Elon Musk is just not 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 mentioned it might reduce 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 up to now it hasn’t.”
“They should reduce prices massively and the exec staff must dwell within the manufacturing facility or they may die,” he wrote.
Musk, having gone by “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 mentioned 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 properly.
“Our enterprise is just not resistant to current financial and geopolitical uncertainties, most notably the influence of traditionally excessive rates of interest, 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 just lately slowed, spurring Ford and GM to pare again their manufacturing plans. That is partly as a result of the early EV lovers have already purchased their automobiles, and common automobile customers usually tend to be turned off by the upper costs, vary anxiousness, and poor resale worth related to EVs, amongst different issues.
Tesla, in a name with traders, warned of “notably decrease” gross sales progress this yr after a disappointing fourth quarter. Musk mentioned 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 operating, and different legacy automakers are having fun with surging gross sales of hybrid automobiles, which many automobile 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 well-liked Mannequin Y and be priced at round $50,000. The mannequin will probably be smaller and cheaper than what Rivian has supplied up to now.
“There’s a lack of alternative of extremely compelling EV merchandise in that $45,000 to $55,000 value vary, recognizing the common value of a brand new automobile transaction was round $48,000,” Scaringe mentioned. “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 could be required to get to R2 manufacturing, Scaringe replied, “We’re very assured within the capital we now have supporting operations by the tip of 2025.” He added the corporate is “driving effectivity into every part we do” and anticipated a fourth-quarter gross revenue later this yr.
However Rivian has an extended solution to go. It accounted for 4.2% of EV gross sales within the fourth quarter final yr, in comparison with Tesla at 55.1%, based on Kelly Blue E-book estimates. The Tesla Mannequin Y alone had 33.2% of the market.
And Tesla itself, after all, 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 submit following Rivian’s earnings name, wrote: “Their product design is just not unhealthy, however the precise laborious a part of making a automobile firm work is attaining quantity manufacturing with constructive money move.”
This story was initially featured on Fortune.com