Investing in electric car companies like China's Nio and America's Rivian requires scrutiny of their financial health despite both being unprofitable and burning cash. Nio showed a remarkable sales growth, reaching $9 billion recently, yet experienced increased losses. Rivian faces a similar plight with significant cash burn, and future profitability remains uncertain. Potential investors must carefully evaluate sales growth, cash flow characteristics, and management strategies before making decisions. The current market condition suggests caution when investing in such high-risk companies.
Nio has grown sales from just over $1 billion five years ago to $9 billion over the last 12 months, but losses doubled to about $3 billion annually.
Rivian faces a challenge similar to Nio, also lacking profitability while burning cash at an alarming rate. Key decisions lie in their future operational strategies.
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