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While discussing the big Ford EV news of the week with Larry and Steve yesterday, something came to the forefront of my mind regarding Rivian.
Rivian has done a great job developing excellent, compelling, high-quality electric vehicles. However, it has been a bit slow compared to Tesla and various Chinese EV companies. For a while, I’ve been concerned that the electric automaker maybe missed the window of opportunity to break into a mature, complicated, heavily gated industry. Could it actually get profitable and survive, or was it doomed to die an early death like so many other automotive startups (and in recent years, EV startups)?
Yes, the big plan is to roll out the more affordable R2 and R3, scale them up to high volumes, and get profitable like Tesla. However, Tesla had no real competition when the Model 3 scaled up, and still plenty of market opportunity when the Model Y scaled up. Now, however, there are hundreds of compelling, semi-affordable electric cars and SUVs. Almost every automakers has some EVs that are sensible, attractive options depending on your taste and budget. And, of course, there’s Tesla, which has been trying to revive sales growth with big price cuts, feature bonuses, subsidized leasing rates, etc. How can the R2 and R3 break into the market now?
Ah, but now Elon Musk and Donald Trump have given Rivian an opening. Despite causing much more, bigger problems that we won’t focus on today, their activities repelling and stunting EV purchases might at least provide a legitimate path to profitability for Rivian.
Rivian R3
Starting with the simple one, Elon Musk’s political extremism has pushed countless people away from Tesla. Numerous Tesla owners will not buy another one, and many people who would have been open to buying a Tesla no longer are. What that means, though, is there are a lot of people keen on buying a nice EV from an EV-only company, and the Illinois-based brand will get their business.
Rivian R3
Together, Elon Musk and Donald Trump also essentially ended US fuel economy standards, shut down the federal EV tax credit, and told automakers to pack up their EV business and go back to ICEVs. Ford just announced a $19.5 billion EV write-off and an extreme shift in its EV products and plans, as we’ve been discussing. Other legacy automakers are doing similar things. What that means, though, is that people on the market for an electric vehicles are going to have fewer options, pushing more of them into the lap of Rivian.
In short, due to Tesla and legacy automakers ceding market position, Rivian can find more buyers, scale up, and, potentially, get to net profitability. We shall see.
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