Tesla CEO Elon Musk said high production and break-even cash flow will be the true test for rival carmaker Rivian, which had a blockbuster IPO on Wednesday and now has a market value of over $100 billion.
“There have been hundreds of automotive startups, both electric and combustion, but Tesla is [the] only American carmaker to reach high volume production & positive cash flow in past 100 years,” Musk said in a tweet Thursday.
He added: “I hope they’re [Rivian] able to achieve high production and breakeven cash flow. That is the true test.”
Rivian, which did not immediately respond to a CNBC request for comment on Musk’s tweets, has never recorded revenue and it expects less than $1 million in sales in the third quarter.
It says it has 55,400 pre-orders for its R1S SUV and R1T pickup truck and a contract to build 100,000 electric vans with Amazon by 2030.
But trusting Rivian to assemble the vehicles and deliver them profitably represents a massive gamble for investors who are already valuing the company higher than traditional auto giants Ford and General Motors.
Despite the lack of revenue, Rivian raised around $12 billion in its market debut, making the IPO the largest in the world this year. The IPO also made Rivian the second most valuable car manufacturer in the U.S. behind Tesla.
After its first two days of trading in 2010, Tesla had a market cap of just over $2 billion. Meanwhile, R.J. Scaringe, the CEO of Rivian, was worth that much on his own after his company’s second day on the public market.
Rivian shares popped 57% in their first two days on the Nasdaq. Scaringe, who founded Rivian in 2009, owns 17.6 million shares, valued at $2.2 billion, based on Thursday’s closing stock price of $122.99.
“We began thinking about the truck, SUV, and crossover segments as they presented a massive opportunity for us to demonstrate how a clean sheet, technology-focused vehicle could eliminate long accepted compromises,” Scaringe wrote in the company’s IPO prospectus.
“We wanted to establish our brand by delivering a combination of efficiency, on-road performance, off-road capability, functional utility, and product refinement that simply didn’t exist in the market.”
Rivian has poached numerous former Tesla employees, including key engineers that helped to build the Tesla Model 3.
It’s not the first time Musk has thrown shade at Rivian. Last month he tweeted “prototypes are trivial compared to scaling production and supply chain.”
— Additional reporting by Ari Levy.
