Yes, things sure have changed—for Rivian and for the world—since the automaker debuted in the US in 2021 and recorded the largest IPO the stock market had seen in seven years. One big change is that interest rates are higher, which makes large purchases more expensive to finance, and makes buyers cagier about purchasing anything, new cars included.
The conventional wisdom on electric vehicles has shifted too. Sales data suggests electric-auto makers have made strides among higher-income early adopters, who tend to get excited about any sort of new technology. Indeed, these are the sort of drivers right in Rivian’s crosshairs: weekend warriors with change to spare. But now, automakers must reach normal drivers, who will be less patient, and less forgiving, in adapting to a new kind of car—much less paying a premium for the privilege. As Scaringe put it on a recent call with investors: “How do we get the 93 percent of the market that’s not buying an EV to get excited about the product?”
Rivian hopes that a more affordable option will do some of that work. At $45,000, the new vehicle is more comparable to middle-of-the-road EVs, including the Hyundai Ioniq 5 and 6, the Ford Mustang Mach-E, and the Tesla Model 3. It’s also closer to last month’s average US vehicle transaction price—for vehicles with any powertrain—of $47,400, according to Kelley Blue Book.
Still, there should be plenty of more affordable competition by the time the R2 starts rolling off the production line in two years. A compact “urban” truck from the California startup Telo Trucks—designed by Yves Béhar’s Fuseproject—could arrive by then. So might Kia’s EV3, now only a concept. Ford is planning production of a new electric Explorer. Meanwhile, Tesla has said it will refresh its platform in 2025 with a new, “next-gen” vehicle that may finally carry the company’s mythical $25,000 price point.