Benzinga - by Anan Ashraf, Benzinga Editor.
Tesla Inc CEO Elon Musk opined on Thursday that executives of EV startup Rivian Automotive Inc (NASDAQ:RIVN) will need to invest more time in the company’s factory to prevent an impending bankruptcy.
What Happened: Musk suggested that Rivian needs to take two steps to ensure continued survival: cut costs and spend more time in the factory. “They need to cut costs massively, and the exec team needs to live in the factory or they will die,” the billionaire CEO said.
They need to cut costs massively and the exec team needs to live in the factory or they will die— Elon Musk (@elonmusk) February 22, 2024
This comment follows Musk’s statement from Wednesday that Rivian’s current trajectory "looks like it is gearing up for bankruptcy in about six quarters."
While acknowledging Rivian’s decent product design, Musk emphasized the challenges of achieving volume production and positive cash flow in the automotive industry.
Rivian’s Shape: Rivian reported a total revenue of $1.3 billion for the fourth quarter and a net loss of $1.52 billion. The company ended the quarter with $9.37 billion in cash and cash equivalents, with a total liquidity of $10.47 billion, including an asset-based revolving credit facility.
The EV maker lost nearly $43,372 per vehicle delivered in the fourth quarter — up from nearly $31,000 in the previous quarter but significantly down from the $124,000 during the same period in 2022.
Why It Matters: The Tesla CEO is known for being a workaholic, who denounced work-from-home trends during the COVID-19 pandemic, and has often spoken about sleeping on the factory floors “because it mattered.”
Musk has previously warned of Rivian going bankrupt. In June 2022, he warned of potential bankruptcy for Rivian together with another EV maker Lucid due to their substantial spending, stating, "Unless they cut their costs dramatically, they are in deep trouble and will end up in the cemetery like every other company (automotive) with the exception of Tesla and Ford."
However, Rivian is now gearing up to unveil its R2 vehicle in March. The R2 is expected to be priced lower than the company’s initial R1 offerings, in the same price bracket as Tesla’s best-selling Model Y SUV.
Check out more of Benzinga’s Future Of Mobility coverage by following this link.
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Photo courtesy: Thomas Hawk on Flickr
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