Elon Musk is just not shocked by the unhealthy information hitting Tesla rival Rivian. He’s been warning about it for a while.
On Wednesday, Rivian introduced a disappointing quarter and outlook and stated it will lower its salaried workforce by roughly 10%.
Shortly after, Musk wrote on X that the rival maker of electrical automobiles would go bankrupt in about six quarters on the present trajectory, including, “Possibly that trajectory will change, however thus far it hasn’t.”
“They should lower prices massively and the exec group must dwell within the manufacturing unit or they are going to die,” he wrote.
Musk, having gone by way of “manufacturing hell” and “sleeping on the manufacturing unit” himself at Tesla, ought to know.
The billionaire has warned about Rivian’s challenges earlier than. In June 2022, he stated his recommendation for the corporate can be “to chop prices instantly throughout the board dramatically or they’re doomed.”
After markets opened on Thursday, Rivian shares fell by as a lot as 26%, their largest drop and lowest degree because the firm went public in 2021.
Rivian CEO RJ Scaringe pointed to excessive rates of interest as one of many EV maker’s key challenges, one thing Musk has described as hampering Tesla as properly.
“Our enterprise is just not resistant to present financial and geopolitical uncertainties, most notably the affect of traditionally excessive rates of interest, which has negatively impacted demand,” Scaringe stated on an earnings name.
That’s not the one problem.
EV slowdown
Gross sales development of EVs, whereas nonetheless sturdy, has lately slowed, spurring Ford and GM to pare again their manufacturing plans. That is partly as a result of the early EV fans have already purchased their automobiles, and common automotive buyers usually tend to be turned off by the upper costs, vary nervousness, and poor resale worth related to EVs, amongst different considerations.
Tesla, in a name with traders, warned of “notably decrease” gross sales development this 12 months after a disappointing fourth quarter. Musk stated his EV maker is “between two main development waves” because it goals to begin manufacturing of a extra inexpensive mannequin late subsequent 12 months.
In the meantime Toyota, the world’s high carmaker for 4 years operating, and different legacy automakers are having fun with surging gross sales of hybrid automobiles, which many automotive patrons see as a extra sensible various to EVs.
On March 7, Rivian will unveil its R2, a midsize SUV that may tackle Tesla’s widespread Mannequin Y and be priced at round $50,000. The mannequin can be smaller and cheaper than what Rivian has provided thus far.
“There’s a lack of selection of extremely compelling EV merchandise in that $45,000 to $55,000 worth vary, recognizing the common worth of a brand new automobile transaction was round $48,000,” Scaringe stated. “We stay very bullish on the R2 phase and the R2 product itself.”
However the R2 is anticipated to launch in 2026. Requested on CNBC whether or not a capital increase can be required to get to R2 manufacturing, Scaringe replied, “We’re very assured within the capital we’ve supporting operations by way of the top of 2025.” He added the corporate is “driving effectivity into all the pieces we do” and anticipated a fourth-quarter gross revenue later this 12 months.
However Rivian has an extended approach 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%, in accordance with Kelly Blue Ebook estimates. The Tesla Mannequin Y alone had 33.2% of the market.
And Tesla itself, after all, was lately topped in international EV gross sales by China’s BYD, chief among the many Chinese language EV makers placing concern into legacy automakers with their low manufacturing prices and quickly increasing exports.
Musk, in one other put up following Rivian’s earnings name, wrote: “Their product design is just not unhealthy, however the precise onerous a part of making a automotive firm work is reaching quantity manufacturing with constructive money circulation.”
