Rivian is preparing for a future in which just being electric won't be enough
Rivian’s founder and CEO RJ Scaringe said Tuesday that the constant tinkering they’re doing now to lower the cost of manufacturing will serve the company well as the electric-vehicle business gets a lot more crowded in the coming years.
Speaking on a quarterly earnings call, Scaringe said everything they’re learning now while making Rivian’s R1S (SUV), R1T (pickup), and commercial vans in Normal will inform how they make the company’s next product (the R2) starting in 2026 in Georgia. Because it’ll be cheaper, the R2 will have more competition in an expanding EV market that includes many legacy automakers.
“In the not-too-distant future, everything will be electric. So being electric alone isn’t a sufficient differentiation point,” Scaringe said. “Given the significant change that electrification offers, though, it does create new opportunities in terms of how we architect the vehicle, how we design the cost structure, and then the types of driving dynamics and experiences that can be delivered.”
Rivian’s stock price has plummeted about 89% since it went public in November 2021.
Much of Tuesday’s earnings call focused on how Rivian is finding ways to lower the cost of making its vehicles – a key step toward its stated goal of reaching a positive gross profit in 2024.
Much of that work is happening at Rivian’s plant in Normal, which has around 7,500 employees and plans to make about 50,000 vehicles this year. One of the biggest changes is the introduction of a new in-house motor called Enduro and the LFP battery pack, which are cheaper to make and ease Rivian’s supply-chain bottleneck. Those were recently incorporated into Rivian’s commercial vans and are coming soon to the R1T and R1S.
“All that work flows very naturally into R2. So we not only take cost out of R1, but we de-risk the launch of R2,” Scaringe said.
When asked about increasing competition from legacy automakers, Scaringe said demand for Rivian’s initial R1 models outpaces other similarly priced vehicles. (The R1T starts at $73,000, and the R1S starts at $78,000.)
“Of course, we hope to carry that into a much lower price point with the R2 platform. While the R2 will have a number of other players that are offering products in that price range of $40,000 to $50,000, the way we’re thinking about it and the things we’re excited about with regards to the product is just how unique we can make it, in terms of capturing the core essence of everything we’ve shown with the flagship product (R1),” Scaringe said. “We have a tremendous amount of confidence around the (R2) product we’re developing and how that not only fits our brand so nicely but also provides an extension to the market relative to what we’ve done with R1.”
Rivian officials noted that their R1T recently garnered J.D. Power’s top satisfaction rating amongst premium EVs, dethroning 2022’s leader, the Tesla Model 3.
“We really do focus on the overall customer experience, and what we can deliver with a combined hardware-software platform,” said Nick Kalayjian, Rivian’s chief product development officer. “We have a software experience and an overall customer experience that we’re really proud of, and we think it differentiates it beyond just being an electric vehicle.”
All of that takes money. Rivian said it lost about $1.3 billion in the first quarter of 2023, about 15% better than this time a year ago. Operating expenses and capital expenditures were also down. Rivian brought in $661 million in revenue from the delivery of nearly 8,000 vehicles.
That leaves Rivian with about $12 billion in cash. It’ll need that money to build its second manufacturing plant in Georgia, where R2 vehicles will be made starting in 2026. Rivian and Georgia state officials won a favorable appellate court ruling late last month related to incentives for the project – representing a major legal setback for those who’ve tried to block the project.
“There’s great momentum as we sit here today on progress in Georgia,” said Rivian chief financial officer Claire McDonough.
Also last week, Rivian’s 2023 R1S earned a Top Safety Pick+ award from the Insurance Institute for Highway Safety (IIHS). It’s the only large SUV to earn that award. The R1T earned it too, in February, making it the only electric truck to do so.