Rivian CEO says company is at ‘inflection point’ day before layoffs

The atmosphere was lively at a waterfront rail yard in Oakland.

By Wednesday morning, more than a hundred people had gathered inside the converted space to see what Rivian spinoff company ALSO had been stealthily planning for several years.

The project turned out to be a $4,500 electric bike. The platform doesn’t have much to do with Rivian’s cars, but it remains close to the heart of CEO RJ Scaringe, whose children attended the event to celebrate the unveiling.

If there was any indication that the CEO was mentally preparing to lay off several hundred employees from his auto company on Thursday, he didn’t reveal it when he spoke to me.

“I’m super excited,” Scaringe said after asking about the atmosphere inside Rivian as they prepared for the launch of a new model. “For us, this is the most important point in the company — in the history of the company.”

Rivian is gearing up for production of the R2, which will be the company’s most affordable model to date. If price is the barrier to entry for drivers considering electric vehicles, then the R2 – a $45,000 SUV – is Rivian’s answer.

While the R1 is a flagship product that sets the tone for the company’s premium adventure-focused brand, the R2 will be what brings Rivian to a wider audience. The CEO drew a parallel with Tesla, pointing out how the Model 3 attracted more customers with its $35,000 base price.

“Tesla, their flagship products, the Model S and the Model X, were relatively low volume. And for them, that explosive point was when they launched the Model 3,” the CEO said.

In 2018, Tesla CEO Elon Musk also called the Model 3 a “bet on the company” situation. Musk later revealed that the company was on the verge of bankruptcy.

I asked Scaringe if the R2 was Rivian’s Model 3 moment, in which the company’s future depends on a successful launch. He said he would call the car “an inflection point.”

“For us to become a company of the scale that we aspire to be, one that produces several million cars a year, we’re not going to do it with just one $90,000 flagship,” he said. “We need R2, we need R3. And so R2 is the critical step to get there, and if we don’t take that step, if we don’t launch R2, we’ll remain a pretty small company.”

The path to R2 has already seen some downsizing. Last year, Rivian laid off 10% of its salaried staff, marking the company’s third round of layoffs since 2023. Rivian also laid off less than 1.5% of its workforce last month, according to multiple reports.

On Thursday morning, employees began being notified of another restructuring. The Wall Street Journal reported the decision to lay off more than 600 employees, or about 4.5% of the workforce, hours before Scaringe sent a company-wide statement.

“Everyone I know was shocked,” one worker affected by the layoffs told me. “Employees were talking about it yesterday, and it created panic because there really aren’t many employees left in many departments.”

A spokesperson declined to comment.

On Thursday afternoon, Rivian sent Business Insider the internal memo that Scaringe shared with his company’s 15,000 employees. The CEO wrote that Rivian made the “very difficult decision” to reduce its workforce by 4.5%, citing the launch of R2 “and the need to grow our business profitably.”

The memo states that the most affected areas are customer service and marketing. Scaringe wrote that he would serve as interim marketing director.

I asked Scaringe if the production of R3, Rivian’s crossover that’s also generating fan hype, will depend on the success of R2.

Scaringe said he didn’t think like that.

“One of the questions I get asked a lot, and I understand why, is some version of ‘What are you going to do if you fail?’” he said. “I have such a different perspective because the probability of failure is the lowest it’s ever been. The highest probability of failure was on day one. A car company with one employee, no capital, no team, no factory, no technology, no brand, nothing.”

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