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The US EV pure play has no immediate worries on the size of its potential customer base, but it is also looking to expand it
Serious questions have been asked to both EV-only manufacturers and legacy OEMs in the Q2 result season about a potential plateau in demand for EVs. Price cuts from actors as diverse as Tesla, Ford and Lucid have obviously been a key driver of the concern.
But one firm seemingly unworried, in the short term at least, is California’s Rivian.
“We feel very confident in the continued backlog that we have — we have clear visibility deep into 2024 with that backlog," says Rivian CEO RJ Scaringe. “We are quite bullish on the continued strong demand we have for our products.”
Indeed, the EV pure play is even trying to take steps to alleviate its backlog, shuffling its production mix to make more of its R1S e-SUV and less of its R1T e-pickup. “By far and away one of the biggest customer complaints we have… is the amount of wait time associated with getting a Rivian today,” Scaringe continues, with the change in production bias in part “addressing some of that very long painful backlog for R1S”.
Nor does Rivian seems in the mood to contemplate some of the price cuts peers have made. "We take a very methodical and thoughtful approach to how we look at our vehicle pricing," says Scaringe.
"We feel quite comfortable with the positioning of what we have done." Among other US OEMS, Tesla has been in price-cutting mode all year, while Ford dropped the price of its F-150 Lightning e-pickup in July and Lucid came to the table in August.
Residual value
The Rivian chief also points to another metric that he feels shows appetite for his products is robust. “One of the things we look very closely at is residual value,” he says.
“Residual value is nice because, it reflects, how our used vehicles are trading, which gives us indication of overall demand positioning. The R1 products within the truck and SUV segment are among the best residual values of any product in those categories. Across both combustion and electric, our vehicles are maintaining value extremely well.”
And Scaringe goes on to suggest that, for post-sale new Rivians, “once the transaction occurs, the vehicle value does not really drop”. “That is just an artifact of the strong demand backdrop that we have and the willingness to pay for the products we are building,” he concludes.
Broader audience
But the firm is not resting on its laurels. It is keen to push into lower price points to access a bigger customer demand pool, both with more competitively priced R1 variants and its planned new R2 range.
“We believe the majority of our long-term R1 demand will come from dual-motor variants,” says Scaringe. But introducing the dual motor into R1 vehicles is just “the first step in providing customers with a lower price variant of either R1T or R1S”.
“The next step, which is coming shortly, is the introduction of our standard pack — [which] is not only is a lower cost pack for us to build, but importantly allows customers into an R1 vehicle at just over $70,000,” he continues. “We believe the dual-motor variants offer great value while providing high on- and off-road performance.”
And that strategy of offering a lower-priced product to a larger audience is also behind Rivian’s ambitions for its R2 offering, which it aims to showcase “in the early part of 2024”. “We could not possibly more be more excited about what is to come with R2,” says Scaringe.
“In much the same way that R1 rethought a space, R2 takes that even further and stretches our ideology, and our brand ethos really, into such a great segment and such a large addressable market.”
Even at a lower price point, there remains a focus on driving costs lower on R2 to unlock more customer potential. “We are putting some really fun personalisation items into the contemplated adventure products offering,” says Scaringe. The logic is that this “moves cost out of the core vehicle and into the accessories, which allows us to achieve a baseline vehicle with very aggressive cost structure”.
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