The recent layoffs at Rivian highlight the increasingly tough road ahead for electric vehicle (EV) manufacturers. According to a report from The Wall Street Journal, Rivian is cutting about 1.5% of its workforce—roughly 220 employees from its nearly 15,000-strong team—as it works to reduce costs and streamline operations ahead of the launch of its next-generation R2 platform, aimed at producing more affordable EVs. This move underscores the financial pressures faced by EV startups amid rising competition, shrinking incentives, and widening losses across the industry.
One of the key challenges Rivian—and others like it—faces is the imminent expiration of the $7,500 federal tax credit for EV purchases at the end of September, which could effectively raise prices for consumers and dampen demand. Compounding the issue, Rivian is also losing the ability to sell zero-emission vehicle credits, a once-significant source of revenue, due to changes in U.S. environmental policies.
Rivian isn’t profitable yet, but analysts expect that to change by 2026, with sales projected to rise from 40,000 to 70,000 units, driven by the launch of its more affordable R2 models. However, that path to profitability becomes more uncertain if the company has to lower prices to stay competitive without the tax credit cushion.
This isn’t a problem unique to Rivian. Other EV startups like VinFast and Polestar are also struggling financially, with massive losses and warnings about long-term viability. Even Tesla, the industry leader, saw a sharp drop in operating profits this year, and CEO Elon Musk cautioned investors about “rough quarters” ahead.
Despite Thursday’s job cuts, Rivian’s stock rose 3.7% on Friday to $14.21, a modest rebound after a 5.1% drop the previous day. Still, the stock is a far cry from its $179 peak in late 2021, reflecting investor skepticism about the EV sector’s near-term prospects.
In short, Rivian’s cost-cutting measures signal a broader reality: as incentives shrink and margins remain razor-thin, even the most promising EV makers are being forced to recalibrate for a more difficult and competitive market environment.
