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aka0007 t1_j9rmmtg wrote

Reply to comment by JohnnyFnCliche in Rivian Business Strategy Walkthrough - Do they have what it takes to compete against Tesla? by maliknyc

Tesla took till 2018 when they had already over 500K vehicles sold to finally hit -10B in cumulative free cash flow (much of it related to production and scaling of Model 3 production before things turned around in 2019)... Rivian by Q3' 2022 was already -11.4B in cumulative free cash flow with under 20K sold. By comparison... when Tesla had sold that few vehicles their cumulative free cash flow was about -1B.

So comparing to Tesla here is kind of ridiculous but guess it looks like Rivian is headed to -100B in cumulative free cash flow before they turn it around.

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Cold_Acanthisitta_95 t1_j9ruwzh wrote

Plus, tesla doesn't have any worthy competition back then. The landscape is 100x tougher now, especially for a startup.

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aka0007 t1_j9t9e9l wrote

Exactly. Not sure why people don't get that that Tesla was operating in a different environment in 2010-2020. The Tesla model worked, arguably, to a large extent because of the lack of competition and the access to those motivated buyers who were less price conscious and more forgiving of early missteps. And even in that environment Tesla almost went bankrupt (well we also forget that battery costs were crazy high and lack of any supply chain meant substantial upfront costs).

Then Tesla also has Elon Musk, but if I mention that I will get called out for being part of the cult...

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Southern_Smoke8967 t1_j9rwpu9 wrote

Tesla waited until 2018 to scale up for midel3 which is when negative FCF became big. Rivian on the other hand is scaling up from the get go which is why it has such as large cash burn. Same reason but different ramp up speeds.

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aka0007 t1_j9tb6tn wrote

Tesla in 2017 sold 2,685 Model 3's and their FCF that year was -4.1B. In 2018 they sold 152,977 Model 3's and their FCF that year was -221M.

RIVN in 2021 sold 920 r1t's and their FCF was -4.4B... So ah-ha! You must think you are right because look at how close that FCF is... But... through Q3' 2022 with 12,278 vehicles sold their FCF was another -4.7B.

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So to recap from Year 1 of production to Year 2 of production for the Model 3 vs the Truck/SUV Rivian makes:

Tesla 2,685 -> 152,977

Rivian 920 -> 12,278

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FCF for those periods:

Tesla -4.1B -> -221M

Rivian -4.4B -> -4.7B

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If you want to dig deeper into this...

In Q1' 2022 per vehicle sold, Rivian's FCF was -654K

In Q2' 2022 per vehicle sold, their FCF was -206K

In Q3' 2022 per vehicle sold, their FCF was -449K

Not sure scaling is working out here as you think.

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You can chirp on about how Rivian is doing this and that, but the numbers here don't show it. Tesla within a year turned around a cash-burning production process... Rivian has barely scaled up and as of Q3 was still burning cash like crazy. I would not count on next week Tuesday after the close looking pretty.

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