Until a few months ago, I think it's fair to say that not many people thought of Rivian as a software company. A maker of cool-looking, high-range electric SUVs and trucks, sure, but not necessarily as a groundbreaking tech operation. That certainly changed when Volkswagen admitted it needed outside help to deal with its endless software woes and inked a $5 billion deal with Rivian to co-develop software and electrical architectures. That was a huge coup for the American startup and a much-needed financial lifeline as it seeks to cross the "valley of death."
But as Rivian seeks to establish itself as a leading player in the EV tech race, we know that it's now looking to one of China's very best as an example of what can be done.
Speaking at Morgan Stanley's 12th Annual Laguna Conference this week, Rivian CEO RJ Scaringe confirmed a question posed by analyst Adam Jonas: that the EV startup has indeed acquired a Xiaomi SU7 for benchmarking purposes.
That's not entirely surprising for several reasons. China's EVs are now known to be extremely advanced in terms of software, construction, low build costs, efficiency and more, so many automakers are acquiring those vehicles to try and learn from them.
"In China, there's an enormous level of competition amongst a lot of different brands, both new companies and existing companies in the EV space," Scaringe said. "And of course, [with] BYD chief among them, we've seen some very impressive vehicles from a cost point of view and enterprise point of view. And so lots of people have taken apart those cars and looked at what's in them."
Just a few weeks ago, I saw a Zeekr zooming around the campus of a certain large automaker that operates here in America.
Gallery: Xiaomi SU7 2024
But Rivian's choice of the SU7, to me, is extremely telling. It's a real "go big or go home" moment if you're going to pick a vehicle for benchmarking.
Launched this spring, the SU7 is the first foray into the automotive world for the Chinese smartphone and tech giant; that company is already the third-largest phone maker in the world behind Apple and Samsung. And because of how deeply the EV integrates with Xiaomi's existing software and hardware ecosystem used by more than half a billion people globally, the SU7 has been dubbed "China's Apple Car". It represents the kind of connected vehicle Apple might have built if it hadn't thrown in the towel.
Indeed, the SU7 is already getting rave reviews in China for offering Tesla Model S-beating performance at Model 3-level prices. And Xiaomi is even planning a performance version soon that could well be the fastest four-door sedan ever made.
So, yes, it's fair to say Xiaomi is coming correct here. And as Rivian eyes ways to advance its zonal electrical architecture, boost its software game and cut costs to seek profitability, there's perhaps no better example to follow.
While Scaringe didn't mention the SU7 specifically after confirming what Jonas asked, he did stress that cost reduction is a big part of why Rivian cares here.
"Lots of people have taken apart those cars and looked at what's in them," Scaringe said. "In many cases, there's nothing that's there's not some singular magic wand. There's not you don't take it apart and say, 'Oh, that this is wildly different than expected.' But it's a cost advantage that exists across every nut and every bolt and every wire and every panel in the vehicle."
Scaringe added that many of China's automakers are "competing in an environment where they're operating at zero gross margin and planning to do that for a very, very long time," meaning they have so much competition that they're finding ways now to survive for the long haul—and that means being obsessive about cost reduction and one-upping the rest of the field.
Gallery: Rivian R2
He confirmed that Rivian has no plans to enter China "for a lot of reasons," he said it's crucial to know if China's EVs will be competitive in the U.S. or Europe. And he added—correctly, I might add—that many Chinese automakers are finding inroads into the American market via technical and battery partnerships. And Rivian seeks to learn a lot from not just how these cars are built but also how their underlying supply chains work.
"It's that every single component... is 20% to 30%, sometimes 40% cheaper than what we would have for a part or a component that's sourced in the Western market," he said.
Ultimately, what Scaringe says here underscores the challenges of competing in the EV arena, even if it's a company like Rivian that's native to the space. It's all about control of batteries, control of the supply chain and getting costs down for making cars in a very different way than has been done across 100 years of gas-powered automobiles. And throughout his chat, he stressed that getting out of the $90,000 to $100,000 price range Rivian is in now with the future R2 and R3 models will be key to the company's survival—not unlike when Tesla got to the day when it could crank out the Model 3 and Model Y in volume.
"We are working very hard to have a very similar outcome, where R2 is the dominant vehicle within our portfolio from a volume point of view," he said.
Contact the author: patrick.george@insideevs.com
