Rivian's big headwinds come at a crucial moment
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Rivian is counting on strong demand for the more affordable R2, coming in 2026. Photo courtesy of Rivian
As a newcomer to the auto industry, Rivian finds itself at a critical juncture.
- Sales of its pricey R1 models are headed in the wrong direction, but it's pinning a lot on next year's release of a smaller, $45,000 SUV, the R2, followed later by an even cheaper R3.
- But first, the company has to get through 2025.
Why it matters: Electric vehicle sales have stalled in the U.S., and President Trump's tariff and tax policies will further stifle growth.
- Unlike other automakers, pure-EV companies like Rivian, Tesla and Lucid don't have profitable gas-powered models to fall back on.
- Plus, easy money those EV companies made from selling regulatory credits to other carmakers will likely disappear as compliance pressures ease under Republicans' deregulation efforts in Washington.
What they're saying: "Continued R1 softness and the ['One Big, Beautiful Bill'] introduce fundamental and narrative risks to our long-term R2/R3 bull thesis that cannot be ignored," wrote Guggenheim analyst Ronald Jewsikow in a report downgrading Rivian stock, per Barron's.
💰 Some positive news: Rivian on June 30 received a $1 billion equity investment from Volkswagen for hitting a first-quarter gross profit milestone as part of its $5.8 billion tech deal with the German automotive giant.
- The EV maker was able to hit the target by simplifying the design of its vehicles to make them cheaper to build, along with a 10% workforce reduction.
- In January, just before Trump took office, Rivian finalized terms of a $6.6 billion loan from the U.S. Department of Energy to offset the costs of a new EV factory opening in 2028 near Atlanta, but the funds are contingent on hitting various performance targets.
For now, Rivian, which has yet to post a net profit, is tempering expectations.
- The company said it will sell fewer EVs in 2025 than in each of the previous two years, blaming economic and policy uncertainty.
What's next: Rivian will release its second-quarter financial results on Aug. 5.
What to watch: R2 production begins in the first half of 2026 at Rivian's newly expanded factory in Normal, Ill.
