Why Rivian Wants To Compete In The EV Mass Market With A Lower Priced Vehicle

Forbes

Rivian is best known for its EV trucks and SUV's that come with a higher price tag in the $80,000 range. But with sales of costlier electric cars cooling, Rivian's CEO RJ Scaringe is attempting to woo consumers with a new smaller SUV with an approximately $45,000 price tag.   Senior Editor Alan Ohnsman, who covers future mobility at Forbes, recently sat down with Scaringe to hear more about this new model and why the brand is offering a more affordable unit in 2024.   Subscribe to FORBES: https://www.youtube.com/user/Forbes?sub_confirmation=1  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 Rivian is a very interesting new player in the U.S. automotive market.

00:06 Like Tesla, it's a pure EV company started by RJ Scurringe actually several years ago,

00:11 but it's in production now for about three years.

00:14 It arrived as the best funded automotive startup in U.S. history and probably in global automotive

00:20 history, raising $11 billion from private investors and then another $13 billion when

00:26 it IPO'd in 2021.

00:29 It was a bit slow in its launch because it launched right in the middle of the COVID-19

00:36 pandemic.

00:37 It, like other companies, was hit by the global supply chain crisis, which made it very difficult

00:42 and very expensive to get electronic parts.

00:45 The company, though, has weathered those storms and actually expanded pretty quickly last

00:52 year.

00:53 But the market wants a lot more.

00:55 The stock has fallen precipitously about 90 percent from its IPO in November 2021.

01:02 It's now trading for less than 20 bucks a share.

01:05 It was once trading at nearly $130 a share.

01:08 So it's really run into some problems in the market.

01:11 And that's because the market wants to see a lot of growth very quickly.

01:15 It did launch three vehicles in a very short amount of time.

01:20 The R1T pickup truck, the R1S SUV and its electric delivery van, which has been used

01:26 by Amazon, but it's now being sold to other commercial delivery companies.

01:32 The company is sort of at an interesting crossroads now where it came to market as a premium EV

01:40 manufacturer.

01:41 It's now getting ready to reposition and sell a much more broadly affordable EV, the R2.

01:50 That will also take it into direct competition with models like the Tesla Model Y and the

01:56 Ford Mach-E, the Kia EV6, all of which are sort of priced in that mid to low $40,000

02:02 range.

02:03 So I wanted to go up and meet with RJ at Rivian's Palo Alto tech offices to sort of catch up

02:09 and see how things are going.

02:15 If you look at the average transaction price of a vehicle, any vehicle in the United States,

02:20 it's around $48,000.

02:22 So we think that's a really important sweet spot to be in that range to really create

02:27 a viable option for customers that are coming out of combustion powered vehicles into something

02:31 very different.

02:32 As a company, the R1 product was intended to act as our handshake with the world.

02:38 So it introduces the way we approach technology, the way we approach product decisions, the

02:43 way we approach the positioning of the brand and the company.

02:46 But really, from a price point of view, it limits the number of customers that can actually

02:51 access the brand.

02:52 And so R2 really greatly expands the relevance of Rivian to a much broader set of addressable

02:58 market consumers.

03:01 And so this is incredibly important.

03:03 I've never been as excited as I am about a product as I feel for R2.

03:08 We're going to see 100% of new vehicle sales in the not too distant future be electric.

03:12 Now whether that's five years from now, 10 years from now, or 25 years from now, I think

03:16 that has a lot to do with both policy, which is certainly driving towards that, but also

03:21 creating really interesting choices for consumers.

03:25 And today we have a lack of choice in the market.

03:28 I think that has a lot of impact on the overall rate at which we can grow.

03:32 It's one of the reasons we're so excited about R2.

03:35 In the R1 price category, we've really done a great job of pulling a lot of customers

03:40 out of combustion powered vehicles.

03:42 Well over half of our customers have never owned an EV before.

03:45 And the opportunity in that lower price segment really exists for something that's very different,

03:50 very unique to draw new consumers into electrification.

03:59 From an adoption point of view, customers need to understand really what an electric

04:04 vehicle represents in terms of changes to your everyday living with a vehicle.

04:09 And one of the biggest is that you have effectively a refueling station in your garage.

04:14 So say when you think about filling up your car, if it's a combustion powered vehicle,

04:17 you go to a gas station.

04:18 The vast majority of charging actually happens in your home.

04:22 So somewhere between, depending on the brand and the vehicle, somewhere between 90 and

04:25 95% of charging is typically happening at home at night.

04:29 And so the infrastructure that's being created, we're building a charging infrastructure,

04:34 we call it a Rivian Adventure Network.

04:35 Tesla's done a great job with its supercharger network.

04:38 We're going to have our customers be able to access that network here very soon.

04:41 That infrastructure really supports the ability to go on longer trips.

04:45 So to go from San Francisco to LA, New York to Washington DC, these types of trips.

04:51 For us, reliability and quality are paramount to how we're developing our products.

04:55 And with a lot of new technology, new features in the vehicle, that's even more important.

05:00 A lot of times these will be customers, as I said, first exposure to an electric vehicle.

05:05 So the way that we're managing quality in our plant and the focus we put on it, and

05:09 then the way that we design quality in from a reliability point of view is really key.

05:13 And so we've built sensors into the vehicle with the specific purpose of acting as a prognostics

05:19 platform to predict service issues, damage to the vehicle, such that we avoid customers

05:27 ever being surprised.

05:28 So if there is something that's gone wrong, if the vehicle's been off-roading and something

05:31 was damaged, we can sense that and we can then schedule preemptively a repair of the

05:37 vehicle.

05:38 If we can do everything we can to try to understand customer sentiment, so we have lots of ways

05:45 of interacting directly with user groups, as well as looking at some of the third parties

05:50 that do assessments of customer satisfaction, we were really pleased to have in our first

05:55 year of production with our first product, JD Power, rank Rivian as the number one vehicle

05:59 from a customer satisfaction point of view, with the highest likelihood of a repurchase,

06:04 which is a great indication of how the ownership experience is and how much our customers are

06:08 enjoying the product and would like to buy another Rivian in the future.

06:12 We are constantly looking for how we can improve the vehicles, and one of the things we really

06:16 have leaned into is the ability to continually update the software in the vehicle.

06:20 And every three or four weeks we have an over-the-air update that adds new features, new content,

06:26 and those feature sets and improvements are coming from feedback.

06:30 So if customers are saying, "Hey, we really like this, this, and this," we sit with our

06:33 software team and we say, "Well, let's go develop some new features that deliver to

06:38 that."

06:39 And it's a very dynamic list.

06:41 Myself and our head of software, every week we sit down and go through what are our priorities,

06:45 and that priority stack can be refactored based upon what we're hearing from customers.

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