Rivian's crucial R2 EV launch to begin with $58,000 model in spring

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Rivian CEO RJ Scaringe reacts at an event to unveil a smaller R2 SUV in Laguna Beach, California, on March 7, 2024.

Mike Blake | Reuters

Rivian Automotive will launch sales of its crucial R2 all-electric vehicle this spring with a roughly $58,000 special edition model, the company announced Thursday.

The first of the R2 midsize vehicles will be a performance model with a “Launch Package” that includes a 330-mile range, dual motors, special attributes and “lifetime” access to its Autonomy+ advanced driver-assistance system. The vehicle will have 656 horsepower and 609 foot-pounds of torque, and is capable of accelerating from 0-60 mph in as quick as 3.6 seconds.

Rivian has been touting a less expensive, entry-level version of the vehicle, starting at $45,000, but it said that model, which is expected to be less profitable, won’t be available until late 2027. Its current vehicles start at more than $70,000

The R2 is considered a make-or-break moment for Rivian after the company has lost billions of dollars and seen waning demand for its current vehicles: the R1 SUV and pickup and an electric delivery van. The R2, from an exterior perspective, is essentially a smaller version of the R1 SUV, but the company has reworked the vehicle’s software, electrical system and parts in an attempt to make it more efficient and profitable.

Rivian founder and CEO RJ Scaringe has promised investors that the R2 will be a turning point for the company’s profits, sales and technologies. The EV maker is also aiming to launch hands-free, eyes-off driving to better compete against U.S. EV industry leader Tesla.

“R2 is the key transition vehicle for Rivian to transform into a scaled auto manufacturer, which in turn helps drive operating leverage across the business (including R1),” said Morgan Stanley analyst Andrew Percoco.

Morgan Stanley noted that while it’s bullish on long-term demand for the R2, it remains more “cautious in the near-term” as the company transitions to its third-generation electrical architecture that will debut on the new vehicle.

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Why the R2 could be Rivian’s key to profitability

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Others, such as Barclays, have questioned the demand for the R2, which Rivian has said is expected to anchor its current plant in Normal, Illinois, as well as an upcoming, multibillion-dollar plant in Georgia that’s expected to be capable of producing up to 400,000 vehicles a year.

“There is increasing uncertainty on R2’s volume outlook following the recent negative policy developments (i.e. $7.5k IRA credit expiration, reduced reg credits, tariff costs), with R2 likely launching in a period of weak US EV demand,” Barclays analyst Dan Levy said in an August investor note analyzing potential demand for the vehicle.

In addition to changing federal regulations, such as the end of up to $7,500 in federal tax credits, the R2 comes to market as many automakers are pulling back their EV plans or writing off billions of dollars in losses amid slower-than-expected adoption of the vehicles. Analysts have also significantly lowered expectations for market share growth in the years ahead.

Scaringe has said the company expects the R2 to not only compete with EVs such as the Tesla Model Y — the bestselling EV globally — but also traditional gas-powered vehicles.

The R2 is comparable to the Model Y in many key areas. It’s similar in size, mile range and its acceleration time. The Model Y, however, starts at roughly $40,000 and already offers many of the driving technologies Rivian is attempting to accomplish with the R2.

“R2 is an exceptional vehicle and I believe will be a game changer for our customers, our company and the industry,” Scaringe said last month during a call with investors on the company’s quarterly earnings results. “R2 is an extension of the experience we delivered in R1 with design elements and performance to inspire adventure but in a smaller form factor and, importantly, at an attractive lower price point.”

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Shares of Rivian have been higher ahead of details of the R2 being released, buoyed by an upgrade by TD Cowen to buy based on a recent deep dive on demand trends for the new EV.

Scaringe described 2025 to investors last month as a “foundational year” for Rivian, while saying 2026 will mark “an inflection point” for the company.

Rivian’s 2026 guidance includes adjusted pretax losses of between $1.8 billion and $2.1 billion and capital expenditures between $1.95 billion and $2.05 billion. That compares with nearly $2.1 billion in adjusted pretax losses and $1.7 billion in capital expenditures last year.

Here are additional details Rivian released Thursday on its planned R2 lineup:

• Spring 2026: R2 Performance and “Launch Package,” starting at $57,990. Features all-wheel-drive, up to 330-mile range, and 656 horsepower and 609 foot-pounds of torque.
• Late 2026: R2 Premium, starting at $53,990. Includes a dual-motor AWD setup that produces 450 horsepower and 537 foot-pounds of torque and up to 330 miles in range.
• First half of 2027: R2 Standard, starting at $48,490. Features rear-wheel drive with 350 horsepower and 355 foot-pounds of torque and up to 345-mile range.
• Late 2027: R2 Standard, starting at around $45,000. The company has released limited other details about the model other than that it’s expecting to offer a more than 275-mile range.

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