Tesla Inc. (NASDAQ: TSLA) CEO Elon Musk Tuesday made a search at a small electric vehicle rival Rivian Automotive Inc. (NASDAQ: RIVN) saying the recently listed startup could see an incredibly negative gross margin.
What happened: Rivian on Tuesday launched a more expensive Double Motor possibility for the R1T electric van and the R1S electric SUV and raised the prices of both models by up to 20%, evoking a response from the billionaire entrepreneur.
Musk joked that the move would result in a “staggering” negative gross margin for Rivian.
Their negative gross margin will be staggering
— Elon Musk (@elonmusk) March 2, 2022
The newly listed electric vehicle startup had reported November revenue of $1 million and a sizable quarterly loss of $2.23 billion for the first nine months of 2021.
Rivian, based in Irvine, Calif., struggled with supply chain issues and missed production targets last year. The EV maker could produce just 1,015 EVs in 2021, falling short of its own goal of making more than 1,200 units.
The startup on Tuesday increased the prices of its R1T 17% electric pickup and sound R1S electric sport utility vehicle by 20%. The price hike was attributed to soaring inflation, input costs, unprecedented supply chain shortages and parts delays, and higher spending on some options , upgrades and accessories, according to Reuters.
Rivian, which is supported by Amazon.com Inc. (NASDAQ: AMZN) and Ford Motor Co. (NYSE:F), is expected to report fourth quarter results on March 10, after the market closes.
Why is this important: Rivian is among several EV startups that went public last year despite not delivering a single order to customers.
The move has repeatedly drawn criticism from Musk, who has spoken out about automakers getting a high valuation. In August, Musk said Rivian should have delivered at least one vehicle per billion of its valuation before its IPO.
Musk had also in the past tried to take advantage of the strong valuation of Rivian and the luxury electric vehicle maker Lucide Group Inc. (NASDAQ: LCID) and called it “Strange Days.”
Lucid cut its 2022 production target by up to 40% on Monday, citing extraordinary supply chain issues.
Price action: Shares of Rivian closed down 8.4% at $61.9 per share on Tuesday. The title is down 39.7% since the start of the year.
Photo: Courtesy of Rivian
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