How RJ Scaringe Is Driving Rivian Straight At Elon Musk

Forbes

With sales of costlier electric cars cooling, Rivian CEO RJ Scaringe is going to woo consumers with a smaller SUV and a smaller $45,000 price tag.  A storm is brewing on a chilly, gray winter day in Palo Alto, California. Still, RJ Scaringe is in a great mood as he power walks through Rivian’s leafy Silicon Valley campus, with one “let me show you this — it’ll just take 30 seconds” after another.  The 41-year-old CEO and founder of the most-promising of the baby Teslas (including Lucid, Fisker and Nikola) established the company in 2009 soon after getting a Ph.D. in engineering from MIT. Rivian had a rocky start when it launched production in late 2021, a historically tough time to start an auto company. Elon Musk predicted in 2022 that Rivian (and Lucid) would go bankrupt. It didn’t.  Read the full story on Forbes: https://www.forbes.com/sites/alanohnsman/2024/02/20/how-rj-scaringe-is-driving-rivian-into-the-ev-mass-market/?sh=7c74ebc141bd  Forbes Daily Briefing shares the best of Forbes reporting on wealth, business, entrepreneurship, leadership and more. Tune in every day, seven days a week, to hear a new story. Subscribe here: https://art19.com/shows/forbes-daily-briefing  Fuel your success with Forbes. Gain unlimited access to premium journalism, including breaking news, groundbreaking in-depth reported stories, daily digests and more. Plus, members get a front-row seat at members-only events with leading thinkers and doers, access to premium video that can help you get ahead, an ad-light experience, early access to select products including NFT drops and more:  https://account.forbes.com/membership/?utm_source=youtube&utm_medium=display&utm_campaign=growth_non-sub_paid_subscribe_ytdescript  Stay Connected Forbes newsletters: https://newsletters.editorial.forbes.com Forbes on Facebook: http://fb.com/forbes Forbes Video on Twitter: http://www.twitter.com/forbes Forbes Video on Instagram: http://instagram.com/forbes More From Forbes:  http://forbes.com  Forbes covers the intersection of entrepreneurship, wealth, technology, business and lifestyle with a focus on people and success.

Transcript

00:00 Here's your Forbes Daily Briefing for Wednesday, February 21.

00:05 Today on Forbes, how RJ Scarringe is driving Rivian straight at Elon Musk.

00:12 A storm is brewing on a chilly, gray winter day in Palo Alto, California.

00:17 Still, RJ Scarringe is in a great mood as he power walks through Rivian's leafy Silicon

00:22 Valley campus.

00:24 Again and then again, moments later, he says, quote, "Let me show you this.

00:29 It'll just take 30 seconds."

00:32 A 41-year-old CEO and founder of the most promising of the baby Teslas, including Lucid,

00:37 Fisker and Nikola, established the company in 2009, soon after getting a PhD in engineering

00:43 from MIT.

00:46 Rivian had a rocky start when it launched production in late 2021, a historically tough

00:50 time to start an auto company.

00:53 Elon Musk predicted in 2022 that Rivian would go bankrupt.

00:57 It didn't.

00:58 Right now, Scarringe is eager to show off a high-powered new computing system for future

01:02 Rivians and the latest refinements to their automated highway driving tech.

01:07 What he doesn't show off is the company's next big bet, the R2, a lower-priced SUV scheduled

01:13 to be revealed at a March 7 event in Laguna Beach, California.

01:18 That vehicle, smaller than the R1S but with, quote, "the essence of what makes a Rivian

01:23 a Rivian," according to Scarringe, will go up against Tesla's top-selling Model Y when

01:28 it arrives by 2026.

01:32 Rivian's first two consumer models, the R1T pickup and R1S SUV, are priced in the premium

01:38 range, averaging about $80,000.

01:42 The company sold about 44,000 combined last year, and Scarringe said they were the best-selling

01:47 vehicles in the U.S. at that price range.

01:50 But that's not mass market, and mass market is the goal.

01:54 Scarringe explained, quote, "The average transaction price of a vehicle, any vehicle in the United

01:59 States, is around $48,000.

02:02 We think that's a really important sweet spot, to be in that range, to create a viable option

02:06 for customers that are coming out of combustion-powered vehicles getting into something very different."

02:13 Being more competitive on price is essential as the EV market evolves.

02:18 Recent weeks have seen big cost-cutting moves, including Tesla's $1,000 reduction for the

02:22 Model Y and cheaper lease offers from Rivian, as well as new so-called "standard" versions

02:28 of the R1T and R1S, starting at just under $70,000 and $75,000, respectively.

02:36 And Ford CEO Jim Farley recently announced plans for new EVs priced below its Mustang

02:41 Mach-E crossover and F-150 Lightning pickup.

02:46 Industry researcher Kelly Blue Book estimates the average price of a new battery-powered

02:50 vehicle has dropped 11 percent this year to $55,353.

02:56 But that's still higher than an industry average of $47,401, which includes both gasoline-powered

03:02 and electric models.

03:05 Sales of EVs slowed in the final months of 2023, triggering concerns that consumer demand

03:10 for them might be flagging.

03:12 The jump in interest rates and higher prices relative to gasoline-engined autos didn't

03:17 help.

03:18 Still, Cox Automotive predicts EVs will grab 10 percent of new auto sales this year, up

03:22 from 8 percent, and hit about 1.6 million units, topping last year's record of 1.2

03:28 million.

03:29 But it will take some effort.

03:31 As Cox explained in a recent report, the industry needs to sell average consumers on the benefits

03:36 of electric vehicles.

03:37 That means offering a wider array of options, more incentives, more discounts, and more

03:42 advertising.

03:44 Scringe said that a wider selection of models is also necessary.

03:47 He said, "Products available in the market today cover a very small subset of the segments,

03:53 both in terms of form factor and in terms of price that customers want.

03:57 I look at any sort of view of demand being soft for EVs as more of a reflection of a

04:02 lack of product choice."

04:05 Ed Kim, president of industry consultant AutoPacific, said, "The launch of the Rivian

04:11 R2 is happening at a good time because we're rapidly approaching that inflection point

04:15 of EVs being relevant to mainstream consumers.

04:19 Everyone now knows what a Rivian is.

04:21 It's a high-image vehicle, a high-end brand.

04:24 And right at the time EVs are becoming more relevant to mainstream consumers, here comes

04:28 this much more mainstream-priced R2 that's a lot more attainable and affordable."

04:35 For full coverage, check out Alan Onsman's piece on Forbes.com.

04:40 This is Kieran Meadows from Forbes.

04:42 Thanks for tuning in.

04:44 [MUSIC PLAYING]

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