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Fortune
Fortune
Christiaan Hetzner

Rivian CEO says he deliberately didn’t follow the same strategy that Elon Musk set out at Tesla

Rivian CEO and founder RJ Scaringe (Credit: Alisha Jucevic—Bloomberg/Getty Images)

When RJ Scaringe founded Rivian in 2009, a year after the Tesla Roadster hit markets, he came to an important conclusion that would fundamentally alter the path of the EV startup.

For Rivian to succeed, it needed its own distinct identity and investment story that differentiated it from Elon Musk’s carmaker. 

“One of the things so important to me with Rivian is to make sure we weren’t covering the same ground as Tesla,” he told the Grit podcast, hosted by venture capital firm Kleiner Perkins, this week.

A die-hard gearhead who, growing up, owned a Porsche 928 engine even before he had a driver’s license, Scaringe was dead set on starting his own car company after college. 

The natural thing to do, in his mind, was to create enthusiasm for a new brand by launching an electric sports car that other gearheads would fall in love with and then use that success to move into the mass market.

“That was of course how Tesla’s strategy played out, and it worked wonderfully well for them,” he said. “We were starting in a similar logic space, and I realized somebody’s done that already, and done that well with Tesla. So the pivot to a completely different product and experience was a very intentional effort to create a new story.” 

Two years later, in 2011, he shifted from developing a sporty electric coupe to focus on the pickup truck and SUV segment.

But this came with its own complications when seeking to raise capital, he would later find out. 

Model 3’s success opens new doors

“The kinds of questions we would get [from early investors]—looking back now it’s comical—but people were like, ‘What if they get wet?,’ ‘Can they go off-road?’ and ‘What if it hits a really large bump?’” Scaringe recalled. 

Much like Musk, Scaringe struggled for years to keep the company afloat, always looking to deliver on a milestone target to unlock the next tranche of investor capital that would keep the lights on for the next three or four months.

Read more: ‘Tesla death watch’: How Elon Musk’s EV maker survived its early years despite major glitches in its first vehicle 

That was in part owing to the unique challenges of the car industry, where heavy upfront capital is needed before the first vehicle can be built. These high barriers to entry for startups contrast sharply with the asset-light business model of digital platform companies other tech investors are used to.

“Different than typical software startups—where you can have an idea, build a crude version of it, show there’s demand, then scale the idea—the first dollar of revenue in a business like this takes many billions of dollars of spend,” Scaringe explained on the podcast.

Scaringe said he later found it far easier to raise risk capital, starting around 2017 and 2018—coincidentally the time Tesla proved with its Model 3 that there was broad appeal for EVs.

Shortly thereafter both Amazon and Ford invested money in the EV startup. In 2021, Scaringe even timed his IPO for Rivian perfectly, raising money at the peak of the EV hype, just when he began delivering his first vehicles.

Fastest-growing car brand in California

Yet his company is by no means out of the woods. Earlier this year, Scaringe took a gamble by shutting down its Illinois plant to retool assembly and onboard entirely new suppliers in a bid to lower the production cost of the R1T truck and its sibling SUV, the R1S. 

Rivian predicted it would see zero growth this year as a result of the shutdown, restart, and subsequent production ramp. 

In addition to nabbing a crucial investment from ailing carmaker Volkswagen, Scaringe is getting help from an unlikely source: Musk himself. The Tesla CEO has been alienating many of his progressive car-buyers by actively engaging with Kremlin-backed social media accounts, and providing full-throated support to Donald Trump, warning civilization as a whole is at risk if the climate-change denier is not elected.

By comparison, Scaringe barely ever posts anything on X, and when he does, it’s to warn about the need to reduce carbon emissions by transitioning away from fossil fuels. 

This continued focus on the mission has won the Rivian founder a number of deserting Tesla customers in markets like California, a key stronghold for Musk but one where he’s losing ground. Scaringe’s automaker is now the fastest-growing car brand in an economy that nominally—without adjusting for purchasing power—is the size of a Germany or Japan in dollar terms.

Still, Scaringe didn’t look to rub it in. 

“Tesla’s been absolutely inspiring,” he said on the podcast.

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