That’s why Musk’s warning in the interview with podcasters Tesla Owners Silicon Valley and The Kilowatts did not come as a complete surprise. Musk actually issued a similar warning a year ago when Rivian announced plans for its second factory. It was disguised as a recommendation, but Musk speaks bluntly this time.
“Unless something changes significantly with Rivian and Lucid, they will both go bankrupt. They are tracking toward bankruptcy,” said Musk during the interview. “I hope they are able to do something. Unless they cut their costs dramatically they are in deep trouble and will end up in the cemetery like every other car company with the exception of Tesla and Ford.”
Musk went further and compared Rivian and Lucid with an airplane on a glide path toward the ground unless they significantly change course. Tesla’s CEO did not offer more details, but cutting costs does seem to be Musk’s obsession these days. He recently announced the intention to trim Tesla’s workforce amid a “super bad feeling” about the economy.
The auto industry is trying hard to weather the perfect storm of stagflation, parts shortages, and other problems that caused even big players to pause production and delay deliveries. Trying to do the same while ramping up production will be more difficult, especially if the coffers run dry. Rivian, for instance, reported a net loss of $4.22 billion for the year ended December 31, 2021. The things went on in the first quarter of 2022, with a $1.6-billion net loss.
Going bankrupt does not have to be the end of the world, though. General Motors and Chrysler were both insolvent at the height of the 2008 financial crisis, and both emerged stronger. But Rivian and Lucid might not afford the luxury, as they are small employers with little impact on the market.