“Every successful business must continuously adapt to the reality in which we operate,” he wrote.

Reaching a mass market

Not only do you have to build vehicles, you have to find people to buy them.

Like Tesla before it, Rivian made immediate die-hard fans and amassed a yearslong order book for its electric pickup truck and SUV, both of which won multiple industry awards. Those early adopters were willing to pay north of $70,000 and wait years to receive their new EV.

Industry experts say that enthusiasm is beginning to wane, which is beginning to take a toll on Rivian.

“Our automakers were optimistic about how many electric vehicles they would be able to sell,” Ketels said, but he said forecasts for high-end models were unrealistic.

Though U.S. electric vehicle sales surpassed 1 million in 2023, some automakers have rolled back or delayed EV investments, citing demand issues.

Scaringe has remained steadfast in interviews and earnings calls, saying he believes the industry will electrify and that Rivian will be at the forefront.

“Our business is not immune to existing economic and geopolitical uncertainties,” Scaringe said Feb. 21 during a fourth-quarter earnings call. “... We need to recognize only 7% of the market has electrified, meaning that really we’re talking about how to get the 93% of the market that’s not buying an EV to get excited about the product.”

Bringing down vehicle costs

Rivian’s vehicles, which can reach the low six figures, are out of reach for many. Higher interest rates, which makes borrowing more expensive, haven’t helped.

President Joe Biden’s signature climate law adopted in 2022, the Inflation Reduction Act, included hundreds of billions of dollars to incentivize clean energy projects such as EVs, but it also narrowed the number of EVs that qualify for purchaser tax breaks.

Among the new rules was an $80,000 cap on SUV and truck sticker prices to qualify, a sum that is lower than the prices of many of Rivian’s flagship R1T truck and R1S SUV models.

Under Secretary of State Jose Fernandez, who visited Georgia last month on a clean energy tour, said the IRA’s policies will ultimately benefit the country, even if there’s some bumps in the road.

“The transition will not be linear, but the long-term goal is clear,” Fernandez said.

The R2 is expected to start at about $45,000, which easily qualifies it for a $7,500 tax credit under the IRA. The R3 and R3X models Rivian announced Thursday are also potential volume sellers, both with anticipated sticker prices cheaper than the R2.

On the social media platform X, formerly known as Twitter, Scaringe said that Rivian received more than 68,000 R2 purchase reservations in less than 24 hours since its formal launch, a promising sign.

Ketels said the Georgia factory will only make sense once Rivian’s demand — and production capabilities — outgrow its Illinois plant.

“Can they get that momentum and can they gather enough customers to propel themselves into the future?” Ketels said. “That’s yet to be seen.”

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