Elon Musk says that electric vehicle startups Lucid and Rivian are tracking toward bankruptcy unless something changes.
During an interview with the Tesla Silicon Valley Owners Club, Tesla CEO Elon Musk said that both Lucid Motors and Rivian, two US-based electric vehicle startups, are going downhill.
“Unless something changes significantly with Rivian and Lucid, they will both go bankrupt. They are tracking toward bankruptcy. I hope they can do something, but unless they can cut their cost dramatically, they are in deep trouble and will end up in the car cemetery like every other with the exception of Tesla and Ford.”
Rivian lost $1.5 billion last quarter, and it has huge negative gross margins. If this trajectory is carried on, bankruptcy won’t be far away. Lucid is in a similar situation.
However, this is where you’d expect Rivian and Lucid to be at this stage in their evolution and Tesla was in a very similar situation around the same time.
Tesla was losing money and relied on raising more capital for a long time before it got its costs under control.
One of the reasons for this problem is that Rivian is doing it on a bigger scale than Tesla. By the time Tesla was delivering thousands of vehicles per quarter, the automaker had achieved a positive gross margin on them – though it was still losing money overall.
Rivian is still losing money on every vehicle it delivers.
Also, Rivian can afford it with over $16 billion cash on hand at the end of the last quarter. But to Musk’s point, it is on a downward journey.
Both Lucid and Rivian have good products that are getting people intrigued, and they are now focusing on ramping those products up while cutting the costs.