When it comes to EVs, Rivian has managed to carve a sizable niche for itself in the marketplace. This is due to innovative models like the R1T and R1S as well as its enigmatic CEO RJ Scaringe who wanted to flip the script on what an EV should be when he first started Rivian. However, the market is changing and its now facing headwinds thanks to the end of EV tax credits that once provided companies and buyers a cushion when it came time to purchase an EV. Despite this, Rivian is continuing its new product rollout as it hopes to make a profit with the upcoming R2.

R2 an all-in bet for Rivian

Unlike the larger R1 lineup of vehicles, the R2 was designed from the ground up to be an SUV only with Scaringe saying “there is no pickup version” when asked about it at a recent Autmotive Press Association event at Rivian’s facility in Plymouth, Michigan. Failure is not an option and Scaringe made that clear in his opening remarks.

The R2 is bringing the company into a smaller piece of the SUV market and that’s partially reflective in its pricing with the company saying a base one will start around $45,000 which is noticeably less expensive than the R1 lineup. In addition to this lower pricing ladder, the R2 will also plant the seeds for other SUVs including the R3X and its tamer sibling the R3.

A new era of development

It’s sort of mind-blowing when I look at the difference in how this vehicle is being developed and launched compared with what we did with R1.”said Scaringe with the CEO admitting the prototypes its now testing are closer to a formal production vehicle versus the first R1 models.

“One huge difference: the supply chain. It was hard to develop and bring along a supply chain as a newcomer, with the added complications of shortages during the pandemic. That has flipped 180 degrees, he says, in terms of how suppliers are engaging with them now.”

R2 fueling plant expansion

In addition to expanding Rivian’s profile, the R2 is also fueling a new expansion at the company’s Normal, Illinois facility with the company adding an extra 2 million square feet of real estate to the facility. Half of this will be dedicated to a new body shop and general assembly plant for the R2 while the other half will be a new supplier park that will bring some of the firm’s key suppliers to the plant.

Meanwhile, the smaller R3 will not be built at Normal and will instead be built at a new plant that’s currently under construction in Georgia with the facility set to open in 2028. When its fully operational, the Georgia plant will have the capacity to build 400,000 vehicles annually.

Scaringe expects R2 to have less leases, more purchases

One of the bullish statements Scaringe made at the event we attended was that he expects more people to outright buy the R2 versus leasing. This would be a shift from what we have seen on the bigger R1 models with those buyers mostly leasing these vehicles versus buying them outright due to the old incentive structure as well as their high price tags. Scaringe says he expects two-thirds of R2 buyers to purchase but it remains to be seen if that’s the case due to the end of federal incentives.

Scaringe also believes that there is currently a lack of choice in the EV market (we move to disagree with you on that one RJ) with the choices that are out there not being desirable enough to satisfy a wide swath of buyers though it’s important to note the R1S is the strongest selling premium SUV in California. “I’ve never been more bullish,” Scaringe says. And there is more to come: R4, R5, and potentially R6, as well as global expansion, but not everywhere. “We don’t plan to go to China.”

A renewed focus on domestic production

Rivian has also been watching the ever-changing tariff situation very carefully and while the CEO sees some changes being mere noise and filler, the company is also willing to adhere to policies that will have longer term staying power. This includes an anti-china strategy that will see Rivian reduce its reliance on foreign sourced components and sharpen its focus on its production plans.

For example, the R2 is fully assembled in the U.S. but its battery packs currently come from Korea which makes the R2 vulnerable to tariffs. This will change in the near future due to a new LG battery plant that will be built in Arizona. This new plant will allow Rivian to avoid the current Korean tariffs and build these components in house.