Tesla Inc (NASDAQ: TSLA) CEO Elon Musk said on Tuesday he believes that electric vehicle startups Rivian Automotive Inc (NASDAQ: RIVN) and Lucid Group Inc (NASDAQ: LCID) are headed toward bankruptcy.
What Happened: The billionaire entrepreneur said that the two firms need to cut costs dramatically to stay out of danger.
“Unless they cut their costs dramatically, they are in deep trouble and will end up in the cemetery like every other company (automotive) with the exception of Tesla and Ford," Musk said in an interview on Tesla Owners Silicon Valley’s YouTube channel.
Musk also pointed out that Chrysler and General Motors Co (NYSE: GM) had gone bankrupt in 2008 before getting bailed out by the government. Ford Motor Co (NYSE: F), which also secured bailouts, is in a better financial position because it probably has "a better long-term vision," Musk said.
See Also: Elon Musk On Valuations Of Tesla Rivals Lucid And Rivian Says 'These Are Strange Days'
Why It Matters: Musk has previously taken shots at Rivian and Lucid's valuations. Rivian counts Amazon.com Inc (NASDAQ: AMZN) and Ford as its two biggest investors.
The two EV startups scored high valuations when they went public last year, higher than legacy rivals GM and Ford, but those have gone downhill recently.
Rivian has been a “train wreck” since its IPO last year and a “black eye” for the EV industry, a Wedbush Securities analyst said last month. The startup could burn $7 billion in cash this year and could raise an additional $3 billion by the year-end to fund its “extraordinarily capital intensive” production ramp-up, according to a Morgan Stanley analyst.
Rivian, which struggled to meet production and delivery targets last year, has forecast it will make 25,000 vehicles in 2022, lower than its previous estimate.
Lucid too missed its delivery target last year and aims to make between 12,000 and 14,000 vehicles this year, down from a previous goal of 20,000. The company is also under investigation by the Securities and Exchange Commission.
Price Action: Tesla closed 2.4% higher at $662.6 on Tuesday.
