Mar 7, 2024 - Business

Rivian's hopes and dreams are riding on its 3 new EVs

The Rivian  R2, R3 and R3X.

The Rivian R2, R3 and R3X. Photo courtesy Rivian.

Rivian is introducing not one but three smaller, more affordable electric vehicles (EVs) that it hopes will persuade more consumers to replace their gasoline-powered cars and cement the company's status in the automotive world.

Why it matters: Increasing the breadth of its lineup with cheaper models could help accelerate EV adoption while enabling Rivian to scale faster toward profitability to survive a cutthroat market.

Driving the news: Thursday's reveal of the midsize R2 SUV had been widely anticipated as a sequel to Rivian's initial flagship electric models, the R1T pickup and R1S SUV.

  • The surprise unveiling of two additional models — the R3 and R3X crossover utilities — was reminiscent of a Steve Jobs "one more thing" product introduction at Apple.
  • Yes, but: The company is also pausing construction of a planned Georgia factory, potentially complicating the new vehicles' rollout.

Zoom in: The R2 is a traditional five-seat SUV aimed at the heart of the mainstream market, while the slightly smaller R3 and R3X performance variant are crossover utilities with more of a sporty, hatchback design.

  • All three are expected to have a battery range of more than 300 miles.
  • The R2 will go on sale in the first half of 2026, starting at around $45,000.
  • The cheaper R3 and R3X will follow at a later date.

Caveat: The R2 will initially be produced at the company's Illinois factory, rather than a new $5 billion Georgia plant, to save billions in costs. Construction of that new plant has been paused, the company said Thursday.

Between the lines: The R2 and R3 share a new midsize vehicle platform developed to significantly reduce manufacturing and maintenance costs, Rivian says.

  • They're built using high pressure die castings (instead of traditional body welding), for example, and feature a new "structural" battery pack that doubles as the vehicle floor — all part of a broader simplification effort.

The big picture: The auto industry is wringing its hands about slower-than-expected EV growth, and investors have beaten down Rivian shares after a disappointing fourth quarter.

  • But none of that seems to phase Rivian CEO RJ Scaringe, who launched his first models into the teeth of the COVID-19 pandemic.
  • Back then, Rivian's start-up pains were compounded by work-from-home mandates, chip shortages and soaring battery component prices.
  • Without a proven track record, Scaringe had no leverage with suppliers.
  • "We had to do everything we could just to get enough parts to build vehicles," he recalls in an interview with Axios.

Today's business environment is dramatically different, Scaringe says.

  • "I've never been more bullish on our business," he says.

State of play: Commodity prices are falling, helping to create a faster path to profitability.

  • Meanwhile, the Rivian brand is resonating with consumers, Scaringe says, and the company is gaining industry credibility.
  • Suppliers who wouldn't take his calls a couple of years ago are now eager partners, he adds.
  • "It was very painful, but it's made us a stronger company. What I'm excited about ... with R2 is, we're going in as a much more mature, much more capable company."

What's at stake is often overlooked in the EV debate, Scaringe says.

  • "We're talking about the health of our planet, the only place we as a species can live, and the potential of making this an unlivable environment for thousands of years to come."
  • "I can say with true certainty that the entire automotive industry will electrify."
  • "Now, does it happen in five years or 20 years or 30 years? That's the debate. Of course, from our vantage point we really hope and think it will happen faster."

What to watch: Rivian has $9 billion in cash on hand, but some investors worry if it has enough money to build the Georgia factory and launch its new models.

  • "We're not raising capital right now," Scaringe tells Axios — but the company may consider strategic partnerships or debt offerings in the next few years.

The bottom line: "Right now that's not what we as a business are focused on," Scaringe says. "We're focused on continuing to drive efficiency in our business and ramping the R2."

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