Rivian is primed for its moment to shine. The emerging automaker is transitioning from producing lower-volume, higher-priced large SUVs and trucks to entering the mass-market with the 2027 R2. The preceding phase was remarkable, yet the R2 is crucial for the company’s future.
In Park City, Utah, Rivian Founder and CEO RJ Scaringe engaged in a one-on-one interview with The Drive, covering topics from the company’s foundation around this pivotal moment and the R2, to the new factory in Georgia, the expansion of the Rivian Adventure Network, the scaling of the service sector, growing pains, and more.
The latest episode of The Drivecast provides an insider’s look at Rivian’s strategy as the automaker targets mainstream consumers, the most vital automotive market, and competes against top-selling vehicles. Scaringe discusses the challenges of scaling service, the timeline for the Georgia plant and charging framework, and offers a glimpse into the R4 while outlining the essential attributes of RAD vehicles and what enthusiasts can anticipate.
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Complete Transcript
Joel: So, RJ, I’ve known you for quite some time. You’re the founder and CEO of Rivian. I still recall meeting you at the LA Auto Show, I think it was back in 2018, where we were slated for a 30-minute chat, but after an hour and a half, we were pulled out of the room. They were like, “You’ve had enough.” But we were full of questions, and Rivian was relatively new back then, right? It was like a debut party. You were refreshingly candid about many topics, often saying, “I don’t really know yet,” since it was all so fresh. And if I’m not mistaken, you have a true passion for cars. If I recall correctly, one of your all-time favorites is a Porsche 911 from the ’80s, modified for rally with extra ground clearance and all that for off-road capability. Is that correct?
RJ: I’m not sure if I have a definitive favorite, but that’s definitely an intriguing car. If I had to choose a 911, it would probably be a 993.
Joel: 993?
RJ: Yeah.
Joel: Which variant?
RJ: I’d lean towards the Carrera 4S or the Turbo.
Joel: Okay, so you’re definitely—
RJ: Or the Carrera 2S is pretty nice too. Honestly, they’re all fantastic.
Joel: So you are a genuine enthusiast.
RJ: Absolutely.
Joel: Alright. So I recently drove the R2. It literally launched just yesterday. We’re both exhausted; it was a long day yesterday. The R2 is beginning to reach consumers. Let’s talk about the R2. Its success is crucial. We discussed this at lunch yesterday; you’ve effectively staked the company on this and AI, correct? This needs to succeed. Last year, while you achieved a gross profit margin on the R1s, your net position is negative due to hefty expenditures on autonomy and chips and other components. Can you tell me about the anticipated timeline for R2’s profitability? For context, Volvo’s CEO mentioned to me a few months back that their EX60, starting around $60,000, will be profitable from day one, vehicle one. They’re making a profit on their EV the moment it rolls out. So, where do you stand?
RJ: R2 will reach profitability quite swiftly. We have publicly communicated this, and I’ve been quite adamant about it. The profit trajectory for R2 will begin to show by Q4.
Joel: This year?
RJ: Yes, this year. On a vehicle level, it’s vital to point out that Rivian has yet to generate net profits or be cash flow positive as a business. However, this is by design. It’s a deliberate and calculated effort to build out various capabilities aimed at creating a significantly larger operation. On the product side, we’ve opted for vertical integration in nearly all crucial areas—software, electronics, and high-voltage systems like power electronics and motors. We made these decisions to build high-performing products and achieve a structural cost advantage as we scale. Additionally, we integrated vertically on the broader business side, establishing our own distribution and service channels, which required substantial investment over the last few years to prepare for R2. That investment is a sort of anticipated load, expecting volumes that will accompany R2. This volume is what justifies all the preceding investments, such as in service infrastructure and distribution networks, while also catering to needs like autonomy and software. The scale of R2 is what frames it as a “make-or-break” product, the very product around which the entire business model has been constructed. We definitely see this as a high-volume program that will kick off from our Normal production facility with a planned capacity of approximately 160,000 R2 units. We are also expanding with another factory in Georgia, which will be pursued in two phases, with the first phase designed for 300,000 units. Importantly, the Georgia plant will manufacture R2, R3, and several exciting variants.
Joel: Oh, you’re jumping ahead.
RJ: Yes, there’s a lot we haven’t yet discussed.
Joel: We need to cover a lot here. Before delving into that, I don’t want your PR team to swoop in and cut me off. You’ve mentioned several key points that need to be addressed swiftly. First things first, we’ve been hearing various estimates; can you confirm how many R2 reservations we currently have?
RJ: We shared our reservation number just once, roughly 20 hours after the launch event in March 2024. To convey the excitement, we reported just under 70,000 reservations.
Joel: That was quite some time ago.
RJ: Indeed, a while ago. Since then, we’ve garnered more reservations, but we haven’t disclosed an updated figure.
Joel: No time like the present.
RJ: I’d prefer not going into details right now, but the excitement level is truly commendable, which is precisely what we aimed for during the launch. However, it does create a bit of a challenge since there’s a considerable interest from many people wanting their cars right away. So while we plan to start deliveries next week, countless individuals are keen to be among the first.
Joel: In the initial batch, sure.
RJ: Absolutely, and there’s simply no feasible way to address that immediately since we’re ramping up production. We learned valuable lessons from R1, where we encountered a similar—though smaller—challenge with significant backlogs and interest in our brand and product. For R2, we’ve developed a clear and thoughtful approach for rolling out volume and delivering vehicles. We’ve streamlined what we’re launching by opting for a single launch edition. However, lines—whether at restaurants, tech product launches, or car releases—are inherently challenging to manage. We strive to maintain transparency while recognizing that we must predict the conversion rate amidst a wealth of reservations. A slight miscalculation can substantially affect delivery timelines. So we need data to help shape those expectations.
Joel: And to clarify for those not familiar with the launch process, your point about streamlining build configurations also means that while you have reservation numbers, you need to consider the conversion rates across specific configurations—launch editions, standard, premium, etc. Those not being manufactured are naturally lower in the queue because they’ll come later, and you’ve already communicated that understanding.
RJ: That’s indeed a useful way to smooth out the line over time.
Joel: So the takeaway for people should be patience is key, though it’s not necessarily a trait I possess. I get that. So, we don’t have a concrete number. Would you say it’s over 200,000?
RJ: I, yes, we’d prefer not to disclose that.
Joel: Moving on—
RJ: I can share that with you off the record after this.
Joel: Alright, we can discuss that privately later. Now, turning to service, I know you’re very active online. Those who frequent forums or social media often express frustration regarding service experiences. You’ve been candid about Rivian’s past shortcomings. With a new product launch that could escalate vehicle volume significantly, ensuring a positive customer service experience is crucial. How do you plan to address previous experiences and improve going forward as the company grows?
RJ: Service challenges are vital to address. When Rivian launched in ’21, we lacked sufficient service infrastructure and were building it while scaling, which resulted in falling behind in key markets where we were overwhelmed by higher-than-expected volumes. Establishing service centers is not a quick process; it involves finding a location, building it, and obtaining permits, which can take from 9 to 18 months. In some areas, we reached a point where customers faced long wait times for minor repairs. We understood the critical branding implications of reducing those from lengthy waits to maximum two days—this ultimately necessitated considerable effort. As we launch the R2 model, a key objective is to have our service network operating at maximum efficiency, ensuring minimal wait times for critical repairs, ideally within hours, and non-critical issues within a couple of days. It was an enormous undertaking, as we had to prepare not just for product and manufacturing but also for service infrastructure. As you noted, online discussions often reflect past experiences, which is expected from a young company. Exploring the service metrics typical of other automakers from their earlier days could yield some interesting comparisons, as historic service challenges were not captured in the public eye.
Joel: We exist in a time of immediate communication.
RJ: Exactly. There are parallels in the past, but the social media dimension amplifies them now. I’m optimistic, as I’ve been seeing more positive comments from community members stating that their recent service experiences have improved significantly compared to earlier feedback.
Joel: That’s a good sign.
RJ: Yes! Given that the R2 is a mass-market vehicle, it will likely be a primary vehicle for many consumers, which means their tolerance for extended service durations will be much lower compared to the R1 segment.
Joel: To enhance the discussion around service, historically, R1 owners usually get a loaner vehicle during service. That’s a premium benefit typically associated with high-end brands. As R2 heads into production as a more mass-market vehicle with increased volumes, how do you plan to maintain that level of service? Is that something you can sustain?
RJ: One aspect often overlooked is more than half of our service occurs through mobile service. Our goal is to increase that significantly, aiming for 75% to 80% of our service to be mobile. What mobile service means is that if your vehicle encounters issues at home, you can flag it for service and a technician is dispatched to your location. We have around 800 mobile service vehicles, primarily vans equipped as mobile service stations. We also have Rivian service trucks that can reach remote locations. Currently, approximately 60% of our service activities are mobile, which is advantageous because it eliminates the need for a loaner vehicle. For situations requiring customers to bring their vehicle in, we do have a loaner program, but depending on your location and the type of service, we will have to evaluate feasibility. Conceptually, if the service is quick, it can be handled on the spot, or if it entails a longer process, we either arrange for a rideshare, provide a loaner, or facilitate a rental if a loaner isn’t available. Ideally, we prefer to avoid rentals, as that is costly for us and also puts you in a non-Rivian vehicle.
Joel: Who wants to be in a gas-powered rental car?
RJ: Exactly.
Joel: Moving on to charging, we’ve discussed the Rivian Adventure Network before. Notably, around 65% of Americans reside in single-family homes, and the average American drives around 40 miles a day with short trips. This is just data. The reality is, car purchases are often emotional rather than rational. Many consumers believe they need the capability to tow heavy loads across long distances, which may not be practical. As you develop R2 to cater to a broader audience, charging anxiety is a key concern despite R2’s EPA-rated range exceeding 300 miles. We’ve acknowledged that Tesla leads the market in charging networks, while Rivian’s uptime is commendable at 99%. How quickly are we building out the RAN network? Are we maintaining focus there, or have resources been redirected toward R2 and autonomy efforts?
RJ: We are indeed continuing to expand the network. The growth follows a linear trajectory, with our rate of new RAN location additions remaining unchanged.
Joel: No modifications to plans moving forward then?
RJ: No changes in that regard. We currently have about 150 RAN locations, and that number will continue to grow. However, we anticipate a significant acceleration in development with the introduction of our power cabinet 2.0 that will optimize for cost and ease of installation.
Joel: Consider RAN your R2?
RJ: Exactly! As we approach scaling our network, we want to be judicious in our investments. We intend to synchronize our charging expansion with the launch of products from our Georgia facility. Therefore, while growth will occur over the next two years, we foresee substantial acceleration post-launch. Ultimately, our aim is for Rivian to possess one of the largest charging networks in the U.S., recognizing that aside from Tesla, we also want to see the development of other effective networks. A diverse array of high-quality charging solutions is pivotal for wider EV adoption, though the network’s rollout has proven more challenging than anticipated.
Joel: Let’s shift focus to product development. With R2 launching soon, I attended the RAD debut in February. Rivian Adventure Department (RAD) creates some of the most exciting products, right? The R2 I saw yesterday was RAD-wrapped. While it didn’t look different, the wrap made it clear we’ve got a RAD department in play. Can you discuss RAD’s direction? When can we expect to see the first RAD products?
RJ: We haven’t revealed anything yet. I find developing cars, particularly something like the R2, tremendously enjoyable. It involves navigating tradeoffs and compromises, and the goal is to balance them in a way that results in a cohesive vehicle. However, to hit a necessary price point, certain areas need budget allocation, leaving others lacking. We’ve worked to distribute costs evenly across the vehicle to optimize the overall experience. Nonetheless, we can improve performance further. RAD provides us an avenue for enhancing the already fantastic R2, taking it to another level. This encompasses on-road and off-road dynamics, along with alterations to its visual appeal. RAD allows us to create vehicles that still resonate with our established brand image, but which also focus on maximizing excitement, performance, and adventure. This entails not simply changing the branding but fundamentally improving the underpinnings of the vehicles, making them pricier but more thrilling.
Joel: The R3 and R2 launch featured mention of a tri-motor model, yet I note there’s no mention of it on my current spec sheet. Did it get scrapped?
RJ: Well, let’s refer back to our RAD discussion. There’s more to unfold. We showcased R3X without initially recognizing the desire for a performance sub-brand to categorize such vehicles. If we were presenting or showcasing the R3X today, we’d classify it as a RAD vehicle, as it contains features like a wider track, a higher stance, and optimized aesthetics that are inherently motorsport-inspired.
Joel: The cork and those seats are indeed impressive.
RJ: Absolutely, the woven seats are incredibly stylish! R3X’s offerings akin to that of other performance sub-brands across automakers emphasize how RAD will push the boundaries of performance and capability while remaining true to our brand ethos.
Joel: I often receive inquiries online about the availability of an R3X. Do we have any timelines for those eager for updates? I understand mass-market models take precedence, and the focus must be on generating revenue, which is practical for any company.
RJ: We have a well-established timeline internally but haven’t disclosed it publicly yet. They are indeed forthcoming. The roadmap includes both R2 and R3 platforms, and there are plans for innovations stemming from each. Of course, R1 remains part of our future endeavors.
Joel: I’m a fan of the R1.
RJ: R1 possesses ample potential for expansion, particularly considering its quad-motor configuration.
Joel: Absolutely, exciting things ahead. Speaking of R2 and R1, I recognize there’s a lot of chatter about potentially introducing variants, as seen with competitors. We’re observing successes like Ford’s Maverick and others. An R2T makes sense in a growing market segment, yet currently, the design centers around R1 and R2 without specific variants. Could we expect an R2 pickup at some point?
RJ: This decision was indeed intentional. We’ve evaluated concepts such as R2Ts and other options. The platform itself offers substantial versatility. The challenge lies in determining which products will create maximum value and consumer excitement. This led us to focus on R2 and R3, and unusually, R3X was meant to suggest what consumers might anticipate in terms of unique variants from both platforms.
Joel: Are there intriguing markets potentially open for smaller than R1 electric pickups?
RJ: Yes.
Joel: A gap exists in that market currently, for sure.
RJ: Absolutely, we’re noting significant opportunities in areas such as adventure-oriented crossovers and true midsize SUVs. These must be factored into our future offerings beyond R2 and R3.
Joel: What potential form might R4 take?
RJ: That’s exciting, but we aren’t revealing details just yet.
Joel: Might it be a pickup?
RJ: It could take several forms, but I can’t confirm specifics yet.
Joel: Essentially, it might be anything.
RJ: Exactly.
Joel: Discussing patents, I’ve seen intriguing filings around brush guards, winches, and canopies. Are those ideas we could eventually see commercially available, or are they merely speculative at this point?
RJ: It’s a mix of both. Sometimes we will patent ideas without moving towards production. A winch has long been on our wish list for R1, but adding such features poses regulatory challenges, impacting crash safety. Typically, aftermarket providers handle these adjustments. Nonetheless, RAD is positioned to consider such ideas since it emphasizes adventure. It doesn’t just signify performance; it opens avenues for exciting accessories.
Joel: So, RAD may encompass vehicles, components, and more?
RJ: Indeed, RAD encompasses vehicles as well as accessories aiming to elevate the user experience.
Joel: On to repairability—there’s been general frustration in the marketplace about the complexity of modern cars and their repair costs. Many consumers express discomfort with needing professional assistance for even minor fixes. Rivian’s offerings, like parts for repairs, have garnered attention for their price tags. How does Rivian address the repairability challenge while keeping vehicles sophisticated and tech-savvy?
RJ: This was a significant consideration with R2. We designed it with manufacturing and repairability in mind, especially in terms of cost. Repairability encompasses two aspects: wear and tear and collision, which differ considerably. With regards to collision, vehicle design emphasizes safety, leading to complexities when repairs are needed. Safety features often result in substantial costs following accidents, thus, to balance these considerations, for R2 we implemented design strategies that systematically facilitate repairs and minimize overall repair frequencies. An example is utilizing multi-part structures for less severe incidents to avoid the requirement to replace entire panels, maintaining cost-effectiveness. Our objectives focus on efficiency, safety, and reasonable repairability.
Joel: Understood. Finally, let’s address advancements in displays and controls. Your team has been vocal about introducing Apple CarPlay and developing the new Rivian 2.0 OS with enhanced interfaces, in response to consumer feedback, including tactile controls. Tell me how you’re balancing these improvements while retaining the touchscreen interface?
RJ: The haptic wheels on the steering wheel, which create clicks as they rotate, involved substantial engineering, as they rely on software-driven motors creating the tactile sensations.
Joel: They certainly feel responsive.
RJ: Exactly. These wheels offer configuration flexibility; depending on the screen, they can adapt. Our choice of using a multi-touch display allows us to continuously update and refresh it. Additionally, we seek to enhance voice controls as an integrated feature over time. The R2 is built with a robust inference platform, meaning many functions can run locally, improving response times. Addressing these aspects with engaging interfaces, tactile controls, and voice commands creates multiple interaction pathways for users, catering to diverse consumer preferences.
Joel: I recall early voice assistant experiences being less than efficient.
RJ: Absolutely, and now the technology has progressed significantly. It’s becoming more capable, as we’ve transitioned to newer interaction paradigms.
Joel: To respect your time, I’d like to conclude with one last question. If you were to address Rivian owners and enthusiasts, what message would you share about Rivian’s future and what they can expect from your company?
RJ: I’m more excited than ever about what we’re building. The R2 embodies everything we’ve learned and achieved as a company. It’s a remarkable blend of performance, versatility, and engineering finesse, all tailored toward a price that is intended to resonate well with customers. This sets the stage for our foray into the mass market. Furthermore, the potential variants stemming from these platforms, especially RAD versions, promise even greater excitement, enhancing the possibilities for our consumers.
Joel: It’s fascinating that during my drive, I continually wondered how it felt, looked, and drove so incredibly at its price point. All the cars I’ve driven pale in comparison to this one.
RJ: That was precisely our aim; it ended up costing less to manufacture, yet deliver extraordinary value.
Joel: Kudos to your team. It’s truly an impressive accomplishment.
RJ: Thank you! I mean, you know, I recall reading car magazines and being thrilled when a car broke the 4-second mark for 0 to 60, thinking it was something extraordinary. And now our $50,000 R2 can easily achieve that while offering multivalued functionality and adventuring capability. It’s remarkable that it not only hits 0 to 60 in numbers reminiscent of the legendary 993 Turbo while providing exceptional performance and balance in both off-road and urban settings.
Joel: Out of embargo, I’ll assert that unless you’ve driven competitive vehicles, you might not realize how underwhelming acceleration generally becomes past 30 or 60 mph. However, R1 manages outstanding speed much further beyond that, proving it can compete and even excel at higher speeds. I was astonished at how quickly it accelerated from 65, reaching speeds that could easily attract unwanted attention.
RJ: Indeed; it’s incredible that capability is woven into a midsize SUV, allowing for both exhilarating speed and dynamic control.
Joel: I appreciate your insights and thank you for being on the podcast; we’ll catch you again soon.