Rivian CEO Robert “RJ” Scaringe unveiled the electric car maker's R2 SUV on Thursday. Patrick T. Fallon/AFP via Getty Images
Tesla rival Rivian reached a critical moment this week with the unveiling of its latest model, the R2 SUV. Judging by the jump in stock prices, things seem to be going well.
Since Thursday's events, the Amazon-backed electric car maker's market value has jumped more than $1.7 billion. It remains to be seen whether it will fall again as investors reconsider, but the initial reaction meant a much-needed boost for the struggling EV maker.
Last month, Rivian reported disappointing quarterly results and guidance and announced it would cut its salaried workforce by about 10%. Its market capitalization has plummeted from a peak of $153 billion in 2021 to $12.5 billion today.
Gene Munster, managing partner at Deepwater Asset Management, recently mused about Apple's potential acquisition of Rivian, citing low valuations and the idea that after the tech giant scrapped its EV project, “something's going to happen.'' “We need to do something big,” he said.
Tesla CEO Elon Musk said last month that Rivian's product design was “not bad,” but added, “The real challenge in making a car company work is building mass production with positive cash flow.” It's about achieving it,” he added. He suggested that rivals would go bankrupt within six quarters unless they made fundamental changes, saying they needed “significant cost cuts.”
On Thursday, Rivian showed it was ready to do just that, surprising many by announcing it was delaying plans to build a $5 billion factory in Georgia. Instead, the new model will be manufactured at an existing factory in Illinois, saving more than $2.25 billion in capital investment.
Deutsche Bank analyst Emmanuel Rozner told Reuters that Rivian appears to have enough cash on hand to continue producing R2, and that the move would “reduce significant funding costs in the short term.” “It takes the pressure off,” he said.
Rivian surprised investors in other news with the unexpected announcement of another model to be produced after the R2, the smaller and cheaper R3 compact SUV. Also on display was his R3X, which is stronger and more rugged.
CEO Robert “RJ” Scaringe, referring to the late Apple co-founder Steve Jobs' tendency to immediately launch product announcements after a keynote speech, said, “I don't expect there to be 'one more thing' here.” I didn't,” he joked.
In a post to X on Friday, Scaringe wrote that within 24 hours the company had received more than 68,000 reservations for R2 starting at $45,000. He added that the company was “overwhelmed” by the response to the new car.
But the fact remains that Rivian has never been profitable, still loses money on each vehicle it makes, and overall EV sales are growing at a slower pace than industry expectations.
After a difficult few months, Rivian had a productive Thursday and Friday. It remains to be seen whether this is a temporary event or a turning point.
