Popular Automaker In Danger Of Collapse?
A popular American auto company just incurred immense losses, which could put them on the brink of total collapse.
It’s a dog-eat-dog economy out there right now. Businesses across all sectors are reporting lackluster earnings. Many have begun battening down the hatches in anticipation of a recession befalling the nation. Amid all the chaos, fear, and speculation some businesses have incurred particularly harsh blows. Kohl’s and Bed Bath & Beyond are among them. However, now one prominent automaker is really feeling the heat. After a loss of close to $2 billion, EV-maker Rivian will have to tread lightly if they don’t want to completely collapse.
After losing a reported $1.7 billion in the second quarter, Rivian will have to be careful with its next moves to ensure the future of the company. That being said, it actually might be a good sign that the EV-maker lost so much money. According to CNN Business, analysts expect to see a company that is growing and expanding rapidly incur sizable losses like the one Rivian just reported. It’s something that, in a sense, can be likened to growing pains.
There are many good reasons that Rivian experienced such immense losses last quarter. As the company finds its footing, it is also something that will almost inevitably happen again. Because the business is growing so rapidly there are many things that the company is navigating for the first time. For instance, after receiving nearly 100,000 initial orders for its vehicles it needs to figure out how to ramp up production and optimize its supply chain to produce that volume of vehicles.
Overall though, despite the concerning losses, things are really looking up for Rivian. In fact, analysts believe that Rivian is poised to become the second (after Tesla) American automaker to actually penetrate the domestic market in a meaningful way. And honestly, it’s a company that has the backing and the funding to make it happen. Two of Rivian’s biggest shareholders are Amazon and Ford. Rivian also has an exclusive deal to build electric delivery vans for Amazon, which owns nearly 20% of the EV company.
As an aside, it also probably doesn’t hurt that Rivians were the central vehicles used in Ewan McGregor’s The Long Way Up. The documentary series is one that chronicles Ewan and his friend Charley Boorman’s journey from the bottom of South America in Ushuaia, Argentina up through to California. In the series, both Ewan and Charley exclusively use electric vehicles in their travels. The two titular characters use electric Harley Davidson motorcycles while the support crew uses only Rivians. If you are one who really wants to see the Rivian in action then The Long Way Up is absolutely worth a watch (although, it’s worth a watch regardless).
All in all, the overwhelming consensus amongst industry experts is that Rivian is headed in the right direction. “We believe Rivian is in a great position to capture the massive influx of current and future EV demand,” asserted Wedbush analyst Daniel Ives. The company is on schedule to meet its 25,000 model production goal by the end of this year. It is also currently in the process of outfitting a factory in Georgia. In the future, the Georgia factory is anticipated to be able to output 400,000 vehicles in a year.
