Elon Musk Was Right About Rivian | Bankrupt?!

and unless something changes significantly with rivian and Lucid they will both go bankrupt they're tracking to bankruptcy rivien was a promising EVC scrub that entered the market and shocked everybody with one of the most successful IPOs in the last 10 years they released the rivian r1t in 2020 which sold out in record time and quickly started delivering in 2021. customers love the product and it looked fantastic however they have one huge problem they're competing with one of our generation's most successful business minds and the car industry is incredibly competitive in a recent interview Elon Musk warn that rivien was on a one-way path to bankruptcy and he was correct after recent news from rivienne join us as we explain what just happened to rivian and why this could be the end for the EV startup before we dive into the most recent news we need to understand how rivien went from being the hottest stock on Wall Street to a company in an uncontrollable death spiral rivian Motors went public on November 10 2021 under the ticker symbol rivn on the NASDAQ the company's stock was initially priced at 78 dollars per share selling 153 million shares and raising 12 billion dollars this was the largest IPO in the U.S since 2014 and valued rivien at over 100 billion dollars rivian stocks soared on its debut day closing at 100.73 cents per share of 29 from its IPO price the stock continued to rise in the following days reaching a peak of 129.95 per share on November 15 2021. this gave rivien a market cap of over 150 billion dollars surpassing established automakers such as Ford and Volkswagen however this is when the story changed rivian started to miss production and delivery targets they were forced to increase their prices due to supply chain issues which frustrated customers and sparked investors skepticism about his valuation and profitability today the stock is nosedive 90 from its all-time high of 129 dollars per share to just 13 per share and if that wasn't enough the story is getting worse rivian is hemorrhaging cash and the plug the hole and save the company the CEO announced that they need to raise 1.3 billion dollars in cash via the sale of convertible nodes in the wake of diminishing funds rivian said the convertible notes will qualify as green bonds meaning they meet a set of criteria that tends to attract institutions willing to accept lower returns in exchange for supporting sustainable development green bonds are basically a way of supporting projects with environmental or climate benefits still investors don't invest in them out of the goodness of their hearts this type of investing often comes with huge tax incentives like complete tax exemption on capital gains or tax credits the benefits vary from state to state we all know the full benefits of rivian's bonds once they are priced but raising this money sends a message to the market that the company is changing its plans which brings uncertainty and investors never like that the company said that the new funds will be used to fund the R2 which Rivals attempts to release a lower price Model the rivien 2 is the name of the rivian's next all-new electric vehicle platform that will be smaller and more affordable than the current R1 platform that underpins the r1t pickup and r1s SUV rivien says the R2 will be the next step to expand the Brand's portfolio globally across different price points and form factors but has not revealed many details about what shape or size the R2 Vehicles will be the rivien 2 family will be produced in a new 5 billion dollar Factory in Georgia us that is scheduled to open in 2024 and is estimated to cost around fifty five thousand dollars another reason the stock is falling is the announcement that it aims to make just 50 000 electric vehicles in 2023 which is twice as many as last year but lower than what the market expected the Wall Street analyst predicted the company should Target 60 000 to 65 000 cars this year still it seems the company is being overly cautious with its numbers this indicates they see a drop in sales figures and signals that their demand is lower than it once was according to Bloomberg rivian secretly believes it can exceed 50 000 vehicles in 2023 the report said company Executives told employees that making 62 000 electric vehicles this year is achievable Elon Musk has repeatedly sounded the alarm on rivian and it seems that rivien may have actually listened to him in Elon musk's words the only car companies in the US that haven't gone bankrupt are Tesla and Ford unless something changes significantly with rivian and Lucid they will both go bankrupt musk added I hope they can do something but unless they can cut their costs dramatically they are in deep trouble and will end up in the car Cemetery like every other with the exception of Tesla and Ford my advice to rivien would be to cut costs immediately across the board dramatically or they're doomed now rivien has confirmed they are reducing headcount by six percent in an effort to reach profitability we must focus our resources on the ramp and our path to profitability the rivian CEO said in the email in which he apologized to employees for the necessity of the cuts it has always pointed out that Elon Musk will obviously be critical of rivium because they are competition but interestingly this is not the case Tesla's mission statement is to accelerate the world's transition to sustainable transport Elon knows Tesla cannot do that all by itself and needs other car makers to contribute to this effort but he also knows how hard it is to start and grow a profitable car company Tesla has famously come close to bankruptcy on several occasions including in 2008 on Christmas Eve Elon said in a tweet Tesla financing closed at 6 PM Christmas Eve the last hour of the last day possible payroll would otherwise have bounced two days after Christmas Elon Musk understands how hard it is for a new company to survive and is given the warning to help avoid making the same mistakes he did Tesla has open sourced all its patents meaning anybody can see and use its protected designs for free if he was focused on crushing his competitors and trying to monopolize the electric vehicle industry this would be the last thing he would do at the same time Tesla seems so far ahead of their competitors that they are now doing laps of them Tesla slashes prices significantly by up to 20 percent and what seemed like a sincere effort by Tesla to boost its sales and make EVS more accessible has triggered a price war in the car industry but this was expected it's basic economics when a dominant company lowers prices all its competitors feel forced to do the same Ford has already reduced the price of its Mustang Mach e by up to nine percent with GM and every other EV maker under pressure to follow but rivian is already burning through cash while at the same time losing money on every car they sell so it's no surprise that the CEO has opted out of joining a price War we feel confident in the value proposition of what we're delivering at our pricing levels today said the CEO in an earnings call interview in February of this year rivian posted a fourth quarter revenue of 663 million dollars and a fourth quarter net loss of 1.7 billion compared with a 2.5 billion loss a year ago the company also said it had cash and cash equivalents of 11.6 billion dollars down from 13.3 billion at the end of the previous quarter in its fourth quarter earnings report the car maker said that it continued to use up cash but expected better vehicle gross margins over time through cost savings and higher production levels in 2019 musk was asked about competition in the electric vehicle market during an interview with recode he mentioned rivin as one of the companies with the potential to succeed he said I think it's good that other companies are making electric cars it's a good thing and they should bring it on things changed and in 2020 musk expressed skepticism about rivien Tesla had a cyber truck upcoming back then most thought the electric pickup rivian was planning to launch would compete directly with it must tweet it Tesla will make a pickup truck after model y I've had the core design engineering elements in my mind for almost five years and I'm dying to build it he also suggested that rivian's truck design may not be aerodynamic enough it would keep it from achieving high range and efficiency rivian is staying optimistic and some things are going well for them still they might need to listen to Elon Musk if they want to stay in business what do you think is Elon Musk right let us know in the comments section thank you very much for watching today we appreciate you leaving a like and consider subscribing so you're always in the loop for the latest EV and Tech news

Channel: Velocity

Views: 120,179

Keywords: rivian, rivian r1t, rivian truck, rivian r1t review, rivian r1s, rivian electric truck, rivian vs tesla, 2022 rivian r1t, rivian r1t pickup truck, rivian r1t offroad, rivian suv, electric truck, r1t, rivian tank turn, rivian review, rivian truck review, rivian r1t tank turn, ev, rivian stock, 2021 rivian r1t, rivian r1t pickup, tesla, rivian news, r1s, tesla news, tesla stock, tesla model s, tesla model x, tesla analysis

Id: pJPG7a0YMAo

Length: 8min 48sec (528 seconds)

Published: Tue Mar 21 2023