Rivian Automotive is laying off approximately 600 employees—roughly 4.5% of its workforce—as the electric vehicle maker faces mounting pressure from the September 30 expiration of federal EV tax credits and a broader slowdown in EV demand. The layoffs, first reported by The Wall Street Journal, mark the third workforce reduction in just four months for the Irvine-based company.

The cuts couldn’t come at a more critical time. With Rivian’s make-or-break $45,000 R2 SUV set to launch in 2026, the company is betting its future on successfully transitioning from luxury vehicles to mass-market affordability—all while navigating hostile policy headwinds under the Trump administration.

Third Round of Layoffs in Four Months

Rivian confirmed the layoffs Thursday in a memo from CEO RJ Scaringe to employees. The cuts primarily target customer service, marketing, and sales departments, leaving manufacturing operations untouched as the company prepares for R2 production ramp-up at its Normal, Illinois facility.

“With the launch of R2 in front of us and the need to profitably scale our business, we have made the very difficult decision to make a number of structural adjustments to our teams,” Scaringe wrote in the memo. “With the changing operating backdrop, we had to rethink how we are scaling our go-to-market functions.”

The company employed just under 15,000 people at the end of 2024. This latest round follows a September layoff affecting approximately 200 employees (1.5% of staff) and a June reduction of roughly 140 workers in manufacturing—bringing total job cuts to nearly 1,000 since summer.

Tax Credit Expiration Hits Pure EV Makers Hardest

The timing of these layoffs directly follows the September 30, 2025 expiration of federal EV tax credits worth up to $7,500 for new vehicles and $4,000 for used ones. The credits ended under President Trump’s “One Big Beautiful Bill” (OBBB), cutting short a program originally slated to run through 2032.

Karl Brauer, an analyst at iSeeCars.com, noted that demand for electric vehicles is stalling as the market becomes saturated and vehicles become harder to afford.

“Electric vehicle production is going to be cut back by every company due to falling demand,” Brauer said. “For purely EV makers, they’re probably already feeling it.”

President Trump’s reversal of Biden-era EV incentives, combined with recent auto tariffs that make cars and parts more expensive, are contributing significantly to the slowdown.

Sales Surge Before Cliff, But Full-Year Outlook Dims

Rivian experienced a temporary sales spike as buyers rushed to purchase before the tax credit expired. The company reported a 32% increase in vehicle sales to 13,201 units in the third quarter compared to the same period last year.

However, Rivian simultaneously lowered its full-year delivery guidance to between 41,500 and 43,500 vehicles, down from a previous target of 46,000. This revised forecast represents a potential 16% decline from the 51,579 vehicles delivered in 2024—a troubling reversal for a company that needs to demonstrate growth to justify its valuation and secure additional capital.

EV sales in California remained flat in 2024 compared to previous years, raising questions about whether automobile manufacturers can meet ambitious state mandates for zero-emission vehicle sales.

The $45,000 R2: Rivian’s Make-or-Break Moment

To boost sales and expand beyond its wealthy early adopter base, Rivian is preparing to launch the R2, a more affordable mid-size SUV expected to start at $45,000 when production begins in 2026. The company’s current least expensive model, the R1T pickup, carries a price tag around $71,000—a price point that remains inaccessible for many consumers, particularly without the federal tax credit.

Brauer warned that while the new model might provide a boost, Rivian needs to conserve funds in the meantime.

“Rivian is acknowledging that, and they’re reconfiguring their production plans and their cost structure as a result,” Brauer said. “That’s why they’re laying people off.”

The R2 will be produced at Rivian’s Normal, Illinois plant with capacity for up to 150,000 units annually. Rivian has also broken ground on a new Georgia facility that will eventually produce additional R2 variants, though that project has faced delays due to economic pressures.

Tesla’s Discount Strategy Falls Flat

Tesla, the electric vehicle giant run by Elon Musk, released lower-priced versions of its Model 3 and Model Y vehicles earlier this month in an apparent effort to maintain sales momentum without federal incentives. The new Model 3 Standard starts at $36,990 ($5,500 less than the existing version), while the Model Y Standard starts at $39,990 ($5,000 less than its pricier counterpart).

However, the launch did not impress investors, and analysts said the new prices are not low enough to trigger a buying surge. Tesla’s stock remained stable after the company reported its third-quarter earnings earlier this week, showing a 6% year-over-year increase in total automotive revenues.

Still, Tesla’s numbers missed analysts’ estimates, and Musk has yet to deliver on his long-promised robotaxi venture. Rivian reports its earnings on November 4.

Stock Rises Despite Layoff News

Following news of the upcoming layoffs, Rivian’s stock was up more than 1% in trading on Thursday. Its shares have shown little change so far this year, while the tech-heavy Nasdaq Composite Index rose more than 15% over the same period.

Rivian and other EV makers benefited from a temporary surge in sales ahead of the tax credit’s expiration, as customers rushed to get the discount while it was still available. National sales of new EVs jumped 19% in July from last year, Cox Automotive said, and sales in Orange County increased 7% in July from the month prior.

Now that the credit has been eliminated, analysts warn the dropoff in sales could be harsh. Brauer cautioned that Rivian might get a boost when it releases its cheaper model, but the company needs to conserve funds in the meantime.

EVXL’s Take

This is the harsh reality check the EV industry has been bracing for. Rivian’s third round of layoffs in four months isn’t just about trimming fat—it’s a company in crisis mode, desperately trying to bridge the gap between its current luxury lineup and the affordable R2 that represents its only real path to profitability.

We’ve been following Rivian’s struggles closely. Back in July, we reported on the company’s stock downgrade when Trump’s OBBB eliminated the tax credits. We covered their Q2 delivery drop—a 22% decline that signaled serious trouble ahead. And while Rivian showed impressive foresight by stockpiling batteries to dodge tariff impacts, that tactical win can’t offset the strategic disaster of losing the federal tax credit.

The bigger question is whether $45,000 will be affordable enough for the R2 to succeed without government incentives. That’s still significantly more expensive than comparable gas-powered SUVs, and buyers who might have stretched for a $45,000 EV with a $7,500 credit are now looking at the full sticker price. Meanwhile, some automakers like Hyundai and BMW are temporarily offering their own $7,500 rebates to fill the gap, but those programs won’t last forever.

Here’s what really worries us: Rivian is cutting sales and marketing staff right when it needs those teams most. The R2 launch will require massive consumer education and aggressive outreach to move beyond the early adopter crowd. Slashing those departments now might save cash in the short term, but it could kneecap the R2’s market introduction at the worst possible moment.

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