In response to ongoing market challenges and a broader downturn in electric vehicle (EV) demand, Rivian, the electric vehicle manufacturer, announced its decision to reduce its workforce by approximately 1% on Wednesday. 

This marks the company's second round of job cuts this year, illustrating its commitment to cost reduction initiatives amidst economic headwinds within the EV sector.

Following the announcement, Rivian's stock, which had surged as much as 3.4% earlier in the day, saw a significant pullback, closing up only 1% on Thursday. 

Rivian cited the necessity of this decision in achieving its goal of attaining positive gross margins by the year's end, underscoring the strategic imperative of aligning operational expenses with revenue targets, reported Reuters. 

The layoffs primarily targeted staff supporting the core business functions, reflecting the company's focused approach to optimising its workforce structure.

This move follows Rivian's earlier workforce reduction of 10% in February, a response to investor disappointment stemming from a lower-than-expected production forecast for 2024. 

According to its annual report, as of December 31, Rivian employed 16,790 individuals across its operations in North America and Europe. The company's efforts to streamline operations and enhance cost-efficiency include internalising some production processes, renegotiating supply contracts, and temporarily halting production lines for upgrades aimed at bolstering productivity and reducing expenses.

Despite unveiling plans for its more affordable R2 SUV models and streamlining production processes at its existing U.S. facility, Rivian's stock experienced a significant downturn, hitting record lows amid growing concerns over consumer sentiment towards EVs. 

The prevailing market conditions have prompted other industry players, including market leader Tesla and automotive giant Ford, to undertake similar cost-cutting measures and price adjustments to stimulate demand and manage financial sustainability.

As Rivian prepares to report its first-quarter results on May 7, the company faces the formidable task of navigating through a challenging market landscape while striving to achieve long-term viability and profitability in the rapidly evolving EV sector.