Elon Musk isn’t shocked by the unhealthy information hitting Tesla rival Rivian. He’s been warning about it for a while.
On Wednesday, Rivian announced a disappointing quarter and outlook and mentioned it could lower its salaried workforce by roughly 10%.
Shortly after, Musk wrote on X that the rival maker of electrical autos would go bankrupt in about six quarters on the present trajectory, including, “Maybe that trajectory will change, but so far it hasn’t.”
“They need to cut costs massively and the exec team needs to live in the factory or they will die,” he wrote.
Musk, having gone via “production hell” and “sleeping at the factory” himself at Tesla, ought to know.
The billionaire has warned about Rivian’s challenges earlier than. In June 2022, he said his recommendation for the corporate can be “to cut costs immediately across the board dramatically or they’re doomed.”
After markets opened on Thursday, Rivian shares fell by as a lot as 26%, their greatest drop and lowest degree for the reason that firm went public in 2021.
Rivian CEO RJ Scaringe pointed to high interest rates as one of many EV maker’s key challenges, one thing Musk has described as hampering Tesla as properly.
“Our business is not immune to existing economic and geopolitical uncertainties, most notably the impact of historically high interest rates, which has negatively impacted demand,” Scaringe mentioned on an earnings name.
That’s not the one problem.
EV slowdown
Gross sales progress of EVs, whereas nonetheless robust, has not too long ago slowed, spurring Ford and GM to pare back their production plans. That is partly as a result of the early EV fans have already purchased their autos, and common automobile consumers usually tend to be turned off by the upper costs, vary nervousness, and poor resale value related to EVs, amongst different considerations.
Tesla, in a name with traders, warned of “notably lower” gross sales progress this 12 months after a disappointing fourth quarter. Musk mentioned his EV maker is “between two major growth waves” because it goals to start out manufacturing of a extra inexpensive mannequin late subsequent 12 months.
In the meantime Toyota, the world’s prime carmaker for 4 years operating, and different legacy automakers are having fun with surging sales of hybrid vehicles, which many automobile consumers see as a extra sensible various to EVs.
On March 7, Rivian will unveil its R2, a midsize SUV that may tackle Tesla’s common Mannequin Y and be priced at round $50,000. The mannequin shall be smaller and cheaper than what Rivian has supplied to this point.
“There is a lack of choice of highly compelling EV products in that $45,000 to $55,000 price range, recognizing the average price of a new vehicle transaction was around $48,000,” Scaringe mentioned. “We remain very bullish on the R2 segment and the R2 product itself.”
However the R2 is predicted to launch in 2026. Requested on CNBC whether or not a capital increase can be required to get to R2 manufacturing, Scaringe replied, “We are very confident in the capital we have supporting operations through the end of 2025.” He added the corporate is “driving efficiency into everything we do” and anticipated a fourth-quarter gross revenue later this 12 months.
However Rivian has an extended option to go. It accounted for 4.2% of EV gross sales within the fourth quarter final 12 months, in comparison with Tesla at 55.1%, according to Kelly Blue Ebook estimates. The Tesla Mannequin Y alone had 33.2% of the market.
And Tesla itself, in fact, was not too long ago topped in international EV gross sales by China’s BYD, chief among the many Chinese language EV makers placing worry into legacy automakers with their low production costs and quickly increasing exports.
Musk, in one other put up following Rivian’s earnings name, wrote: “Their product design is not bad, but the actual hard part of making a car company work is achieving volume production with positive cash flow.”
