The R2 fits that strategy as Rivian’s entry into the mass market.
Broader Industry Struggles
Rivian isn’t alone in feeling the squeeze. General Motors wrote down $1.6 billion in EV investments this month. Ford took $500 million in EV-related charges in July.
Even Tesla saw operating margins compress to 5.8% from 10.8% year-over-year despite record third-quarter deliveries. “The competition is getting tougher…Chinese auto makers are expanding globally,” Farley said. “And the industry faces lower returns due to EV overcapacity and global pressures.”
Rivian carries a market cap of $15.68 billion with average daily volume of 43.9 million shares. The technical sentiment signal indicates Sell.
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