Rivian R2 Will Be Brand's 'Model 3 Moment'

But it's meant to compete with the Model Y

Rivian R1T Demonstrates The Capabilities Of Unreal Engine 5.2

Photo by: YouTube

Rob Stumpf

By: Rob Stumpf

Dec 30, 2023 at 12:18pm ET

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Rivian's core focus is officially on the success of its next-generation EV platform for the masses. The upcoming R2 platform is expected to enter production in 2026, but that means a lot of changes for Rivian between now and then.

CEO RJ Scaringe recently spoke on Guy Raz's How I Built This podcast where he addressed some of the company's projected challenges over the next two years as it prepares to build out a new vehicle at a more affordable price point. Or, in short, how Rivian will have its make-or-break "Model 3 moment" very soon.

Rivian CEO RJ Scaringe and Ford Motor Company chairman Bill Ford

Don't get it twisted—just because this move could be the company's breakthrough to more attainable markets doesn't mean that the R2 is meant to compete with the Model 3 directly. Arguably, it's more likely to compete with the Model Y.

We already know that the R2 will be some sort of midsize SUV competing in the same segment as the Model Y. That alone is a strategic move (and one that differs from Tesla's launch of a sedan) considering that Americans have a seemingly insatiable appetite for crossovers.

"The goal with these is to continue to take the essence of what we've done here, but in different packages and smaller form factors," said Scaringe in a previous interview with YouTuber Marques Brownlee.

We also had a rough target price for the crossover. RJ Scaringe clarified this in his latest interview, noting that the company has an "extreme vacuum of choice [..] in sort of the $45,000 to $50,000 price range." Likely, this range will end up being the starting price of the R2, which is just slightly above the Model Y which costs $45,630 after destination and order fees.

The Rivian R1T and R1S have proved to be desirable vehicles. However, the biggest growth constraint that Rivian faces is the same one that Tesla has already conquered: demand. Rivian's current production is finally reaching equilibrium with the number of vehicles being sold—an eventuality for EVs priced similarly to the R1T and R1S across the industry. And like Tesla, the seed money from selling these upmarket vehicles will lead to more affordable models amid a leveling-off of the higher-priced models.”

Now Rivian is hoping to take that same approach over the next two years as it prepares to launch the R2. Scaringe warns that the automaker will grow "disproportionately" during this time, as the manufacturer needs to scale for volume and growth substantially before the launch. That all begins with the construction of a $5 billion manufacturing plant in Georgia.

In the early days of Tesla, at-scale growth meant peppering service centers in more locations around the U.S. and growing the Supercharging network. Fortunately for Rivian, its vehicles will make use of that very network that Tesla built out in its infancy thanks to Rivian's planned adoption of the North American Charging Standards (NACS). So it would appear that the growing pains for Rivian will be around scaling out manufacturing and service over the next several years. Even so, the automaker will still have to deal with supply chain challenges and other unforeseen issues during its ramp-up.

Rivian CEO, RJ Scaringe, driving the first production R1T pickup off the production line in Normal, Illinois

Despite the small differences, the approach Rivian is taking could be pulled right out of Tesla's own historical playbooks. According to Scaringe, "Strategically, it’s very similar.”

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And what better manifesto to base your operations on? Tesla is one of the few startup manufacturers to succeed in scaling up in nearly a century, and if Rivian can do the same using a similar approach, it may have cracked the code for that much-desired Tesla money—something many other automakers have tried (and failed) to do in recent years.

Rivian plans to officially begin production of the R2 in 2026, which means that a preview of the platform may be revealed as early as 2024. Until then, Scaringe says Rivian plans to make the R2 the "core focus" of its business.

More Rivian News

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Rivian R1T Owner Says His Truck Has Been Out For Repairs For Eight Months

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