By Abhirup Roy
SAN FRANCISCO, April 22 (Reuters) – Rivian on Wednesday started production of its smaller R2 SUVs, with customer deliveries expected later this spring, the electric-vehicle maker said, as it bets on a lower-cost model to broaden demand and put it on a firmer path to profit.
The R2 rollout is a pivotal moment for Rivian, best known for its high-end R1 pickups and SUVs. The new vehicle is expected to compete with Tesla’s best-selling Model Y and drive growth at a time when the removal of key tax credits has hurt U.S. electric-vehicle demand.
“We’ve been encouraged by the reservations that we’ve been receiving for the R2 product overall,” Chief Financial Officer Claire McDonough told Reuters, without disclosing specifics.
“We’ll start to invite customers to begin to configure their vehicles in the June time frame. So, we’ll have better visibility at that point.”
MARGINS
Rivian said last month it will start deliveries with a launch variant priced at $57,990. A Premium trim at $53,990 is expected late this year, followed by a rear-wheel-drive Standard version at $48,490 in the first half of 2027. A keenly awaited $45,000 variant is due by late 2027.
Once production reaches a higher run rate in 2027, the R2 will cost Rivian less than half as much to build as the R1, McDonough said.
Those savings hinge on an aggressive consolidation and elimination of parts, Rivian told Reuters. Die castings cut costs by 32%, a new drive unit delivered a 25% reduction and a simplified suspension slashed spending by 72%.
Still, McDonough said the R2 will initially weigh on margins before helping them. Rivian expects to exit 2026 with positive automotive gross profit margins, supported by rising R2 output and lower non-material costs across its R1 lineup and commercial vans, she said.
Rivian’s 2026 delivery forecast implies roughly 22,000 to 23,000 R2 deliveries this year, assuming steady demand and a smooth production ramp.
Chief Operating Officer Javier Varela said the biggest risk lay outside Rivian, in the supply chain, so it had put “boots on the ground” at key suppliers to spot disruptions early.
BNP Paribas analysts expect fewer than 400 deliveries this quarter, before volumes ramp to about 7,000 in the third quarter and about 15,000 in the fourth.
The R2 also sits at the heart of Rivian’s broader strategy beyond vehicle sales. The company has rolled out a $2,500 driver-assistance package, developed a custom self-driving chip and last month struck a deal with Uber that includes up to a $1.25 billion investment tied to a robotaxi partnership built around the R2.
(Reporting by Abhirup Roy in San Francisco. Editing by Mark Potter)
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