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EV Death Pool Update: Rivian
Rivian is performing in a manner that according to any historical business metrics would have it on the path to bankruptcy in the very near future. The EV manufacturer is producing staggering losses, it is rapidly burning through its cash, and its already weak revenue figures have peaked and are now in decline.
Rivian continues to lose over $30,000 on every vehicle it sells, and with a negative gross profit margin, there is no sales volume that would be profitable.
Expectations are being lowered to minimize how “unexpectedly” bad Rivian’s Q4 will be. Concurrently, Rivian continues to burn cash like it’s being consumed by a runaway thermal lithium fire. Over the past 9 months, Rivian has burned through more than $2.4 billion in cash, leaving it with just $5.4 billion.
In the quarter ended Sept. 30, Rivian said its cash and cash equivalents were $5.4 billion, compared with $7.86 billion in the fourth quarter of last year.
For some inexplicable reason, struggling automaker Volkswagen is trying to throw Rivian a $5.8 billion lifeline. VW desperately needs to liberate itself from its destructive commitment to EVs, but instead, it is aligning itself with Rivian, which makes as much sense as the fabled K-Mart/Sears merger, may it rest in peace.
Meanwhile, the Biden administration just announced that it is granting Rivian a $6 billion federal “loan” to re-start construction on its suspended new plant in Georgia.
A nearly $6 billion federal loan will help electric-vehicle manufacturer Rivian restart construction of a $5 billion vehicle and battery plant near Covington, U.S. Sen. Jon Ossoff, D-Ga., announced Tuesday.
"There was real concern last spring that construction would never start," Ossoff told reporters Tuesday morning in an online briefing. "What we have now is a major step forward to make sure this plant is built in Georgia."
There is abundant excess capacity at Rivian’s existing Illinois plant, so there is no reason to build a plant in Georgia, and even if there were some product demand, subsidizing the plant with US tax dollars is offensive. And yes, this is a subsidy. If this were a viable project, banks would be lending the money. This “loan” will almost certainly never be repaid.
Gangster Government Choosing EV Winners and Losers
Tesla founder Elon Musk has famously supported Donald Trump, and he also supports elimination of the government’s $7,500 EV tax credit. This is because Tesla doesn’t need the tax credit to be profitable selling its EVs, while Tesla’s competitors do not have any model for profit in the EV game without the government subsidizing its EV sales.
So, in the upside down world we live in, in which the government seeks to pick winners and losers, the Biden administration is seeking to choose Rivian as a winner by giving it $6 billion. Meanwhile, in California, which is the country’s biggest market for EVs, Governor Gavin Newsom is trying to make Tesla a loser in the EV marketplace, by explicitly targeting Tesla for retaliation.
Specifically, with the Trump administration seeking to eliminate the federal EV tax credit, California is not giving up yet on the all-electric dream, so Gov. Newsom is proposing to have California fund its own EV tax credit…with a catch. Tesla vehicles would be specifically excluded.
Tesla's electric vehicles likely would not qualify for California's new state tax credits under a proposal in the works if President-elect Donald Trump scraps the federal tax credit for EV purchases, Governor Gavin Newsom's office said on Monday.
This is effectively no different than Newsom announcing that he is imposing a stiff Tesla-only tax. This gangster-style of government that Gavin Newsom embodies is the reason that Tesla relocated from California to Texas, and it certainly influenced Musk abandoning the Democrats in disgust.
The Climate Cult’s War on Auto Manufacturing Jobs
Meanwhile in Europe, there has been a burst of announcements regarding automobile manufacturing plants being closed and auto workers getting laid off. This is a direct result of the “EV transition” that Europe’s leaders have tried to impose.
Stellantis (Chrysler, Vauxhall, Fiat, Peugeot, etc] just dropped some awful news on the British auto industry…
Vauxhall's parent company Stellantis has announced plans to close its van plant in Luton, days after it warned the government that it could slash production in Britain over Labour's tough electric vehicle sales targets.
Ford is eliminating 4,000 jobs in Europe, mostly in Germany and the UK, because of the failed EV transition.
“Ford to cut 14% of European jobs, blaming EV shift and rising competition” [CNBC – 11/20/2024]
Ford said on Wednesday it would cut around 14% of its European workforce, blaming significant losses in recent years compounded by weak demand for electric vehicles, a lack of government support for the shift to EVs, and rising competition.
This comes just a few weeks after VW announced massive layoffs of its own, and the unprecedented announcement of multiple plant closures, also due in large part to the failed EV transition.
The domestic factory closures would be the first in Volkswagen’s 87-year history, and they lay bare the challenges facing Germany’s largest manufacturer.
This is all part of the European ruling class’ eco-war against the working class. The Davos crowd would be wise to back off sooner rather than later, since pushing people out of work and into despair is a political form of lighting a fuse which might not be extinguishable.
Desperation Move – Pre-Tax EV Car Payments
The “EV transition” has been such a catastrophic failure that the U.K. is now trying to incentivize people to purchase an EV by making the monthly car payments pre-tax, much like a 401K or HSA contribution in the U.S.
“EV salary sacrifice explained: How to save 40% on a new electric car” [Daily Mail – 11/21/2024]
The £500 monthly payment is salary sacrificed and deducted from your income. If you fall into the 40 per cent tax bracket, you would have paid £200 income tax on that £500, leaving you with £300. But by salary sacrificing the money, it isn't taxed. Effectively, then your Tesla Model Y which costs £500 to lease is only costing you £300.
We can probably expect Gavin Newsom to offer up something like this in California. But excluding Tesla, of course.
European EV Battery Dream Just Died
When the global eco-communists decided to “transition” the car industry, we were all assured that new jobs in the EV industry would replace the lost jobs. Battery manufacturing was one of the industries that was supposed to produce jobs. That dream has pretty much just died in Europe with the bankruptcy of Northvolt.
“Sweden's Northvolt files for bankruptcy, in blow to Europe's EV ambitions” [Reuters – 11/21/2024]
Northvolt, the Swedish maker of battery cells for electric vehicles, said on Thursday it has filed for Chapter 11 bankruptcy protection in the U.S., dealing a blow to Europe's hopes that its most developed battery player would reduce Western car makers' reliance on Chinese rivals.
"Northvolt's liquidity picture has become dire," the company said in its Chapter 11 petition, filed in U.S. Bankruptcy Court in Houston.
This will mean that pretty much all EV battery production will come from China now. An alternative – and I know this is crazy talk – is not to mandate electric vehicles and not import EV batteries at all.
Goldman Sachs’ Investors Fleeced by EV Battery Investment
I’m not sure if I’m feeling schadenfreude or if I’m just glad that important financial lessons are being learned. Either way, this is a nice palate cleanser to end today’s roundup…
The losses mark a sharp contrast to a bullish prediction just seven months ago by one of the Goldman funds, which told investors that its investment in Northvolt was worth 4.29 times what it had paid for it, and that this would increase to six times by next year.
A fool and his money are soon parted, and there are a lot of credentialed fools who bought into the EV hype.
[buck.throckmorton at protonmail dot com]