By Akash Sriram and Abhirup Roy

(Reuters) -Rivian said on Wednesday it would cut its workforce by 10% and forecast EV production for this year that widely missed estimates, hurt by downtime for factory upgrades and slowing demand for electric vehicles due to high interest rates.

Shares of the company tumbled about 16% in extended trading after Rivian said it expects to produce 57,000 vehicles in 2024, well below estimates of 81,700 units, according to eight analysts polled by Visible Alpha. It produced 57,232 vehicles last year.

“There is a host of macro level challenges… consumers are behaving more consciously,” Rivian CEO RJ Scaringe told Reuters.

That as well as a weeks-long production downtime at its Normal, Illinois factory this year meant to improve efficiency are reflected in the full-year production target, he said. Rivian has been burning through cash to ramp up production of its R1S SUV and R1T pickup trucks as it spends on building a new factory in Georgia and loses thousands of dollars on every vehicle it builds.

“The effect (of interest rates) is more pronounced on more expensive vehicles of course and EVs still average higher price,” Vitaly Golomb, Rivian investor and investment banker told Reuters, adding that “a lot is riding on” the company’s smaller and cheaper R2 SUV that is set to be unveiled next month.

The company’s cash burn comes at a time when demand for EVs has slowed, with Tesla CEO Elon Musk warning that high interest rates are making cars unaffordable.

“Our order bank has notably reduced over time as deliveries have more than doubled in 2023 versus 2022 and along with the impact of cancellations,” Scaringe said in a conference call with analysts.

Meanwhile, Lucid also forecast production for 2024 that was much lower than Wall Street’s expectations, even after it cut prices of its Lucid Air luxury electric sedans last week.

Lucid expects to make 9,000 units this year, up from 8,428 vehicles in 2023. Wall Street estimates Lucid to produce 22,594 units, according to five analysts polled by Visible Alpha.

Rivian’s cash and cash equivalents were $7.86 billion at the end of the December-quarter, compared with $7.94 billion in the preceding three-month period.

It also recorded a 10% fall in deliveries in the fourth quarter, missing estimates, citing lack of deliveries to Amazon in the three-month period to focus on the holiday period.

However, revenue for the October-December period stood at $1.32 billion, above Wall Street estimates of $1.26 billion, according to LSEG data.

Rivian has been posting a loss on every vehicle it sells and expects to record its first quarter of positive gross margin later this year.

Rivian, which said it expects to post gross profit for the first time in the fourth quarter, reported a net loss of $1.52 billion for the fourth quarter ended Dec. 31, compared with a loss of $1.72 billion a year earlier.

(Reporting by Akash Sriram in Bengaluru and Abhirup Roy in San Francisco; Editing by Shailesh Kuber)