© Reuters. Rivian CEO RJ Scaringe speaks at an event to unveil a smaller R2 SUV during an event in Laguna Beach, California, U.S., March 7, 2024. REUTERS/Mike Blake
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By Chris Kirkham and Abhirup Roy
LAGUNA BEACH, California (Reuters) -Rivian on Thursday unveiled its smaller and less expensive R2 SUVs and R3 crossovers amid a slowdown in demand for EVs and also said it would start producing the R2 at its existing facility to hasten deliveries in the first half of 2026.
Rivian (NASDAQ:) shares were up 11.5% at $12.30 on Thursday afternoon.
The R2’s starting price of $45,000 is well below the company’s flagship R1 SUVs and pickups. The new vehicle is seen as critical to Rivian’s success amid a sharp slowdown in EV demand due to high interest rates. Electric vehicles are typically more expensive than gasoline-powered cars.
Rivian had previously planned to produce the R2 – a five-seater version of the automaker’s larger R1S SUV with more than 300 miles (483 km) of range – at a yet-to-be-constructed $5 billion plant in Georgia.
But some analysts have questioned the need for building the factory amid slowing demand for EVs.
Rivian had previously said only that the R2 would launch in 2026, without specifying when, but on Thursday it said by starting production in Normal, Illinois, it was accelerating its timeline to the first half of the year.
“We’re able to achieve that accelerated timing by leveraging our production capabilities in Normal, using our Illinois site to launch R2 and get that into market as quickly as we can,” CEO RJ Scaringe said.
Rivian said the decision to produce the R2 in Illinois would help the company cut the amount of capital needed and reduce risk.
“This certainly takes some pressure off the continued massive cash investment needed for the Georgia plant,” Vitaly Golomb, a Rivian investor and an electric and autonomous mobility expert. “I would also hope that they are being conservative and will be able to pull forward the delivery dates even further.”
The move will help the company save more than $2.25 billion, it said, adding that it had sufficient capital to fund operations through the launch of the R2.
The Illinois plant, where Rivian also makes its electric delivery vans, can produce 150,000 vehicles a year, a Rivian spokesperson said. With the addition of R2, Rivian said it expected total annual capacity of 215,000 units at the plant.
The planned facility in Georgia “remains an extremely important part of its long-term strategy,” the company said.
Rivian produced 57,232 vehicles last year and said growth this year would be flat as it tackles slowing demand and multiple weeks of production downtime to make upgrades intended to cut costs and improve margins.
Despite the immense popularity of SUVs and pickups in the United States, ramping up production and generating demand beyond the initial wave of enthusiasts has been an uphill battle.
Offering affordable EVs at scale is seen as key to attracting customers still unwilling to switch over from their cheaper gas-guzzling vehicles.
In a surprise move, Rivian also unveiled its R3 crossover and a more powerful R3X variant on Thursday. The R3 will cost less than the R2 and launched after that vehicle. The company did not disclose any other details.
A crossover refers to a vehicle built on a car platform but with increased ride height and ability to handle rough terrain like an SUV.