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EV company woes run deep

Jul 13, 2022
Illustration of electric vehicle surrounded by various upwards and downward trend lines

Illustration: Eniola Odetunde/Axios

When EV makers Canoo and Nikola laid off staff earlier this year, investors were quick to blame the SPAC processes through which those companies went public. But Tuesday's layoffs at Rivian and Tesla indicate the industry's problems aren’t in how companies go public, but in how they operate.

Why it matters: The SPAC discussion was easier to focus on than the complexity and capital requirements necessary to build a successful car company in the U.S, electric or otherwise.

Driving the news: In an email to staff Tuesday that was shared with Axios, Rivian CEO RJ Scaringe outlined the company's path for the next 18 months, which includes waves of layoffs across the company.

  • "We are financially well positioned and our outlook remains strong, but to fully realize our objectives it is critical that our strategy supports our sustainable growth as we ramp towards profitability," Scaringe told employees.

Between the lines: Rivian isn't profitable and shareholders are getting antsy.

Yes, and: Tesla also filed a 60-day WARN notice indicating its intention to lay off 229 employees in its autopilot division and close the company's San Mateo office.

  • Unique among its peers, Tesla recorded $3.2 billion in profit in Q1.

Quick take: The focus on the way EV companies went public has overshadowed the bigger question of whether they should be public at all.

  • As much as Tesla and its ilk want to be software companies, at the end of the day they are investing heavily in a complex hardware business with strict regulations in a heavily competitive market that no amount of profit hacking can fix.

What we're watching: Whether Rivian's cash position, which worsened from 2020 to 2021, necessitates even more cuts in the near term. And if Tesla's profitability didn't protect it from layoffs, what's next across EV makers?

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