Elon Musk Warns Lucid and Rivian That They Are Heading Toward Bankruptcy
Regardless of how you feel about EVs, Tesla, or even Elon Musk, most agree that Musk pioneered the electric car revolution. With nearly every legacy automaker committed to electrification, it’s an idea that’s finally seemed to take hold. And as manufacturers launch new introductions and address challenges, most listen when Elon Musk shares advice.
However, Musk recently offered a stern warning to two of his direct EV competitors: Rivian and Lucid Motors. Musk claimed both would be heading for certain bankruptcy if they didn’t immediately start making changes to how they run their companies. It seems harsh at first, but with more context to his predictions, he may be speaking some hard truths for Rivian and Lucid Motors.
Why Elon Musk thinks Rivian and Lucid Motors are heading for bankruptcy
Since Elon Musk already went through the trials and tribulations associated with launching an entirely new EV car-making company, he can certainly speak from experience. During an interview, the Tesla CEO told the Tesla Silicon Valley Owners Club that his competitors were in big financial trouble. Electrek reported that according to Musk, Rivian and Lucid Motors “will both go bankrupt.”
His warning wasn’t intended to be overly critical, and Musk also said, “I hope they can do something.” But his sentiments suggest that both US-based electric vehicle startups need to do something drastic to cut costs or, as Musk put it, they will surely “end up in the car cemetery.” Interestingly enough, he also stated most electric automakers face the same financial demise, except for Tesla and Ford.
Both Rivian and Lucid Motors both raised their vehicle prices earlier this year. And Musk believes that alone is a mistake, noting that doing so would “reduce the number of people who can afford” them almost exponentially. Both EV startups posted annual losses, including Rivian taking a $1.5 billion hit last quarter. And while the trajectory doesn’t look good, there is more context to where Lucid Motors and Rivian both stand right now financially.
What consumers can expect from the Rivian and Lucid production lineups
When you look at Tesla’s early trajectory, it too was losing money early on in production. Critics of Elon Musk’s recent warnings remind consumers that Rivian and Lucid Motors are hitting the same roadblocks Tesla once did.
However, some significant differences include that Rivian launched on a much larger scale than Tesla ever did. And the EV startup still reported $17 billion cash on hand, says Inside EVs, meaning it can continue to produce its next-gen R2 series of EVs.
Lucid Motors is similarly experiencing EV growing pains. It closed its first quarter with $5.4 billion in cash in the bank, which is plenty to fund production into 2023. Lucid’s CFO, Sherry House, remains confident in the company’s financial position to continue production. And just as Rivian did, Lucid raised vehicle prices to help.
As far as consumers should be concerned, both Lucid and Rivian are still on target to roll new EVs off their respective production lines. The Rivian R1T is the company’s flagship EV pickup truck. And Lucid Motor’s Lucid Air is a luxury EV sedan, challenging the likes of the Mercedes-Benz S-Class, as NPR described. Both vehicles have been attracting investors since their inception.
Production issues plaguing both electric automakers
Since their company launched, Rivian and Lucid Motors have faced plenty of challenges. Like Tesla did initially, both companies unveiled popular vehicles capable of exciting car buyers. The problems present when it’s time to produce those cars and roll them out to the public.
Despite falling short of production goals, Rivian still produced over 2,500 EVs and delivered 1,227 in the First Quarter of this year. Its overall is roughly 5,000 units. Lucid Motors had snafus of its own, missing a few of its production goals. But it continues to be on target to produce 12,000 and 14,000 units this year.
Elon Musk may be raising the warning flag on Tesla rivals Rivian and Lucid Motors. But it may just be growing pains. Although taking too many more financial losses could eventually be detrimental to the success of both EV startups.