When Elon Musk, CEO of Tesla (TSLA) – Get the Tesla Inc reporttalks about the environment and the problems faced by the automotive industry, listen to industry players.
For many years, the billionaire worked hard to convince his peers, authorities and consumers that electric vehicles were the future. The task was not easy because industry skeptics were double the number of believers.
His bet even seemed lost when from 2017 to 2019 Tesla was on the verge of bankruptcy due to the difficulties of managing the increase of its production capacity for the Model 3 sedan, its main vehicle.
“The closest we got was about a month. The Model 3 ramp was too much stress and pain for a long time – from mid-2017 to mid-2019. Hell of production and logistics,” Musk said on November 3, 2020.
The tech mogul has recounted these difficulties twice this year, in March to defend rival Rivian, and in April during a Ted Talk.
“It was a big pain,” Musk said last March.
This difficult time in Tesla’s history is symbolized by Joe Rogan’s podcast interview with Musk in September 2018. During this interview, Musk and his host smoked marijuana.
Today, Tesla has become a jagger, the sixth most valuable company in the world with a market capitalization of 686.53 billion dollars in the last audit.
The Austin Automotive Group delivered nearly one million vehicles in 2021 and expects more than 1.5 million units in 2022 despite supply chain disruptions, chip shortages and rising commodity prices.
The billionaire says that in order to survive, young people must prove that they can overcome the same difficulties that Tesla did.
Rivian (RIVN) – Get the report Rivian Automotive Inc and Lucid (LCID) – Get the report Lucid Group IncThey are one of the most promising competitors, they are going through difficulties and Musk has just expressed his opinion about their future.
“The only American car companies that have not gone bankrupt are Tesla and Ford.” (φά) – Get the Ford Motor Company report Musk said during an interview with Tesla fan club Tesla Owners Silicon Valley. “And if nothing significant changes with Rivian and Lucid, they will both go bankrupt.
“I hope they are able to do something, but if they do not reduce their costs dramatically, they are in big trouble.”
GM (GM) – Get the General Motors report and Chrysler, now a member of Stellantis (FCAU) – Get the Stellantis NV reportfiled under bankruptcy laws in 2009.
Lucid and Rivian may have a chance
The billionaire then confirmed his comments in a tweet on June 14 that:
Scroll to continue
“If they [Rivian and Lucid] “They have dramatically reduced their operating system and gears, then they have a chance, but that has not happened yet,” Musk said. He referred to the operating costs and the cost of the goods sold or to the direct costs involved in building the car.
A Rivian spokesman declined to comment. TheStreet also contacted Lucid for comment.
Elon Musk’s warning comes as Lucid and Rivian face problems with increased production rates. The two automakers are also hampered by supply chain problems across the industry, but some of their difficulties are also unique to them.
As TheStreet’s Rob Lenihan wrote on June 14, Rivian, which went public in November, is delaying the delivery of its long-awaited SUV, the R1S, by one to nine months.
“As we continued to navigate a narrow supply chain, we had to reduce complexity where possible, including prioritizing certain construction combinations over others,” the company said in a letter to customers posted on RivianForums.
Rivian was founded in 2009 and went public in 2021. The company produces three electric vehicles: the R1T truck, the R1S SUV and the RCV commercial truck.
The company said in the first quarter that it had $ 17 billion in cash as of March 31. She added that it would be enough to cover her costs by launching her next model, a lower-cost vehicle called the R2, according to the planned new plant in Georgia in 2025.
But the net loss was $ 1.6 billion in the first quarter. And Rivian expects to use $ 2.6 billion in capital spending in the second quarter ending this month.
As for Lucid, whose main shareholder is the state-owned public investment fund Public Saudi Arabia – which owns 62% – the company said last month that it had enough cash to finance its operations until 2023.
“We continue to have a healthy balance sheet, closing the quarter with nearly $ 5.4 billion in cash, which we believe is sufficient to fund the company by 2023,” said Sherry House, Lucid’s chief financial officer. first trimester. profit call.
Lucid in February was forced to reduce its production target for 2022 to between 12,000 and 14,000 vehicles from 20,000, mainly due to global supply chain and logistics challenges.
Morgan Stanley analyst Adam Jonas is convinced that the group should find new capital injections in 2023.
Jonas estimates that $ 2 billion in new equity will be raised in fiscal 2023 and an additional $ 3 billion (50/50 equity / debt) in 2024, as we wrote on May 7th.
Lucid produces the Lucid Air Sedan which is available in various configurations, including Lucid Air Dream Edition, Lucid Air Pure, Lucid Air Grand Touring.