Rivian has been very busy transitioning from pitching its ideas to selling electric vehicles. It developed an electric pickup and an electric SUV while getting ready for a major IPO. It also created electric delivery vans for Amazon and wants to produce similar ones for other businesses. Now, Rivian is planning to introduce a more affordable SUV that could establish its dominance in the EV market for years. Additionally, Rivian had plans to construct a new factory in Georgia where many of these vehicles would be manufactured.
Given all these moving parts, predicting the company’s future was challenging.
But that has changed.
Earlier on Thursday, Rivian announced a complete overhaul of its first two consumer vehicles, the R1T pickup and the R1S SUV. These vehicles are now more technologically advanced and have been simplified to significantly reduce manufacturing costs.
Recently, Rivian decided to put its plans for the new Georgia factory on hold, choosing instead to focus on its existing facility in Illinois. This decision will save the company $2.25 billion and allow it to concentrate all its resources on one manufacturing plant.
These changes mean that, for the first time since the company came out of stealth mode in 2018, Rivian’s short-term future is quite clear. The company needs to sell these updated vehicles profitably to sustain itself long enough to launch the cheaper mass-market R2 SUV (and the charming R3 variant that captured the automotive world’s attention earlier this year). Rivian knows exactly where this will take place and what it will take to achieve it.
“With Rivian’s latest move to refresh the R1T and R1S EVs, you can begin to see how the company aims to chart its way forward across the ‘EV valley of death,’” Corey Cantor, senior associate for electric vehicles at BloombergNEF, said in an email to Truth Voices. “If successful, they can use the fruits of this process as they scale up the R2 and reach the mass market, en route to the R3.”
Other EV startups arguably face a more challenging path through that “valley of death.”
Take Lucid Motors, for instance. The company has a well-regarded product in the Lucid Air sedan but has struggled to find buyers. Its CEO, Peter Rawlinson, has publicly acknowledged marketing failures. To date, only about 12,000 cars have been shipped, at least as of the end of the first quarter of this year.
Lucid Motors is now heavily relying on the upcoming Gravity SUV. This type of vehicle should have broader appeal due to the popularity of SUVs. However, its success is not guaranteed, especially since it starts at a relatively high price point of “under $80,000.” Lucid Motors needs the Gravity to succeed to move forward with its own planned midsize, mass-market EV.
Other EV startups face more uncertainty. Canoo has changed its business model multiple times, making it difficult to track its plans for its unique EVs, initially revealed in 2019. (Currently, the plan is to sell to fleets and government agencies.) Faraday Future has been as focused on disputes with its landlords as on selling its luxury EVs. Fisker is on the verge of bankruptcy following disappointing sales of its electric SUV and numerous quality and service issues.
It won’t be easy for Rivian. The company is forecasting minimal growth this year compared to 2023 and started off on an uneven note. Consequently, it might need to raise more funds—a challenging task in the current economic climate.
However, Rivian claims the updates to the R1 lineup set it on course to achieve “positive gross profit” by year-end. This is significant, considering the company still loses tens of thousands of dollars on each car sold. For Rivian to survive long enough to launch its more affordable mass-market R2, these revamped vehicles must sell well.
“The path ahead is clearer than it was a year ago as Rivian has outlined its short-term plans,” Cantor said. “But ultimately, executing both profitability and high-volume EV sales is required for Rivian to emerge as one of this decade’s EV success stories.”
