Sweeping and still-fluid changes to U.S. trade policy and reduced demand for regulatory credits are hurting Rivian’s bottom line, as the electric automaker nears the start of production on a new model in Normal.
During a quarterly earnings call Tuesday, Rivian leaders said U.S. policy changes are creating headwinds on several fronts. One example: In response to a trade dispute with the U.S., China has restricted exports of rare-earth minerals used in components by technology companies like Rivian.
“That had a very significant impact on our overall production volume,” Rivian founder and CEO RJ Scaringe told CNBC. Indeed, Rivian produced just 5,979 vehicles in the second quarter of 2025 (April, May, June), down 37% from that time a year ago.
In Tuesday’s earning calls, Rivian chief financial officer Claire McDonough also acknowledged the link between supply-chain disruptions and production in Normal, but suggested the company had wrangled the problem.
“We believe we now have visibility into these components for the remainder of the year,” McDonough said.
Another challenge directly related to Trump administration policy changes is the loss of revenue from U.S. regulatory credits. Until now, companies like Rivian were able to sell regulatory credits to traditional automakers to help them avoid fines for emissions from their gas-powered vehicles. That market is now drying up as the Trump administration pulls back on fuel-economy standards.
Rivian previously was expecting to make $300 million this year from these regulatory credits. Now, it expects to make $160 million, McDonough said.
“As a result of changes to our regulatory credit outlook, in addition to our second-quarter results, we expect our gross profit for the full year 2025 to be roughly break-even,” she said.
Rivian expects tariffs to impact per-vehicle costs by a few thousand dollars through 2025.
“We’re actively studying tariff mitigation strategies to best position the company,” McDonough said, “especially as we look ahead to the Section 232 automotive tariff offset which ends in April 2027.”
R2 production in Normal
Meanwhile, Rivian leaders say they’re on pace to begin production of a new, lower-cost EV model, called R2, in Normal during the first half of 2026.
Scaringe said they’ve “substantially completed” construction of a new 1.1 million square foot building in Normal to accommodate R2’s general assembly and body shop. Design validation builds are underway, with manufacturing validation builds expected later this year, Scaringe said. Rivian’s main plant in Normal will shut down for three weeks starting in September to prepare for the start of R2 production, McDonough said.
Ultimately, Rivian plans to make 155,000 R2s annually in Normal, and they plan to add a third shift of operation, McDonough said. Total capacity in Normal for all models is expected to hit 215,000 per year, up sharply from the roughly 40,000-50,000 made today.
“One of the big strategic [reasons why] we made the decision to launch R2 out of our Normal facility is the shared fixed-cost absorption we’ll have between R1, [electric delivery vans], and R2” all being built in Normal, Scaringe said.
While there will be several “variants” of the R2 [an SUV], it’s expected to start at between $45,000-$50,000—a much more affordable option than the R1T truck and R1S SUV currently offered. Rivian hopes that will open a new market for mainstream buyers—and allow it to compete with gas-powered vehicles in that same segment.
“We do see it as a very large market, and our hope—what we’re driving toward—is to continue being able to draw a lot of non-EV customers into this, not simply because it’s an EV, but because it’s the best choice they have,” Scaringe said.
During Tuesday’s earnings call with investors, Rivian leaders faced some skeptical questions about whether R2 demand will be high enough to warrant construction of the company’s new plant in Georgia. That construction is expected to begin in 2026.
Scaringe said they would not share how many R2 pre-orders they’ve received, but he expressed optimism for demand both in the U.S. and internationally.
“We do see the scale of the addressable market as being many, many millions of units. With what we’re launching in Normal representing 155,000 units of R2 capacity, and what we’d be bringing on in Georgia ... adding another 200,000 in the first phase, we feel quite confident and bullish on what that represents,” Scaringe said.
Scaringe said Rivian may also face less competition in the EV space as legacy automakers have fewer incentives — again, due to changing U.S. policy — to make and sell EVs themselves.
“There are less incentives for incumbent manufacturers to make the commitment or the transition to electrification,” Scaringe said.
The tough second quarter broke Rivian’s two-quarter streak of positive gross profit. Rivian posted a $206 million loss in the second quarter, which is still better than the $451 million loss this time a year ago, according to documents provided by the company.
Rivian now has around 8,000 employees in Normal. It is McLean County’s second-largest employer.
