Elon Musk says that electrical automobile startups Lucid and Rivian are monitoring towards chapter until one thing modifications.
Throughout an interview with the Tesla Silicon Valley Owners Club, Tesla CEO Elon Musk stated that each Lucid Motors and Rivian, two US-based electrical automobile startups, are trending towards chapter.
The CEO stated:
Until one thing modifications considerably with Rivian and Lucid, they’ll each go bankrupt. They’re monitoring towards chapter.
I hope they’ll do one thing, however until they’ll reduce their price dramatically, they’re in serious trouble and can find yourself within the automotive cemetery like each different except for Tesla and Ford.
Right here’s the related a part of the interview:
Musk additionally added later in the course of the interview:
My recommendation to Rivian could be to chop prices instantly throughout the board dramatically or they’re doomed.
He additionally commented on Rivian increasing the prices of its electric vehicles earlier this year and famous that once you enhance the worth, you “scale back the quantity of people that can afford the automobiles exponentially.”
Clearly, he’s technically correct, however I believe that the feedback want much more nuance that wasn’t communicated in the course of the interview.
Rivian lost $1.5 billion last quarter, and it has vital detrimental gross margins. If it retains shedding cash on electrical automobiles it sells and delivers, it’s going to go bankrupt until it may well increase extra money, which could be troublesome with out indicators of the trajectory altering. Lucid is in an identical state of affairs.
Nonetheless, that is the place you’d count on Rivian and Lucid to be at this stage of their evolution and Tesla was in a really related state of affairs across the identical time.
Tesla was shedding cash and relied on elevating extra capital for a very long time earlier than it bought its prices below management.
I’d say that the largest distinction is – particularly with regards to Rivian – that they’re doing it on an even bigger scale than Tesla. By the point Tesla was delivering hundreds of automobiles per quarter, the automaker had achieved a optimistic gross margin on them – although it was nonetheless shedding cash total.
Rivian continues to be shedding cash on each automobile it delivers. However, once more, signaling doom assumes that Rivian can’t reduce prices by scaling and slicing manufacturing prices.
The opposite distinction is that Rivian can afford it with over $16 billion money readily available on the finish of final quarter. However to Musk’s level, it’s on a downward trajectory and one thing wants to alter, however once more – not not like Tesla simply 5 years in the past.
Each Lucid and Rivian have good merchandise which can be getting folks excited, and they’re now specializing in ramping these merchandise up whereas lowering the prices. Sure, it’s one thing to keep watch over, however Musk’s “doom” feedback are similar to the naysayer’s feedback that pissed off him so much when Tesla’s was in the identical progress part.
As an apart, I actually want Musk would return to giving interviews to folks that aren’t simply superfans and would really problem him on feedback like that. I’m not blaming these guys as a result of it’s not their job – they’re followers and so they simply need to hear him discuss, however the entire interview is Musk making statements with them nodding, with out ever difficult something he says.
For my part, it doesn’t make for essentially the most informative content material, however that’s been Musk’s media remedy for the previous 12 months or so.
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