What Will the Rivian R2 Model Tell Us About Its Future? The Company’s Unpopular Role in Electric Vehicle Production and Sales
Rivian revealed its next electric vehicle, the R2, a more affordable SUV that the company is counting on having a much broader appeal than its stylish — and expensive — R1T trucks and R1S SUVs.
But profits were on the horizon, the company promised. Production rates will improve by approximately 30 percent because of the multi-week shutdown of the Normal, Illinois factory. Rivian predicted it would eke out a “modest gross profit” in the fourth quarter of 2024.
Rivian had a cash cushion of $7.86 billion at the end of the fourth quarter, down from $9.1 billion at the end of the third quarter. At its current burn rate, the company is likely to run out of cash before the first R2 even comes off the assembly line.
Investors were dubious. How could a company not be able to predict how production will grow in an increasingly volatile market? Morgan Stanley said in a note to clients that Rivian’s results have largely disappointed, whether on volume or margin progression.
It is a particularly dangerous period for a young company to be in. Rivian does not have a financial benefactor like Saudi Arabia’s Public Investment Fund. Amazon is Rivian’s largest stakeholder with a 16 percent stake. But the company’s influence over Rivian has diminished over time, especially after its “exclusive” delivery van partnership ended last year.
You don’t need a crystal ball to know there will be a lot more competition by that point. Companies with a lot more experience making mass-market vehicles will have a lot more EVs for sale. Rivian needs to sell its current generation of vehicles to more customers in order to survive the short term.
Legacy car companies have whole lineups of internal combustion engine vehicles to fall back on when times are tough. Ford, GM, and others are reporting robust hybrid sales, for example, which helps take some of the sting out of the billions they’re losing on EV development and production.
R2: A Smaller, Better, Faster, And More Roomy Autonomous Vehicle: The Rivian Randall-Sundrum R2
The length of the Rivian R2 is 188.6 inches and it’s less than two inches shorter than a Model Y and less than 15 inches shorter than an R1S. There’s a substantial frunk (front truck) — Rivian described it as “roomy.” Keeping with its “adventure” ethos, the R2 will also feature a nifty bike mount system that can connect easily with the vehicle’s rear accessory ports.