Tesla’s Musk sends dire warnings to rivals Lucid and Rivian

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As Tesla CEO Elon Musk (TSLA) – Receive reports from Tesla Inc. talk about environmental and automotive sector issues, industry players listen.

For many years, the billionaire has worked hard to convince his peers, executives and consumers that electric vehicles are the future. The task was not easy as the number of skeptics about the industry was twice as high as the number of believers.

Tesla was on the brink of bankruptcy after struggling to ramp up production capacity for its entry-level vehicle, the Model 3 sedan, from 2017 to 2019.

“mega pain”

“We still had about a month left. The Model 3 ramp was a long period of extreme stress and pain — from mid-2017 to mid-2019. Manufacturing and logistics hell,” Musk said November 3, 2020, Musk said November 3, 2020.

Tech Tycoon has detailed these difficulties twice this year, in March on defending competitor Rivian and in April during a TED Talk.

“It was mega pain,” Musk said last March.

This difficult time in Tesla’s history is marked by Joe Rogan’s September 2018 podcast interview with Musk. During that interview, Musk and his host smoked marijuana.

Today, Tesla is the sixth most valuable company in the world with a market cap of $686.53 billion.

Austin Auto Group has delivered nearly one million vehicles in 2021 and expects to surpass 1.5 million units in 2022, despite supply chain disruptions, chip shortages and rising commodity prices.

The billionaire says that in order to survive, upstarts must show they can overcome the same difficulties as Tesla.

Rivian (RIVN) – Rivian Automotive Inc. Receive reports and Lucid (LCD) – Lucid Group Inc. Received reports that its most promising competitors are going through difficulties, and Musk was just pondering his future.

“The only American auto companies that haven’t gone bankrupt are Tesla and Ford” (f) — Get the Ford Motor Company report, Musk said during an interview with Tesla fan club Tesla Owners Silicon Valley. “And if nothing substantial changes with Rivian and Lucid, they will both go bankrupt.

“I hope they can do something, but unless they drastically cut their costs, they’re in big trouble.”

GM (GM) – Receive reports from General Motors Co. and Chrysler, now part of Stelantis (FCAU) – Get the Stelantis NV report filed in 2009 under bankruptcy laws.

Lucid and Rivian might have a chance

The billionaire confirmed his statements by tweeting on June 14:

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“If you [Rivian and Lucid] Drastically reduce your OPEX and COG and they have a chance, but it’s not done yet,” Musk wrote. He added the operating costs and the cost of goods sold, or the direct costs associated with the manufacture of the cars mentioned.

A spokesman for Rivian declined to comment. TheStreet also reached out to Lucid for comment.

Elon Musk’s warning comes as Lucid and Rivian struggle to deal with increased production rates. The two automakers are also hampered by industry-wide supply chain issues, but some of their difficulties are also unique to them.

As The Street’s Rob Lenihan wrote on June 14, Rivian, which went public in November, is delaying deliveries of its long-awaited R1S SUV by one to nine months.

“As we continue to navigate a tight supply chain, we need to reduce complexity wherever possible, including prioritizing specific build combinations,” the company said in a letter to customers posted on RivianForum.

Rivian was founded in 2009 and went public in 2021. The company produces three electric vehicles: the R1T pickup, the R1S SUV and the RCV van.

The company said during its first-quarter earnings call that it had $17 billion in cash as of March 31. It said that would be enough to cover its expenses by launching its next model, a low-cost vehicle called the R2, at a proposed new Georgia factory in 2025.

But the net loss for the first quarter was $1.6 billion. And Rivian expects to spend $2.6 billion on capital expenditures in the second quarter ending this month.

As for Lucid, whose main shareholder is Saudi Arabia’s Sovereign Wealth Fund Public Investment Fund — which owns 62% — the company said last month it had enough cash to fund its operations through 2023.

“We continue to have a healthy balance sheet,” Lucid’s chief financial officer, Sherry House, said during the first quarter, ending the quarter with approximately $5.4 billion in cash, which we believe will carry the company well into 2023 will help in. enough to fund it.” deserve call.

In February, Lucid was forced to reduce its 2022 production target from 20,000 to 12,000 to 14,000 vehicles mainly due to global supply chain and logistics issues.

Morgan Stanley analyst Adam Jonas is confident that the company will have to raise new capital injections in 2023.

Jonas expects to raise $2 billion in new equity in fiscal 2023 and an additional $3 billion in capital (50/50 equity/debt) in 2024, we wrote on May 7.

Lucid produces Lucid Air sedans that come in a variety of configurations including Lucid Air Dream Edition, Lucid Air Pure, and Lucid Air Grand Touring.

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