Elon Musk just isn’t stunned 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 might 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, “Perhaps that trajectory will change, however thus far it hasn’t.”
“They should lower prices massively and the exec workforce must reside within the manufacturing facility or they’ll die,” he wrote.
Musk, having gone by way of “manufacturing hell” and “sleeping on the manufacturing facility” 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 could 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 greatest drop and lowest stage 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 effectively.
“Our enterprise just isn’t proof against present financial and geopolitical uncertainties, most notably the impression 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 progress of EVs, whereas nonetheless sturdy, has just 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 customers usually tend to be turned off by the upper costs, vary anxiousness, and poor resale worth related to EVs, amongst different considerations.
Tesla, in a name with buyers, warned of “notably decrease” gross sales progress this yr after a disappointing fourth quarter. Musk stated his EV maker is “between two main progress waves” because it goals to begin manufacturing of a extra reasonably priced mannequin late subsequent yr.
In the meantime Toyota, the world’s prime carmaker for 4 years working, and different legacy automakers are having fun with surging gross sales of hybrid automobiles, which many automotive patrons see as a extra sensible different 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 might be smaller and cheaper than what Rivian has supplied thus far.
“There’s a lack of selection of extremely compelling EV merchandise in that $45,000 to $55,000 value vary, recognizing the common value of a brand new car transaction was round $48,000,” Scaringe stated. “We stay very bullish on the R2 section and the R2 product itself.”
However the R2 is predicted to launch in 2026. Requested on CNBC whether or not a capital increase could be required to get to R2 manufacturing, Scaringe replied, “We’re very assured within the capital we’ve got supporting operations by way of the tip of 2025.” He added the corporate is “driving effectivity into all the things we do” and anticipated a fourth-quarter gross revenue later this yr.
However Rivian has a protracted approach to go. It accounted for 4.2% of EV gross sales within the fourth quarter final yr, in comparison with Tesla at 55.1%, in accordance with Kelly Blue E book estimates. The Tesla Mannequin Y alone had 33.2% of the market.
And Tesla itself, in fact, was just lately topped in international EV gross sales by China’s BYD, chief among the many Chinese language EV makers hanging concern into legacy automakers with their low manufacturing prices and quickly increasing exports.
Musk, in one other publish following Rivian’s earnings name, wrote: “Their product design just isn’t unhealthy, however the precise exhausting a part of making a automotive firm work is reaching quantity manufacturing with optimistic money movement.”
This story was initially featured on Fortune.com
