All-electric vehicle maker Rivian is dealing with a lot: the end of federal support for EVs, a surge in hybrid vehicle sales and a rate of cash burn that still alarms investors, among other things.
The company also has relatively low production and delivery numbers, but Rivian CEO RJ Scaringe told CNBC in a December interview that’s not the full story.
“The R1 is the best-selling premium electric SUV in the United States,” he said, adding that it has been a top-selling premium SUV of any kind in the state of California.
But the R1S carries a nearly $80,000 starting price. Rivian’s hope is that the upcoming, less expensive R2 model can repeat that same success in the far larger midsize, mid-price SUV EV market.
The R2 looks like a smaller R1S. Someone sitting inside will notice Rivian’s familiar style and design language throughout the interior. It has Rivian’s recognizable headlights. And it’s much the same shape, with a long, flat roof that lets a 6-foot-1-inch person sit in the rear seat without slouching.
One of the biggest differences is that it has five seats, two fewer than the larger R1S.
“It’s a smaller vehicle,” Scaringe said. “But I think this is the best vehicle we’ve developed to date. We’re incredibly bullish on this and excited for it. Of course it’s cheaper, but it doesn’t mean it’s not an aspirational product, something that you’re really going to enjoy and love to be in.”
Test ride
Scaringe took CNBC on a test drive of the R2 near the company’s office in Palo Alto, California.
It feels low to the ground and agile.
“Watch this,” Scaringe said as we were driving on the freeway. He kicked the accelerator and the R2 shot forward. EVs are known for fast acceleration, but this might stand out for its class.
“It’s quicker than it needs to be,” he said.
We didn’t drive off road, but Scaringe said the R2 is trail-worthy, though customers shouldn’t expect the more than 1,000-horsepower, go-anywhere capability of the $120,000 R1 Quad.
“It’s a Rivian, so it still has to be adventure ready,” Scaringe said. “It can go out and be on a trail. It’s just not going to be doing extreme rock crawling in the way that an R1 can do.”
Rivian’s approach to design and manufacturing has enabled the company to pack a lot into a lower-cost package.
Traditional cars have more than 60 computing units in them. By designing the computing architecture differently, the company reduced that down to 17 in its first-generation R1 vehicles and then to seven in the second generation. That’s the same number the R2 has, but the company was able to cut the length of the wiring in the vehicle by 2 miles from the previous generation. These kinds of design choices lower the cost of materials.
“It’s a dramatic reduction in the cost structure to build it,” Scaringe said. “So it’s key for both enabling the ramp-up in volume because it’s so much more accessible in terms of pricing, but it’s also much lower cost to build.”
There are also some unique features — rear-seat side windows drop down all the way into the door panel–highly unusual for the back of a vehicle — due to the location of the rear wheel. The company spent a lot of time getting the placement of the rear wheels right to allow it, Scaringe said.
Lowering costs doesn’t mean Rivian skimped everywhere. Customers had complained that there was no glove compartment on R1 vehicles, so the R2 has two of them. They both have a velvet-like lining that costs $11 per car.
“We wanted to make it a very nice environment,” Scaringe said. “So we spent the money to line them up. But this is a really good example. That’s a trade-off we made. The top-line number, the starting price of $45,000, has to be achieved. And we have to do it profitably.”
Wall Street’s view
Analysts are divided on whether Rivian can pull this off and match or beat Tesla‘s success.
Needham analyst Chris Pierce said the consensus opinion holds that Rivian will sell about 15,000 units of the R2 in 2026, but he thinks the company can top that. He added that Rivian ranks first in Consumer Reports’ owner satisfaction survey.
“They have the highest rating of people that own the car that want to buy it, that would buy the car again, would recommend the car to a friend,” Pierce said. “If you have a car and you like that car and you tell people, ‘That’s a great car,’ that’s the best form of advertising. It just seems like, for whatever reason, because of EV uncertainty, Trump, etc., people really got bearish on how many cars of this car they could sell.”
Rivian burned through $3 billion in the first three quarters of 2025, according to the company’s financial statements.
As of January, the company had about $7 billion in cash. Pierce said he expects Rivian to burn $5 billion in 2026. But company struck a $5 billion deal with Volkswagen to use Rivian software in VW vehicles worldwide, and that arrangement should bring in another $2 billion in 2026, leaving the company with about $4 billion in 2027 if all goes well.
For now, Rivian needs to ramp up its new vehicle, which is expected to roll out to reservation holders in June.
“If we can have the type of market share that we have on R1, where it’s the market share leader with R2, I mean, we’d have a real challenge of making enough of them,” Scaringe said. “So this is the hope, is we can capture that spark that’s connected with so many customers and at the flagship price point.”
Watch the video to learn why Rivian is betting on the R2 in its pursuit to profitability.
Correction: This story has been updated to correct the horesepower in the R1 Quad.
