Tesla US sales increased about 8% from Q3 2023 at a time when the overall US auto sales declined 13%. The refreshed model 3 increased 10% in sales and together with the Cybertruck made up for a 9% decline in Model Y sales. The Model Y appears to Osborne-ing as folks await the Model Y Juniper refresh due next year.
Rivian sales were down 21% as it appears it cannot compete with the Cybertruck, at least for now.
I don’t think that’s what was said. Rivian said that they have “ongoing parts shortages” which led to lower production numbers, which in turn led to lower sales numbers, which in turn led them to reduce their projected annual total by about 10,000 vehicles.
If we take Rivian at face value then the supply of its R1T pickup should be much less than the demand. I’m no economist, but I would think that would raise the R1T sales price. Yet the R1T list price is much lower than the Cybertruck that has been selling at $100+K all year. That suggests it is not competitive with the Cybertruck. https://www.motorauthority.com/news/1142258_rivian-drops-price-on-r1t-r1s-with-new-entry-level-battery
And if Rivian is slowing production because of a lack of parts, why is it still burning $1.5B in cash per quarter? That is a B for billion. Rivian reportedly loses over $30,000 for each vehicle it sells. If the only way Rivian can maintain demand is to sell its vehicles for a 30% loss, well it looks like they don’t have much pricing power. That doesn’t say much for demand.
Compare that with Tesla. The Cybertruck was similarly production constrained over the past year so Tesla turn it into the Foundation series and sold it at an exorbitant price. That is an indication of demand.
I dunno. It certainly could be a parts problem. Or it could be that they need an excuse to stop losing so much money per sale as they finalize their takeover by VW.
Probably because they are building a new production line for the R2? Of course, even without the R2 line additional capex spend, they would still be burning a bunch of cash each quarter because you usually can’t maintain a profitable auto company while selling only 10 or 20 thousand vehicles a quarter (with the supercar producers being the rare exception to this rule of thumb).
Rivian will likely need to raise more capital sometime in 2025 or 2026, maybe from VW, maybe from Amazon, or maybe even from Saudi if they decide to combine Lucid and Rivian somehow.
It’s possible, but VW has a whole host of their own problems right now that doesn’t leave them with a large excess of capital, or management bandwidth, for this kind of deal.
It took Tesla only 6 years to show it could be profitable over a single month, indicating that it could make a profitable product. This made plausible that its annual losses were due to massive investments. Has Rivian shown any evidence that it can make a profitable vehicle? It can certainly make a good vehicle. But we are seeing from other builders that the hard part is making it profitable.
And keep in mind that Tesla was trying to do something no one else could do—build an EV that could compete with ICEs in price and performance. It had no competition during those unprofitable years so it wasn’t losing marketshare to anyone. Rivian has to compete with Tesla, not to mention Ford and GM whose trucks appear at equal stages of development as Rivian.
I am skeptical of the strategy to develop and introduce new models when it hasn’t been demonstrated that Rivian can produce their first model profitably. Why spend billions building production lines with technology that hasn’t been shown to be capable of profitable production?
Because the R1 models are too expensive to appeal to the mass market. They need the R2 and the R3 at much lower price points to get the volume up to a level that has a chance at being profitable. If Tesla were only selling the S, X, and CT, they too would have minimal profitability due to too low volumes to cover all the capex and fixed operating expenses. It is the high volume 3 and Y that allow for a reasonable profit.
Tesla had its first profitable quarter when the Model S sold about 5000 vehicles. This demonstrated that the Tesla production tech in 2013 was capable of building cars profitably (or close to it) at the luxury car level even at relatively low numbers. This provided some confidence that Tesla might be able to profitably mass produce the much cheaper Model 3.
I see no such assurance with Rivian. Still losing $30,000 per vehicle a couple of years into the production R1 cycle is pretty depressing to me.
Tesla designs their cars from the start to be efficiently produced. If Rivian didn’t do the same, profitability may be a long time coming.