Elon Musk has said that Rivian, $RIVN, needs to ‘cut costs massively’ and its execs should ‘live in the factory’ for the it to survive
Elon Musk has said that Rivian, $RIVN, needs to ‘cut costs massively’ and its execs should ‘live in the factory’ for the it to survive.
On Wednesday, Rivian announced disappointing quarterly results and outlook, revealing plans to reduce its salaried workforce by approximately 10%.
Shortly afterward, Musk wrote on X that the electric vehicle rival would face bankruptcy in about six quarters if it continues on its current path, stating, "Maybe that trajectory will change, but so far it hasn’t."
“They need to cut costs massively and the exec team needs to live in the factory or they will die,” he added.
Musk, having experienced "production hell" and "sleeping at the factory" himself at Tesla, is well aware of the challenges involved.
The billionaire has previously cautioned about Rivian's difficulties. In June 2022, he suggested that the company should "cut costs immediately across the board dramatically or they’re doomed."
The growth of electric vehicles, while still robust, has recently slowed, leading Ford and GM to scale back their production plans. This is partly because early EV enthusiasts have already made their purchases, while regular car shoppers may be deterred by the higher prices, range anxiety, and poor resale value associated with EVs, among other factors.
Tesla, in an investor call, warned of "notably lower" sales growth this year following a disappointing fourth quarter. Musk stated that his EV company is "between two major growth waves" as it aims to commence production of a more affordable model late next year.
Meanwhile, Toyota, the world’s leading carmaker for four consecutive years, and other traditional automakers are experiencing strong sales of hybrid vehicles, which many car buyers consider a more practical alternative to EVs.
On March 7, Rivian will unveil its R2, a midsize SUV that will compete with Tesla's popular Model Y and be priced at approximately $50,000. The model will be smaller and more affordable than Rivian's previous offerings.
“There is a lack of choice of highly compelling EV products in that $45,000 to $55,000 price range, recognizing the average price of a new vehicle transaction was around $48,000,” Scaringe said. “We remain very bullish on the R2 segment and the R2 product itself.”
However, the R2 is not expected to launch until 2026. When asked on CNBC whether a capital raise would be necessary to start R2 production, Scaringe replied, “We are very confident in the capital we have supporting operations through the end of 2025.” He added that the company is “driving efficiency into everything we do” and expects a fourth-quarter gross profit later this year.
Despite this, Rivian still has a long way to go. It accounted for 4.2% of EV sales in the fourth quarter of last year, compared to Tesla's 55.1%, according to estimates from Kelly Blue Book. The Tesla Model Y alone captured 33.2% of the market.