Tesla Inc TSLA CEO Elon Musk on Tuesday took a dig at smaller electric vehicle rival Rivian Automotive Inc RIVN saying the recently listed startup could see staggeringly negative gross margin.
What Happened: Rivian on Tuesday launched a more-expensive Dual Motor option for the R1T electric pickup truck and the R1S electric SUV and raised prices for the two models by up to 20%, evoking a response from the billionaire entrepreneur.
Musk quipped 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 in November reported $1 million revenue and a steep quarterly loss of $2.23 billion for the first nine months of 2021.
Irvine, California-based Rivian has been battling supply-chain issues and missed production targets for last year. The EV maker could produce just 1,015 electric vehicles in 2021, lower than its own target of making above 1,200 units.
The startup on Tuesday hiked the prices of its R1T electric pickup by 17% and its R1S electric sports utility vehicle by 20%. The price hike was attributed to soaring inflation, input costs, unprecedented supply chain shortages and delays for parts, as well as higher expenses for some options, upgrades, and accessories, as per Reuters.
Rivian, which is backed by Amazon.com Inc AMZN and Ford Motor Co F, is scheduled to report fourth-quarter earnings on March 10, after the market closes.
Why It Matters: Rivian is among many EV startups that went public last year despite not having delivered a single order to customers.
The move has repeatedly drawn criticism from Musk who has been vocal about automakers securing 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 taken a shot at the high valuation of Rivian and luxury EV maker Lucid Group Inc LCID and called it “strange days”.
Lucid on Monday cut its 2022 production target by up to 40%, citing extraordinary supply chain issues.
Price Action: Rivian shares closed 8.4% lower at $61.9 a share on Tuesday. The stock is down 39.7% year-to-date.
Photo: Courtesy of Rivian
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