Rivian initiates restructuring
Company wants to be “as focused, agile and efficient as possible”.
Supply chain is still “bottleneck” of production
As reported by TheStreet, citing an internal memo from Rivian CEO RJ Scaringe to employees of the US electric car maker, the company is in the process of embarking on a major restructuring to become more agile, reflecting the current difficult period for the global economy, which is also the automotive industry is struggling to survive.
“As discussed in recent all-hands meetings, we have worked to focus our business to stay ahead of the changing economic landscape,” said TheStreet Scaringe. “We are in good financial shape and our prospects remain strong, but to fully achieve our goals it is critical that our strategy supports our sustained growth as we move closer to profitability.”
Rivian wants to be “as focused, agile and efficient as possible”.
As reported by The Street, Scaringe said in the memo that ramping up and improving the R1T pickup truck and R1S SUV and its EDP electric van, accelerating development of the lower-cost R2 vehicle, further boosting the company’s go-to-market capabilities, including of its charging and service infrastructure and optimizing costs and operating costs across the company are among the priorities. “As a result, we’ve made changes at Rivian, including prioritizing certain programs (and pausing some), retiring certain settings outside of manufacturing, and implementing significant cost-cutting measures to reduce material spend and operational costs,” said Scaringe, adding, “We have Also started to align the organization as a whole to ensure we are as focused, agile and efficient as possible to achieve our priorities and goals.”
cost reductions through downsizing
The restructuring will also include job cuts, but the Rivian CEO did not say how many layoffs the company plans to make. However, Scaringe has promised that the company will be “considerate” in its cost cutting. “Every decision made by our team is evaluated in light of our strategic priorities, not as a simple cost-cutting mechanism. Our team will continue to grow in support of our production ramp-up and product roadmap,” said Scaringe. At the same time, according to TheStreet, the Rivian boss also warned that the company is not “immune” to the current downturn and “must ensure that we can grow sustainably”.
Supply chains are a problem
The company is currently increasing production rates to meet significant demand. As Rivian announced when it released its first-quarter results in May, the Tesla competitor had over 90,000 pre-orders on May 9th. And this at a turbulent time for the automotive market, when chips are in short supply and prices for commodities such as nickel, palladium and cobalt are rising after supply chains were severely disrupted by the corona pandemic. “The supply chain remains the bottleneck of our production. This challenge has continued through a small handful of engineered components such as semiconductors as well as some non-semiconductor components,” the company wrote in its first-quarter letter to shareholders in May.
However, according to TheStreet, Rivian was able to give investors good news only recently. The company announced on July 6 that it produced 4,401 vehicles at its Normal, Illinois, facility in the second quarter, a 72.4 percent increase from the prior quarter. These figures are said to remain in line with the company’s expectations. In addition, Rivian still believes that it is on the right track to achieve the annual production forecast of 25,000 vehicles previously given, as the company explained in a letter to its shareholders in May and recently confirmed this again.
Rivian in the first quarter with a loss of billions and high cash reserves
Rivian’s net loss was approximately $1.6 billion in the first quarter of 2022, compared to a loss of $414 million in the same quarter last year. The US electric car maker also said it had around $17 billion in cash as of March 31, and pledged that this money would be enough to fund the launch of its next model, a lower-cost vehicle called the R2, in a planned new one factory in Georgia in 2025.
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