Does the R2 actually kill Rivian?

[carsly]

Wait, what? The leaked specs on R2 are awesome (I agree).

Here's the rub.

I suspect many prospective buyers in the R1 pipeline really don't want to pay $75-100K for either a tiny truck bed or a third-row that they will never use. Others may be urban dwellers and as facile as the R1 is, it's still a handful on tight city streets and in parking lots with ultra-narrow spaces. Let's face it, if you've waited 3-4 years for a R1 that doesn't quite fit your needs, or budget parameters, the R2 looks very, very compelling at roughly half the price.

Let's say other folks agree with this take. Potentially a lot of them.

Then, somewhat counter-intuitively, the R2 never comes into existence.

The new plant is Georgia is far from done. Tooling is far from ordered (and paid for) and lines still have to built, configured, tested and dialed-in for production volumes. Then there are testing and certifications to be had, yada yada yada, it's two+ years before R2 hits the road (I'm guessing end of 2026 with the current trajectory, IF Rivian finds the cash to get there).

Ah, cash. R1 demand has already hit a wall and is likely falling. Don't blame Rivian, they are pulling every trick out of the bag - early release of dual-motor, lower capacity (and lower priced) battery variants, introduction of leasing in certain markets, still covering connectivity costs for all vehicles and the impending line updates should take more cost out of the R1 platform creating an opportunity for either additional gross margin, reducing price points, or perhaps a bit of both.

But back to cash.

By my reckoning they have about four quarters of cash on hand once you adjust for working capital needs - as they grow they will have more raw goods on hand, work-in-process inventory and finished goods inventory (in transit and at delivery centers). That does NOT include a build-out of a new facility in Georgia with its own capex and staffing needs years in advance of first revenue.

Back to the premise. If R2 demand is strong, and we'll know more in 2 days or so, then R1 demand may soften even more than Rivian has stated publicly and Rivian will not sell enough R1 vehicles this year (or next) and run out of cash sometime in Q1 or Q2 of 2025. That's at least a year before the R2 launch so it's quite possible that R2 anticipation ends up killing the company absent a large influx (or two) of highly dilutive external cash.

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[jjswan33]

R1 refresh?? Also I am sure there will be plenty of differentiating features.

Also we don't know the full price for the top spec of the R2, probably ends up close to low end R1.

 

[COdogman]

It’s a valid question, but I think it’s pretty simple actually: If the R2 is popular Rivian will have no problem raising money to get it built.

Tesla models 3, Y coming into existence did not kill Tesla. They still sold the S, X even though numbers were less, but that has been the plan all along for Rivian. Most manufacturers start with their “halo” model(s) and then offer more affordable options later.

 

[Riviot]

Spoiler alert: no

 

[mpw81]

The cannibalization of the small subset of people willing to pay $100k for a vehicle switching to the R2 should be much (much, much) smaller than the additional demand from consumers who can afford the lower price point.

 

[Dark-Fx]

Nah, FUDsters like you can't kill Rivian either. Rivian's numbers don't look great today but that's ignoring their upcoming cost reductions through the retools happening this year. Rivian is dropping the Bosch quad for in house motors with more power and significantly better margins.

People like me are going to trade in Launch R1 vehicles for another sale. Since Rivian contracts out trade-in resale, they don't really need to worry about the used inventory.

 

[jjswan33]

It’s a valid question, but I think it’s pretty simple actually: If the R2 is popular Rivian will have no problem raising money to get it built.

Tesla models 3, Y coming into existence did not kill Tesla. They still sold the S, X even though numbers were less, but that has been the plan all along for Rivian. Most manufacturers start with their “halo” model(s) and then offer more affordable options later.

This is an excellent point, until last year I couldn't even tell the difference between a Model Y and a Model X yet somehow Tesla still sells both.

 

[Carscott]

I have a strange feeling that R2 may come off the R1 line as I bet the cars will be similar. Just a guess due to the R2 factory nimby delays.

 

[EarlyAdptr]

I wondered the same thing. But then realized, these guys are auto experts. They must be aware of this risk and decided to move forward - for good reasons I'm sure. It may 'freeze out' some prospective R1 buyers, but the read they get on R2 demand - and the importance that has on their balance sheet and ability to raise money / make new decisions (e.g., accelerate R2 production) are well worth it.

It's why they're promoting / teasing the R2 release so much. It's got to be successful. We can all do our part by putting down $100 (or 2) for a refundable reservation to help boost their numbers.

 

[shandel]

R2 may be more profitable than an R1 for them given all of the learning that has gone into design and manufacturing changes. So sales price may matter less.

 

[oskeei]

Better title might have been, does R2 actually kill the R1. Me thinks not, maybe it'll be like the Hummer H1 vs H2. H1 is the OG and really overkill for day to day, but I think many thought the H2 was the better vehicle back when it came out.

Maybe the R1 will look like overkill and over-engineered when compared to the R2.

 

[NineElectrics]

The Osborne Effect you describe is real, and Rivian already faces weakening demand. Also, competitors like Kia are already doing it better at that price point. They will have to raise a lot of cash, and the quality of the R2s will be as bad as, if not worse than, the R1s, since they will be in a terrible rush (and, let’s face it, Rivian doesn’t know how to make cars that don’t have a dozen problems even years later). I agree they’ll just raise more cash in the markets. No big deal unless you’re a stockholder.

 

[NineElectrics]

Nah, FUDsters like you can't kill Rivian either. Rivian's numbers don't look great today but that's ignoring their upcoming cost reductions through the retools happening this year. Rivian is dropping the Bosch quad for in house motors with more power and significantly better margins.

I hate to break it to you, but no evil conspiracy of FUDsters is trying to “kill Rivian” on this forum. Even if they were, forum posts don’t matter at all.

 

[fdon1]

I also do not believe demand has died down at all. What has gone down is the number of buyers that were in a market where, for most, loans were practically all-time lows. It's hard to buy anything when you already don't have the money.

 

[Eric9610]

Considering the average sale price on an R1 is $90k+ the people in this group are not cross shopping a compact SUV. Margin % may be higher on the R2 but net dollars will be larger on the R1. This is the case with Tesla.

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