- The smaller Rivian R2 SUV, which will start at $45,000, has attracted more than 68,000 reservations, CEO RJ Scaringe said in a post on X.
Rivian’s shares closed more than 2 per cent higher on Friday as its cheaper R2 SUV racked up tens of thousands of reservations within hours of its launch, fueling optimism that the electric vehicle maker could expand in the mass-market segment. Unveiled on Thursday, the smaller R2 SUV, which will start at $45,000, has attracted more than 68,000 reservations, CEO RJ Scaringe said in a post on X.
Analysts also said that the Amazon-backed EV maker’s plan to produce the R2 at its existing U.S. factory and pause the construction of its second factory in Georgia may result in cost savings that will delay further fundraising.
Rivian gains as new launch R2 SUV attracts
The pause in its Georgia plant is expected to drive additional savings of more than $2.25 billion for Rivian compared to its prior forecast. It will also hasten R2 deliveries to the first half of 2026.
Cost savings will leave the company with enough cash on hand through R2’s start of production, “relieving considerable pressure to raise capital in the near term,” Deutsche Bank analyst Emmanuel Rosner said.
The Illinois plant, where Rivian also makes its electric delivery vans, can produce 215,000 vehicles a year after production of the R2 starts, the company said on Thursday.
“With this new product, Rivian can potentially break more into the mass market segment, which represents about half of total U.S. auto sales,” said analysts at Bank of America.
In a surprise move, the company also introduced the R3 and a more powerful R3X variant on Thursday. The R3 will be cheaper than the R2 and will be launched after it.
The reveals come when EV demand is rising at a slower pace than automakers had expected, weighing on shares of the companies this year. Rivian’s stock had nearly halved in value this year, before the launch on Thursday.
After Friday’s close, Rivian’s market value stands at $12.49 billion, around $264 million more than its close on Thursday. Since the R2 launch event, Rivian’s market value has increased by more than $1.7 billion.
Meanwhile, market leader Tesla has slashed prices to spur sales and is also pursuing a cheaper model.
“Given Tesla has shown little ambition to move into the SUV space, Rivian could be one of the few EV SUVs on the market that most investors will likely want to buy over the next 3-4 years,” Evercore ISI analyst Chris McNally said in a note.
First Published Date: 09 Mar 2024, 18:42 PM IST
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