Rivian blazed a trail with its adventure EVs — can it stay on top?

Rivian likes to think of itself as a trailblazer. It was first to market with an all-electric truck and is still one of the few companies today selling an electric three-row SUV. And its EVs are marketed for off-road adventures — the literal blazing of trails.

But on March 7th, Rivian will release its next vehicle, and arguably, it won’t be breaking a lot of new ground. The Rivian R2 is a two-row compact SUV with around 300 miles of range and a starting price somewhere around $45,000. It’s not exactly a major disruption by today’s standards, where the Tesla Model Y, Ford Mustang Mach-E, and other compact electric SUVs currently dominate the sales chart.

Rivian is also revealing the R2 during an especially tumultuous time — for itself and the entire auto industry. EV sales are up, but growth has slowed considerably as more customers have proven reluctant to make the switch, wary of high prices and EV charging reliability. And Rivian is finding itself in a considerable cash crunch, as its costs grow beyond the pace of its revenue.

The R2 is a major moment for Rivian — no question there. But that car won’t start production until 2026 at the earliest, making this year and next crucial if the company hopes to live long enough to see it.

Last month, Rivian reported its fourth quarter earnings for 2023, and it wasn’t pretty. The company reported losing $1.58 billion over the last three months of the year, bringing its net annual losses to $5.4 billion. It also announced plans to lay off 10 percent of its salaried employees, the third such round of layoffs in the last two years.

But it was the production numbers that most triggered a stock slide. Rivian predicted it would only produce 57,000 vehicles in 2024, down from the 80,000 vehicles that were anticipated by Wall Street and relatively flat from last year’s numbers.

But profits were on the horizon, the company promised. A multi-week shutdown of its Normal, Illinois, factory will bring improvements to the R1 line, with production rates improving “approximately 30 percent” as a result. Rivian predicted it would eke out a “modest gross profit” in the fourth quarter of 2024.

Investors were dubious. How could a company that couldn’t realistically predict a growth in production expect to compete in an increasingly volatile market? “Rivian’s results continue to largely disappoint, whether on volume or margin progression,” Morgan Stanley wrote in a note to clients.

Add to the mix the groundbreaking of a new $5 billion facility in Georgia, and you have a recipe for a turbulent year for the young company. (Rivian was founded in 2009 but only came out of stealth in 2018. It made its public markets debut in 2021.)

Rivian’s situation is not unique. As noted by Heatmap’s Robinson Meyer, the company is currently in what’s known as “the EV valley of death,” in which it has scaled up production but isn’t bringing in enough revenue to cover its operational costs.