Rivian had a lot on its plate as it moved from pitch mode to selling EVs. It created an electric pickup and an electric SUV while preparing a massive IPO. It built electric delivery trucks for Amazon and wants to do the same for other companies. Now it plans to sell an even cheaper SUV that could make Rivian a dominant EV player for years to come. And he wanted to build a whole new factory in Georgia where he would build many of these vehicles.
With so many variables, the exact shape of the company’s future was difficult to predict.
That has changed.
Earlier Thursday, the company announced a completely redesigned version of its first two consumer vehicles, the R1T pickup and the R1S SUV. Not only are they more technologically advanced, Rivian also made them simpler in an effort to dramatically reduce their manufacturing costs.
Rivian also recently shelved its plan to build that plant in Georgia for the time being, opting instead to double its existing facility in Illinois. The decision is set to save the company $2.25 billion and means it can focus all of its efforts on one production staff at one plant.
These changes mean that, for the first time since the company broke stealth in 2018, Rivian’s immediate future is actually remarkably clear. The company needs to sell these facelifted vehicles at a profit in order to sustain itself long enough to get the cheaper R2 mass SUV on the road (and the adorable R3 variant that took the automotive world by storm earlier this year). He knows exactly where that will happen, and he knows what it will take to get there.
“With Rivian’s latest move to refresh its R1T and R1S EVs, you can start to see how the company aims to carve its way forward through the ‘valley of death,'” said Corey Cantor, senior partner for electric vehicles at BloombergNEF. an email to TechCrunch. “If successful, they can use the fruits of this process as they scale R2 and reach the mass market, en route to R3.”
Other EV startups arguably have a more difficult path through this “valley of death.”
Take Lucid Motors, for example. The company has a well-regarded product in the Lucid Air sedan. But it has struggled to find buyers for Air, with its own CEO Peter Rawlinson publicly admitting marketing failures. It has only shipped about 12,000 cars to date, at least until the end of the first quarter of this year.
Lucid Motors is now pinning a lot of its hopes on its upcoming Gravity SUV. This vehicle should have wider appeal given the popularity of the SUV form factor. But its success is hardly guaranteed, especially since it starts at a relatively high “under $80,000” price tag. And Lucid Motors needs Gravity to succeed if it ever hopes to reach its own planned mid-size, mass-market EV.
Other EV startups face more uncertainty. Canoo has changed its business model so many times that it’s often hard to keep track of what it plans to do with its bulbous EVs, which were first revealed in 2019. Currently, the plan is to sell to fleets and government entities. Faraday Future spends as much time fighting its owners as it does trying to sell its own luxury EV. Fisker is on the brink of bankruptcy after struggling with overselling its electric SUVs and a myriad of quality and service issues.
It won’t be easy for Rivian. It projects virtually no growth this year compared to 2023, and it’s off to a flat-footed start. It may need to raise more money as a result – a difficult feat in the current economy.
However, the company says that the changes to the R1 range have led to it achieving a “positive gross profit” by the end of this year. That’s a big deal considering Rivian still loses tens of thousands of dollars on every car it sells. If Rivian wants to survive long enough to ship the more affordable R2 to the mass market, it really needs these refreshed vehicles to sell well.
“The road ahead is clearer than it was a year ago as Rivian has laid out its near-term plans,” Cantor said. “But ultimately executing on both profitability and high-volume EV sales is what is required to make Rivian one of the EV success stories of this decade.”
