Insufficient demand, layoffs! The American electric vehicle newcomer Rivian Automotive plummeted 15% after hours.

In the face of sluggish demand in the electric vehicle market, Rivian Automotive has lowered its production expectations for 2024, triggering great concerns among investors. Investors are worried that without strong demand to support it, Rivian Automotive will find it difficult to improve its already poor financial situation.

On February 22 local time, Rivian Automotive announced a fourth-quarter loss of $1.52 billion, or $1.58 per share, exceeding FactSet's expected loss of $1.35 per share. Annual revenue increased from $663 million a year ago to $1.3 billion, higher than FactSet's expected revenue of $1.28 billion. At the same time, Rivian released production guidance, expecting to produce 57,000 electric vehicles in 2024, lower than the 57,232 units in 2023 and far below Wall Street's previous estimate of 66,000 units. Rivian explained:

"Economic and geopolitical uncertainties, especially historically high interest rates, have affected our expectations for 2024."

Investors expressed concerns over the decline in Rivian's production guidance, leading to a 15% plunge in Rivian's stock price after hours.

In the context of slowing demand for electric vehicles, Rivian Automotive's performance may suffer significant and sustained impacts. Analyst Tom Narayan from Royal Bank of Canada Securities expressed concerns about Rivian, believing that traditional car manufacturers offering gasoline and hybrid vehicles are "better equipped to deal with the current slowdown in electric vehicle demand."

CFRA analyst Garrett Nelson noted that Rivian's revenue slightly exceeded market expectations, but quarterly losses were due to "high costs." Nelson added,

Unfortunately, without stronger demand to support it, Rivian will have a hard time improving its recent financial performance.

Moreover, the high-end electric vehicle market is already saturated, posing significant challenges for transformation. Americans purchased approximately 1.2 million pure electric vehicles in 2023, a 46% increase from 2022, with over 70% falling under luxury car sales. Rivian primarily sells luxury electric vehicles, with the starting price of their R1S SUV around $75,000. If Rivian aims to expand its market share, it must enter the mass-market electric vehicle segment, potentially setting up a showdown with Tesla.

Additionally, Rivian announced plans to lay off around 10% of its workforce.