: Elon Musk says this is what it will take for Rivian to make it in the EV business
“I hope they’re able to achieve high production & break-even cash flow. That is the true test.”
That was Tesla’s
chief executive officer Elon Musk, responding to a comment on Twitter
late Thursday over Rivian Automotive
which became the second-most valuable U.S. auto maker this week (No. 1 being Tesla, of course), after a blockbuster stock debut.
Rivian, backed by Amazon.com
and T. Rowe Price
funds, is hoping to dominate in the area of all-electric pickup trucks and SUVs. The company raised $11.9 billion in its initial public offering and shares rose another 17% on Thursday to $122.99 a share, after a 29% jump on its first day of trading Wednesday.
Musk was responding to an observation from Twitter user @samtwits who had this to say: “When $TSLA IPOed at a value of $1.7 billion they had been selling Roadster for 2 years & had stunned the world with Model S reveal the year before. No criticism of Rivian, but 24 hours into IPO MC is $100B with zero revenue. A sign of the times @elonmusk?”
In addition to his comment about high production, and cash flow, Musk added this: “There have been hundreds of automotive startups, both electric & combustion, but Tesla is only American car maker to reach high volume production & positive cash flow in past 100 years.”
Rivian has yet to make any money and the company has said it doesn’t expect to turn a profit in the “foreseeable future” as it keeps pouring money into its business. That didn’t stop investors from piling into the IPO this week.
Tesla’s market capitalization recently topped $1 trillion, lifted by record third-quarter earnings and optimism over a yet-to-be-signed deal to provide rental-car group Hertz
with a fleet of electric cars. The company reported third-quarter operating cash flow of $1.3 billion, minus capital expenditures. Its cash and equivalents fell by $164 million to $16.1 billion in the period.
A 50% jump in shares of Tesla so far this year has driven Musk’s net wealth to nearly $300 billion, making him the wealthiest man in the world. Shares have dropped 12% this week over share selling by Musk, who has sold roughly $5 billion this week.
And: A ‘Made in America’ tax credit — what car buyers considering a Tesla, Rivian or other EVs need to know about Build Back Better