Home Business Tesla-rival Rivian needs a home run when it unveils the new R2 crossover

Tesla-rival Rivian needs a home run when it unveils the new R2 crossover

Tesla-rival Rivian needs a home run when it unveils the new R2 crossover


Rivian’s future hangs in the balance as it prepares for Thursday’s unveiling of the R2.

While the electric crossover will directly compete with the Tesla Model Y, strategically it’s better to think of this as Rivian’s Model 3.

Tipped to start at around $47,000 and offer up to 330 miles of range, its founder RJ’s Scaringe’s first mass-market offering.

A make-or-break product when it first rolls off the line in 2026, it will either catapult his pure-play EV manufacturer into the big leagues…or potentially doom it.

Still vividly remembering the trauma of his own Model 3 ramp that nearly bankrupted Tesla, Elon Musk recently offered some friendly advice to his upstart competitor on the best way to avoid extinction at this crucial phase in their transition from niche to mainstream: Never leave the assembly line.

“The exec team needs to live in the factory,” wrote Musk, “or they will die.” 

Rivian, which did not respond to Fortune’s request for comment, at present only offers car buyers one model—the R1—in two different bodystyles, a truck and an SUV.

But the premium-priced duo are far too costly to build, forcing Scaringe to take a huge gamble by halting production in the upcoming second quarter so he can re-engineer the R1 platform to use more affordable parts and improve line speeds. 

Since new suppliers need to be brought up to speed and ramp their production alongside Rivian’s, once manufacturing resumes in Normal, Illinois, output in the second half will still suffer.

The result is that Scaringe has had to write 2024 off as a zero-growth year with production flat at 57,000 vehicles. 

Ongoing heavy losses and cash burn

There is also no end to its financial losses in sight as his goal to post “modest” fourth-quarter earnings only applies to gross profit, in other words, before accounting for operating expenses like research and development. 

And even this metric looks ugly. Last quarter it reported a gross loss per vehicle sold of nearly $43,400 excluding another billion in total OpEx. 

Furthermore, Rivian has also burned through $10.6 billion in cash over the past two years —more if you don’t count the $3.2 billion it raised by selling debt convertible into new shares in 2023.

Morgan Stanley’s Adam Jonas was so concerned about Rivian stretching itself too thin last month that the analyst looked for any signal that plans to build a dedicated R2 factory in Georgia for $5 billion had changed in light of the recent EV market slowdown.

“We’re in a very interesting moment in time where there is a lack of choice of highly compelling EV products in that $45,000 to $55,000 price range,” Scaringe said, dismissing the concerns. “We remain very bullish on the R2 segment and the R2 product itself.”

Still, it might be a good idea for the Rivian CEO to have a sofa delivered to his office, assuming he doesn’t have one already.

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