Tesla CEO Elon Musk believes EV startups Lucid Group and Rivian Automotive are headed for bankruptcy “unless something changes significantly.”
The billionaire entrepreneur sat down with Tesla Owners Silicon Valley at Gigafactory Texas and made some blunt statements regarding the two hottest EV startups in the US right now.
“Unless something changes significantly with Rivian and Lucid, they will both go bankrupt. They are tracking toward bankruptcy.”
He likened Rivian and Lucid with an airplane nosediving and added that they need to cut their costs dramatically to survive.
“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.”
It is interesting that Musk mentioned Tesla and Ford as the only EV makers that will survive. We have to assume that he was referring exclusively to US automakers, but even so, leaving GM and Stellantis out is highly debatable.
Later in the interview, Musk also said that his advice to Rivian would be “to cut costs immediately across the board dramatically or they are doomed.“
During the wide-ranging discussion, Tesla’s CEO also commented on Rivian’s price hikes applied earlier this year. He noted that when you increase the price, you “reduce the number of people who can afford the vehicles exponentially.“
These comments could come off as harsh coming from the chief executive officer of a company that went through similar struggles in its early days. Some context needs to be added to get the whole picture, though.
Rivian does lose money on every vehicle it makes, and many industry analysts, auto manufacturing experts and even CEOs from rival carmakers believe that the R1T and R1S are still underpriced even after the recent price hikes.
At the same time, Rivian had over $17 billion cash on hand at the end of last quarter, which it deemed enough to allow it to start producing its next-generation R2 series of vehicles at the new plant it will built near Atlanta, Georgia.
As for Lucid, it ended the first quarter of 2022 with close to $5.4 billion cash on hand, which is expected to fund it well into 2023, according to Lucid CFO Sherry House. The EV startup also raised prices across most models starting June 1, 2022.
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