Rivian, the electric vehicle startup that made waves with its high-end models and commercial van, is now gearing up to enter the mainstream market with its latest offering: the R2 crossover. This new model is set to compete with the Tesla Model Y and is seen as a crucial step towards Rivian’s long-term success. During a recent earnings call, Rivian’s founder and CEO, R.J. Scaringe, provided an update on the progress of the R2 program.
Scaringe revealed that Rivian is currently producing “validation builds” of the R2 at a pilot scale, using mostly production tooling. These builds are essential for testing the vehicle’s engineering and design, as well as validating the suppliers and their manufacturing processes. The company aims to put the R2 into production in the first half of 2026, initially expanding its existing factory in Normal, Illinois, to accommodate production of up to 155,000 units annually.
The R2, priced at $45,000, is positioned to appeal to a broader market segment compared to Rivian’s previous offerings. This lower price point is expected to drive sales growth and profitability for the company. Rivian has also secured a deal with the Volkswagen Group and has the necessary liquidity to ramp up production of the R2 and its successor, the R3.
While Rivian has started to turn a gross profit, it anticipates achieving profitability sooner with the R2. One key factor that should help in this regard is the sourcing of batteries in the U.S. to avoid tariffs. Initially, the R2 will use LG batteries from South Korea, but Rivian plans to transition to batteries from an Arizona-based facility by early 2027.
Overall, Rivian’s focus on the R2 as a more affordable and mass-market product reflects its strategic shift towards sustainable growth and profitability. The company is on track to meet its production goals and aims to establish itself as a major player in the electric vehicle market. With the R2 as its flagship model, Rivian is poised to make a significant impact in the automotive industry.