It's no surprise that electric vehicle (EV) start-ups have been struggling to ramp up amid supply chain challenges and rising raw material costs. Widely followed Rivian Automotive (RIVN -12.05%) is doing something about it, and the news sent shares up more than 5% on Thursday morning. As of 12:56 p.m. ET today, the stock remained 2.6% higher.
Previously rumored job cuts were announced at the early-stage EV maker. Several weeks ago, the possibility of layoffs at Rivian was reported by Bloomberg. It was estimated that 5% of the workforce might be cut.
Today, The Wall Street Journal reported that the company has laid off 6% of its 14,000 employees. That report parallels other news from Washington that is aimed at helping the clean energy sector, including EVs. Investors think both items are potentially good news for Rivian.
Rivian has acknowledged rising raw material costs are affecting its business. It raised prices earlier this year to help compensate. Today's report said CEO R.J. Scaringe sent an internal memo to employees saying the new job cuts were intended to spur cost-cutting as the company continues to work on expanding production and investing in growth. The cuts would not include manufacturing jobs, according to the report.
That's probably the best news for investors, as production shouldn't be affected. Rivian expects to hit a reduced goal of producing 25,000 vehicles in 2022, including its consumer pickup trucks and SUVs as well as electric delivery vehicles for Amazon.
The first Amazon delivery vans began rolling out last week. Investors are counting on the full order of 100,000 to contribute to Rivian's growth through the remainder of this decade.
Investors are also cheering news out of Washington that significant investments in the clean energy sector are included in legislation that has a realistic chance of passing in Congress. The Inflation Reduction Act of 2022 was the result of a compromise between more-progressive Democrats and West Virginia Sen. Joe Manchin, the pivotal vote.
Among the funds aimed at clean energy are a $10 billion investment tax credit for factories (including those for EVs) and other credits to entice individuals to purchase EVs. The two news items contributed to Rivian shares jumping today.