Does the R2 actually kill Rivian?

[ThumprMN]

What a sensational headline full of speculation. ?

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[NY_Rob]

It's a very intriguing argument, but as @COdogman mentioned the Model 3/Y did not kill Tesla, but they were (if Elon is to be believed) only days away from going under just before the Model 3 release. The old vehicles are only a fraction of Tesla's sales nowadays compared to the Model 3 and Model Y, so it seems Tesla made the right call with the new lower priced models.

If Rivian can actually make it until the R2 is being delivered to real retail customers, they should be in great shape with an awesome high end Pickup and SUV and a mid priced SUV offering that everybody is clamoring for.

If the R2 turns out to be the killer EV SUV like we all hope, it could be the best seller for Rivian in a short period of time.

 

[RivRyan]

Let's say other folks agree with this take. Potentially a lot of them.

Then, somewhat counter-intuitively, the R2 never comes into existence.

If this is your scenario, then you can remove all the rest. Yes, if the R2 never comes into existence, Rivian dies. Not because of any impact on R1 sales, but just because the company can't survive even on double current R1 sales, and there's no one predicting that's going to happen. Rivian's future is entirely dependent on R2 being popular. And if it is, they could probably shut down the R1 lines without damaging their prospects.

 

[carsly]

I wondered the same thing. But then realized, these guys are auto experts. They must be aware of this risk and decided to move forward - for good reasons I'm sure. It may 'freeze out' some prospective R1 buyers, but the read they get on R2 demand - and the importance that has on their balance sheet and ability to raise money / make new decisions (e.g., accelerate R2 production) are well worth it.

It's why they're promoting / teasing the R2 release so much. It's got to be successful. We can all do our part by putting down $100 (or 2) for a refundable reservation to help boost their numbers.

In fact, Rivian's exec team has precious little experience running an automobile company. It's partly what has allowed them to break the mold and see early success but also what causes them to fall into predictable traps around pricing, quality, service, etc.

They have turned operations leaders at least a few times. I don't think they understand enough about scaling complex manufacturing - otherwise given their cash position and a factory in Normal producing well below capacity it's a highly questionable decision to open a second factory, near the opposite coast from their headquarters in California which will stretch a lean team past their breaking point. This is why the S, X and 3 were all produced in Fremont while Tesla scaled.

It seems the Rivian team has hired too many consultants and hasn't spent enough time actually building and scaling operations.

I think R2 is a "hail mary" play that didn't need to be so risky given their plans and timing. They could have decided to build it in Normal, launch in late 2025 as a 2026 model year, offered "priority reservations" or what have you to anyone who owns a R1 before R2 starts production helping incent sales of what they have on offer today (and possible future add-on sales/share of garage). Their "auto experts" come with gilded resumes, but feel like they are missing the mark on a number of fronts.

I'd much rather be wrong, I just don't think I am...

PS expect to see Rivian begin selling their own used vehicles shortly. This will help bring down entry price points and onboard people to the Rivian experience/brand BUT comes with it inventory carrying risk, additional working capital needs AND added warranty exposure/risk. The days of the $60-70K CPO R1 are coming soon.

 

[Southern R1S]

I'm not cross shopping the R1S with a CRV sized vehicle, and I suspect that very few other people will either. The R1 is, and is always going to be, a lower volume vehicle. The R2 is intended to be far more mass market.

Most automakers share common design language across their lineups, and that's generally seen as a driver of sales (because you can capture down, mid, and up market) rather than a detractor.

Look at something like the Lexus SUV lineup for examples of this (LX and GX have historically been very similar, RX and NX have been very similar, and now the TX sort marries up the other 4).

I also do not believe demand has died down at all. What has gone down is the number of buyers that were in a market where, for most, loans were practically all-time lows. It's hard to buy anything when you already don't have the money.

Demand has definitely died down as Rivian as burned through most of the backlog, but I also think that was to be expected and lines up with the planned timing of getting the Georgia plant online and the R2 out to market.

Again, R1 was never going to consistently be a 100,000/year seller in any world, and I don't that's lost on Rivian either. It's a relatively niche, high performance vehicle, expensive vehicle that's targeted towards pretty narrow audiences & in my opinion that's exactly where I hope the R1 continues to sit.

 

[Zoidz]

I also do not believe demand has died down at all. What has gone down is the number of buyers that were in a market where, for most, loans were practically all-time lows. It's hard to buy anything when you already don't have the money.

Also, Rivian has not been "advertising" until recently. It seems to me there are things in the pipeline that the doom and gloomers are not factoring in. Demand could increase:

- Rivian is advertising, therefore being exposed to a whole new, large group of potential customers. How many R1 sales will that generate?

- Rivian is announcing European Service Centers so we should assume (?) the European market will open up this year for the R1. Is that 5k - 10k - 20k vehicles? Maybe?

- The R2 announcement is going to connect with new buyers. Some of them may decide to buy an R1 now instead of an R2 in 2026.

- We don't know what other EDV OEM agreements are in process. A few thousand additional units in 2025?

 

[Thedude]

I also do not believe demand has died down at all. What has gone down is the number of buyers that were in a market where, for most, loans were practically all-time lows. It's hard to buy anything when you already don't have the money.

What you just described is demand going down.

 

[jambaman84]

I think Rivian had always intended on the R2 platform to be it's bread and butter. R1 was the introduction to the automotive world. R1 is still the best option out there. The R2 will have less features compared to the R1, but the vast majority of people can afford a 40k vehicle more than a 90k+ vehicle.

 

[fdon1]

What you just described is demand going down.

I agree looking back but I'm trying to describe that it's not that people do not want to purchase Rivian but for some the vehicle is just too expensive.

The want is there if that makes sense

 

[MidnightRivian]

R1 is R&D / handshake to the world.

R2 is the mass market solution and built from ground up to be profitable.

Very few folks are cross shopping the R2 with R1. Different capabilities, size and market segment for each product.

The increase in demand and profits from R2 will easily offset any demand / sales lost from R1 which will shift to R2. Rivian wins in both scenario by covering all market segments / price point. From $40,000 - $100,000.

 

[NY_Rob]

.. if the R2 never comes into existence, Rivian dies. Not because of any impact on R1 sales, but just because the company can't survive even on double current R1 sales, and there's no one predicting that's going to happen. Rivian's future is entirely dependent on R2 being popular.

Interesting... and it could be that there is just no way that the R1 vehicles ever make a profit unless Rivian charges $120k for them at which point they will sell only a handful every year.

They need to make the R2 a very compelling vehicle to survive!

 

[NY_Rob]

If this is accurate, it's four inches shorter than the 4-door Bronco... good size!

330 mi range is going to need a 100kWh battery (assuming 3.3mi/kWh), for $47K that's a great offer if true.

 

[SoCal Rob]

Wait, what? The leaked specs on R2 are awesome (I agree).

Here's the rub.

I suspect many prospective buyers in the R1 pipeline really don't want to pay $75-100K for either a tiny truck bed or a third-row that they will never use. Others may be urban dwellers and as facile as the R1 is, it's still a handful on tight city streets and in parking lots with ultra-narrow spaces. Let's face it, if you've waited 3-4 years for a R1 that doesn't quite fit your needs, or budget parameters, the R2 looks very, very compelling at roughly half the price.

Let's say other folks agree with this take. Potentially a lot of them.

Then, somewhat counter-intuitively, the R2 never comes into existence.

The new plant is Georgia is far from done. Tooling is far from ordered (and paid for) and lines still have to built, configured, tested and dialed-in for production volumes. Then there are testing and certifications to be had, yada yada yada, it's two+ years before R2 hits the road (I'm guessing end of 2026 with the current trajectory, IF Rivian finds the cash to get there).

Ah, cash. R1 demand has already hit a wall and is likely falling. Don't blame Rivian, they are pulling every trick out of the bag - early release of dual-motor, lower capacity (and lower priced) battery variants, introduction of leasing in certain markets, still covering connectivity costs for all vehicles and the impending line updates should take more cost out of the R1 platform creating an opportunity for either additional gross margin, reducing price points, or perhaps a bit of both.

But back to cash.

By my reckoning they have about four quarters of cash on hand once you adjust for working capital needs - as they grow they will have more raw goods on hand, work-in-process inventory and finished goods inventory (in transit and at delivery centers). That does NOT include a build-out of a new facility in Georgia with its own capex and staffing needs years in advance of first revenue.

Back to the premise. If R2 demand is strong, and we'll know more in 2 days or so, then R1 demand may soften even more than Rivian has stated publicly and Rivian will not sell enough R1 vehicles this year (or next) and run out of cash sometime in Q1 or Q2 of 2025. That's at least a year before the R2 launch so it's quite possible that R2 anticipation ends up killing the company absent a large influx (or two) of highly dilutive external cash.

I think we’re more likely to see current R1 owners getting an R2 as a commuter or grocery-getter. The bigger boost will come from the friends, family, and colleagues who know current R1 owners (the majority of whom are very satisfied with their Rivian) and want a lower price point, smaller vehicle, or both. I know a lot of people who like our Rivian but they don’t need the capability or want the exterior size. Heck, just a lower step-in height will change some people I know from a “Pass.” to a, “Please!”

 

[electruck]

Lots of things could happen. Asteroid strike wiping out humanity, for example.

 

[White Shadow]

Personally, I'm torn. A new R1S is just more than I want to spend on an SUV, but other than that, it's about right for me in every other way. The R2, if the leaked specs are correct, seems to be okay price-wise, but is a little bit smaller than I'd prefer and there are certain things that I'd miss, such as air suspension that I really enjoy now.

I need an R1.5S.

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