On its Q2 earnings call yesterday, Rivian gave us a glimpse into what we can expect from its newest R2 platform. Rivian is burning through cash as its ramps production of its flagship R1T EV truck model.
Rivian posted a $1.7 billion loss in its Q2 earnings, with labor and material costs rising. At the end of the quarter, Rivian had around 98,000 net preorders for its R1 vehicles, including the R1T truck and R1S SUV.
Even though the company pushed back its R1S SUV model deliveries earlier this summer, Rivian has full-scale plans for its newest R2 platform.
The company’s new R2 platform expects to power a new lineup of vehicles. According to information on Rivian’s earnings call, we can assume it will be offered at a lower price point. Rivian’s CEO RJ Scaringe spoke of the newly passed Inflation Reduction Act (IRA), saying:
While many of our R1 configurations won’t meet the bill’s pricing requirements, our R2 product line and associated cell road map are being developed to allow our customers to capture the value of these incentives.
The new bill is the largest climate bill ever passed, dedicating over $400 billion to clean energy initiatives over the next 10 years.
Rivian’s CEO is talking about the EV tax credits included in the bill. As part of the bill’s focus on a sustainable future, new EV buyers will be eligible for a $7,500 tax credit. However, for a vehicle to qualify for the program, it must have an MSRP under $80,000 for trucks, SUVs, and vans – Rivian’s primary market.
Although Rivian fits the description of other requirements, such as being assembled in America, many R1 models surpass the price threshold with configurations – especially given Rivian’s unexpected price hike announcement followed by an apology from the CEO.
2022 Rivian R1T Source: Rivian
What we know about Rivian’s R2 platform so far
Rivian confirmed in its second-quarter earnings that the company is confident in its ability to launch the R2 platform in its new Georgia facility in 2025.
At the same time, Rivian is facing issues amid industrywide supply chain disruptions and rising input costs this year. The company has already pushed back deliveries of its SUV model to near the end of summer.
Yet, the R2 platform may become a priority as incentives expect to ramp up EV demand. The company said it’s confident in its funding ($15 billion in cash and equivalents) to launch the R2 platform.
Rivian’s CEO, when asked about supply chain difficulties with the R2 platform, responded:
That’s been something that’s been work underway for quite some time. And as we have contemplated and planned for the long-term supply chain for R2, we have always looked at it through the lens of making sure we had domestic supply chain to support the ramp-up of that product.
Meanwhile, the company’s CFO, Claire McDonough, explained that Rivian is planning capital spending (CapEx) around the low $2 billion through 2025 and added that the spending
Allows us to continue to invest in the expansion of our plant in Normal, Illinois, where right now we are adding our in-sourced motor production lines. It also entails us the opportunity to invest in the first 200,000 units of capacity for R2 in Georgia.
In the meantime, Rivian is focusing on working out the production knots and ramping production of its R1 series. Rivian has significant plans for growing its EV market share, and there’s no doubt the R2 platform will play a major role. But, the company will have plenty of hurdles to clear before it arrives. Let’s see if the company can first hit its goal of producing 25,000 units this year.
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