Elon Musk's Warning: The Auto Industry is Tough
Elon Musk, the CEO of Tesla, attended a town hall at the Greater Philadelphia Expo Center in Montgomery County, Pennsylvania. During the town hall, Musk was asked why Tesla hadn't bought the struggling electric vehicle (EV) competitor, Rivian. Musk responded by highlighting the challenging nature of the auto industry and noted that only Ford and Tesla are the two US car companies that haven't filed for bankruptcy.
Musk's Comments on Rivian
Musk wished Rivian well but cautioned that the auto industry is tough. He stated that it's incredibly challenging to compete in the industry and that without the two technological advancements of electrification and autonomy, Tesla wouldn't have been successful.
Rivian's Struggles
Rivian recently announced that its third-quarter vehicle deliveries fell short of forecasts, and it had to lower its full-year production guidance due to a continued component shortage. The company delivered 10,018 vehicles in the quarter and produced 13,157 units, missing FactSet estimates of 12,670 deliveries.
One of the issues Rivian faces is the limited affordability of most of its models, which are beyond the reach of the average consumer. The company plans to launch a smaller Tesla Model Y-rivaling R2, but it won't be available until late 2026 or 2027.
Auto Market Slowdown
The auto market has been experiencing a slowdown, leading to downgrades of companies like GM, Ford, Rivian, Magna International, and Phinia by Morgan Stanley's Adam Jonas. High interest rates and increased vehicle prices have resulted in a sharp rise in new monthly car payments over the past few years.
However, Jonas has suggested that struggling EV companies could form partnerships with traditional automakers. Rivian has recently partnered with Volkswagen, supporting Jonas' prediction of consolidation in the industry.
Public Reaction
Musk's comments on Rivian have elicited various reactions. Some users argue that Tesla has nothing to gain from buying a company that has burned through a significant amount of cash without successfully launching a product line. Others believe that Musk genuinely wants other companies to succeed and has even open-sourced Tesla's patents to assist companies like Rivian.
Rivian's Stock Performance
Rivian's shares have dropped by 57% this year, hitting near-record lows. The company's short interest is about 16.5%, or approximately 122.3 million shares.
Bottom Line
Musk's warning about the tough nature of the auto industry and his comments on Rivian highlight the challenges that new entrants face in this competitive field. The struggles of Rivian and the downturn in the auto market underscore these difficulties. However, the possibility of partnerships with traditional automakers offers a potential lifeline for struggling EV companies.
What are your thoughts on Musk's comments and the challenges facing the auto industry? Share this article with your friends and discuss it. Don't forget to sign up for the Daily Briefing, which is delivered every day at 6 pm.
Elon Musk's Warning: The Auto Industry is Tough
Elon Musk, the CEO of Tesla, attended a town hall at the Greater Philadelphia Expo Center in Montgomery County, Pennsylvania. During the town hall, Musk was asked why Tesla hadn't bought the struggling electric vehicle (EV) competitor, Rivian. Musk responded by highlighting the challenging nature of the auto industry and noted that only Ford and Tesla are the two US car companies that haven't filed for bankruptcy.
Musk's Comments on Rivian
Musk wished Rivian well but cautioned that the auto industry is tough. He stated that it's incredibly challenging to compete in the industry and that without the two technological advancements of electrification and autonomy, Tesla wouldn't have been successful.
Rivian's Struggles
Rivian recently announced that its third-quarter vehicle deliveries fell short of forecasts, and it had to lower its full-year production guidance due to a continued component shortage. The company delivered 10,018 vehicles in the quarter and produced 13,157 units, missing FactSet estimates of 12,670 deliveries.
One of the issues Rivian faces is the limited affordability of most of its models, which are beyond the reach of the average consumer. The company plans to launch a smaller Tesla Model Y-rivaling R2, but it won't be available until late 2026 or 2027.
Auto Market Slowdown
The auto market has been experiencing a slowdown, leading to downgrades of companies like GM, Ford, Rivian, Magna International, and Phinia by Morgan Stanley's Adam Jonas. High interest rates and increased vehicle prices have resulted in a sharp rise in new monthly car payments over the past few years.
However, Jonas has suggested that struggling EV companies could form partnerships with traditional automakers. Rivian has recently partnered with Volkswagen, supporting Jonas' prediction of consolidation in the industry.
Public Reaction
Musk's comments on Rivian have elicited various reactions. Some users argue that Tesla has nothing to gain from buying a company that has burned through a significant amount of cash without successfully launching a product line. Others believe that Musk genuinely wants other companies to succeed and has even open-sourced Tesla's patents to assist companies like Rivian.
Rivian's Stock Performance
Rivian's shares have dropped by 57% this year, hitting near-record lows. The company's short interest is about 16.5%, or approximately 122.3 million shares.
Bottom Line
Musk's warning about the tough nature of the auto industry and his comments on Rivian highlight the challenges that new entrants face in this competitive field. The struggles of Rivian and the downturn in the auto market underscore these difficulties. However, the possibility of partnerships with traditional automakers offers a potential lifeline for struggling EV companies.
What are your thoughts on Musk's comments and the challenges facing the auto industry? Share this article with your friends and discuss it. Don't forget to sign up for the Daily Briefing, which is delivered every day at 6 pm.
