When you see photos of Rivian's electric SUVs in the media, they're often crossing rivers, scaling mountains and braving some trek across a barren terrain. But Rivian's biggest test yet won't be some off-roading adventure: it will be crossing the Valley of Death.
That, as climate news publication Heatmap and other outlets have put it, is the gap between scaling up operations and getting a high-volume product on the road that can actually pay for those enormous capital costs. It's the point many EV startups aim for and few get to—the road between ambitious dreams and long-term stability.
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The next great frontier in the EV market is the sub-$30,000 class, but Rivian's R2 won't be bad either. Rumors indicate it's priced as much as the average new car in America and could be much cheaper with EV tax credits. That will help this startup reach the mass volume sales it needs to survive.
Tomorrow, we'll finally see the way the California-based company will attempt to cross that valley: the Rivian R2, a vastly more affordable, mainstream electric SUV meant to help the company achieve mass-volume success. And with that, the hope of eventual long-term profitability, though that's far from guaranteed.
In recent years, Rivian has become a kind of darling in the EV startup world. Its 41-year-old CEO, RJ Scaringe, is an engineer who's distinguished himself by being a sort of affable, Clark Kent-like, drama-free alternative to Elon Musk's endless unpredictability and culture-war shenanigans. The Rivian R1S and R1T have garnered critical acclaim and sales success for their attractive designs, filling a still-huge void in the electric pickup and SUV space. It's even building up a nascent electric delivery van business, first with Amazon and now with other companies too.
And while its stock price has struggled lately amid a perceived wider EV sales slowdown and huge reported losses on each vehicle, it's fair to say that Rivian has fared better overall than other newcomers like Lucid and Fisker.
But that's only when you look at the company in relative terms. On its own, it still lost $5.4 billion last year and is undertaking layoffs to cut costs, all a symptom of the enormous capital costs needed to build a sustaining carmaking operation. Even if you're rooting for Rivian, and many are, the "Valley of Death" wouldn't have that name if it wasn't a dire position to be in.
All of this brings us to the Rivian R2, which is shaping up to be one of the most important new car debuts—not even EV debuts, but cars, period—of 2024.
We know little about the R2 officially right now. A leak of alleged data from Rivian's website yesterday indicated the SUV will start at $47,500, offer a range of up to 330 miles and pack a Tesla-style North American Charging Standard (NACS) plug. If true, that last detail alone is groundbreaking; it will be the first non-Tesla EV to be compatible with Tesla's vast Supercharger network from the factory, without needing to use an adapter.
Presumably, being built at the company’s new factory in Georgia—its other EVs are made at a former Mitsubishi plant in Normal, Illinois—will allow the R2 to fully qualify for EV tax credits of up to $7,500. If the pricing information is true, then, a buyer could have what looks to be a stylish, off-road capable EV with great range for about $40,000.
In theory, then, the R2 should be priced right around the average new car in America, and that alone should give Rivian an enormous boost. Its two other options are considerably more expensive. The "cheapest" R1T starts at $69,900, while the R1S now starts at $74,900. As impressive as the trucks are and as cool as the look, they have been rich-people toys so far; the R2 aims to fix that.
It's not like this playbook doesn't exist. It exactly mirrors what Tesla was able to achieve years ago with its own hellish ramp-up to the Model 3, and then subsequent profitable quarters with the Model Y. In pricing, capability and what American buyers go after in volume, the R2 is shaping up to be a kind of direct Model Y competitor (although potentially one with more off-road chops.) Either way, this is the SUV that's expected to be Rivian's big long-term moneymaker. And that price point is where a lot of other popular EV crossovers play. It's about where you can find the Kia EV6, Hyundai Ioniq 6 and Ford Mustang Mach-E, to name a few.
Yet just as we've seen this playbook before, we've also seen the countless problems involved. The R2 is a new car, being built in a new factory; manufacturing issues, bottlenecks and quality issues are hallmarks of these efforts. With any luck, "production hell" won't be part of the equation here. And finally, the R2 likely won't even be out until 2026; the EV market in America could be a very different place by then for a multitude of reasons, including increased competition and an uncertain path forward for EV tax credits.
But if Rivian is to have a long-term future—and many EV boosters and fans of the brand hope it will—it all starts tomorrow when the car is unveiled at the South Coast Theater in Laguna Beach. That's the easy part. Then all the R2 has to do is cross the Valley of Death. Nothing to it, right?
Contact the author: patrick.george@insideevs.com
Correction: An earlier version of this story reflected incorrect current Rivian R1S and R1T prices; we regret the error.
