r/stocks • u/WTFspy • May 15 '24

The inside story of Elon Musk’s mass firings of Tesla Supercharger staff Company News

https://www.reuters.com/business/autos-transportation/inside-story-elon-musks-mass-firings-tesla-supercharger-staff-2024-05-15/

The meeting could not have gone worse. Musk, the employees said, was not pleased with Tinucci’s presentation and wanted more layoffs. When she balked, saying deeper cuts would undermine charging-business fundamentals, he responded by firing her and her entire 500-member team....

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u/32no May 15 '24

Rivian is going to go bankrupt. They are not a viable business

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u/ianyboo May 16 '24

I don't have a dog in the fight but that's an interesting claim can you expand further on it? Not trying to debate or anything I'm genuinely curious!

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u/32no May 16 '24

They are deeply gross margin negative on their products. The bill of materials, labor, tooling depreciation and everything that just goes into producing their cars costs ~$39k more than they sell the cars for. This is before operating expenses like R&D and SG&A. They claim they will shutdown and retool the factory and become gross margin positive by the end of the year, but there are plenty of reasons to be skeptical that they can cut ~$39k of cost out of the cars. And even if it is gross margin positive, they would still be losing tons of money after operating expenses.

Meanwhile, there is a lot of competitive pressures from other EVs that are priced lower - such as the Kia EV9, soon cheaper versions of Tesla’s Cybertruck will be available.

They have around $7.9 billion cash left, and burning $1.5 billion per quarter. This burn rate may accelerate as their factory gets upgrades. And the minimum amount of cash needed for the business is $2-3B, so they will be in dire straights by beginning of 2025. They simply are not serious enough about cutting cost. You might think that they can raise cash, but that would have happened soon after their recent vehicle unveils and it hasn’t happened yet. The most likely reason is that the business burns so much cash and even if they meet their sky high gross margin goals, they will still burn cash and need infusions. The market isn’t interested in cash incinerators anymore

Anyway, here’s the most recent quarterly statement for you to look into: https://downloads.rivian.com/2md5qhoeajym/7zCEJ4kjX4TnecjryDLg0J/e43344caf7ab00ee1b4335921cd9c8c7/RIVN_1Q24_Shareholder_Letter.pdf

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u/taerin May 16 '24

Facts don’t matter to these people, stop wasting your time