Rivian Is Gaining Ground on Tesla With New Midsize SUV 

Tesla is going to have to hit the accelerator pedal now that Rivian is riding its bumper. 

On Tuesday, Rivian announced that it’s officially starting to deliver its new R2 mid-size SUVs to customers. The move could push the EV maker from the premium end of the market into a more mainstream one that can compete with Elon Musk’s shop and traditional auto brands, thanks to its price. The model now available costs $57,990, but the company is rolling out a slew of others, including a version that will arrive in the summer of 2027 for just below $45,000. 

“Its goal is for it to be a high-volume product,” Rivian CEO RJ Scaringe recently told CNBC. “Certainly, we’re going to draw on some Tesla customers, but the market of non-Tesla customers is many, many times larger.”

Speed Bumps Ahead 

R2 hitting the market marks a significant milestone for Rivian, one that could determine whether it becomes a household name. Not only does it directly compete with Tesla’s cash cow, the mid-size SUV Model Y that starts at around $39,990, but it also comes at a time when tax credit incentives have expired. Shoppers may steer towards lower-priced models now that they have to pay full sticker price. 

But the new offerings could also backfire for Rivian if it can’t keep margins at such a low price point. The company is hoping the R2 will make it profitable after losing $3.6 billion last year and delivering just 42,247 vehicles, down 18% from 2024: 

• Scaringe told CNBC the company expects to hit profitability — a goal it previously said it would reach by 2027 before quietly walking that promise back earlier this year — once its Georgia plant is up and running. That plant is expected to start production in late 2028.
• During its most recent earnings call, the company said it was able to cut build material costs of its R1 SUV in half for the R2. Scaringe said every R2 model will be cash-flow positive for the carmaker. 

For Sale: Rivian also needs to contend with a surging used EV market. Sales of used EVs increased 17% in January through April while those of new EVs dropped 27% as drivers look to save on gas without shelling out tens of thousands of dollars more for a new car, Bloomberg reported. While that suggests a strong interest in vehicles not fueled by gas, it also means there’s even more competition for the R2.