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The big news in the electric vehicle world this week is layoffs! …or is it?
Bloomberg reported this week that Rivian was planning to layoff around 700 workers, or about 5% of its workforce. According to the report, cuts were targeted at non-manufacturing jobs in an effort to decrease expenses while continuing to increase production.
And outlets around the web piled on:
· Rivian reportedly considers laying off 700 employees (The Verge)
· Report: Rivian Plans Non-Manufacturing Layoffs (Inside EVs)
While Rivian has yet to confirm the specifics, the company has announced that it will hold a meeting on Friday to address the layoffs. Is this a grim portent of things to come for the Irvine EV upstart? Is this a sign that Rivian is getting leaner and nimbler? Is it merely the latest loop on the Rivian rollercoaster?
How do we make sense of this?
Well in the North American EV startup space there’s really only one roadmap to success that we can consult, and that’s Tesla. The Austin-based electric vehicle giant has acquired a reputation for laying off employees with marked regularity. CEO Elon Musk announced last month that he planned to cut about 10% of Tesla staff, and TechCrunch reported yesterday that as many as 229 employees may be let go from the company’s autopilot division alone. In 2019, Tesla laid off 7% of salaried workers, and the year before that it was 9%. But there’s a massive caveat here: Hourly workers—i.e. people on the manufacturing side—have steadily risen every year.
Based on the Bloomberg reporting, it seems Rivian is moving in the same direction, at least in the short term. Last week, CEO RJ Scaringe tweeted that the company’s supply chain woes were easing and production was ramping up. If Rivian is shifting focus to manufacturing, it seems logical there may be a reduced need for designers, engineers, or other planning-stage roles. In the midst of the current economic downturn, Rivian may be looking to eliminate redundancies that don’t help to roll more cars off the line. Remember, this is a company that lost $1.59 billion in Q1 2022. Eventually turning a profit is mostly about building and delivering more vehicles, but reducing operating expenses brings the bar a little lower.
Investors don’t seem particularly spooked by the layoff rumors either. The company’s stock dropped about 6% in the wake of the initial announcement but has held steady and even rebounded slightly since.
We’ll see what happens on Friday, but this seems more like pruning a bush than jettisoning the luggage. — David Shultz
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On this episode of the L.A. Venture podcast, the Lightspeed Ventures partner discusses a trend toward vertical-specific, authentic social platforms, as well as shifts in the ecommerce and influencer economies.
What We’re Reading Elsewhere...
- L.A.-based foodtech startup Chownow lays off around 100 employees.
- Amazon reportedly handed over Ring data to police without getting users' permission at least 11 times.
- Snap is testing allowing artists to import NFTs as augmented-reality filters.
- Riot Games fines esports organization TSM and puts its CEO on 'probation' after bullying reports.
- BioscienceLA and My Comma will host a salon around L.A. femtech later this month.