Name: Rivian Is Betting Big On This $45K SUV
Uploaded: 2026-03-02T22:07:03.000Z
Duration: 15 min 38 s
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We're here at Rivian's engineering labs in Palo Alto and right behind me was their first product, the R1T.

The trouble is they start above $70,000, they want to change that.

They're making now a vehicle that hits right at the center of the market, the R2, which starts at $45,000.

This is what Rivian says will take it from being a niche automaker of high end vehicles to a truly mainstream and profitable company.

The R2 is a test to show Wall street that they can actually bring costs down and produce vehicles at a profitable level.

They've established a brand which is resonating with people.

You can say of the startups the closest thing to Tesla.

Now the company is hoping to prove that its outdoor luxury identity can translate from an expensive hobby for the few to a household staple for the many.

Enter the R2, a mid sized SUV that competes in one of the most popular segments in the US.

CNBC got an exclusive ride along in the R2 with the CEO and founder of Rivian.

R2 is really instrumental for driving the business to positive cash flow and overall profitability.

If we can have the type of market share that we have on R1, where it's the market share leader with R2, we'd have a real challenge of making enough of them.

Rivian was founded in 2009 by R.J. scaringe under the name Mainstream Motors.

It spent the first few years working to build an electric sports car before rebranding to Rivian in 2011.

It eventually shifted focus to building an electric truck and SUV, unveiling the R1T and R1S at the LA Auto show in 2018.

With the R1, it was our first introduction as a brand and we needed to go so far above and beyond make the most capable off road vehicle that's simultaneously great on road the world has ever seen that's also electric.

In 2019, Amazon invested $700 million into the company, inking an agreement to purchase 100,000 electric delivery vans.

Ford also invested 500 million and entered into a partnership to co develop an electric vehicle that ultimately fell apart in late 2021.

that was largely not as an investment for profits, it was more so to assist Amazon in getting electric vans to market.

In November 2021, the company went public at a $66.5 billion valuation, skyrocketing to just under 100 billion in the first day of trading.

Rivian first began delivering vehicles to customers in late 2021.

To date, it has remained a low volume manufacturer.

Those first gen vehicles have done actually okay from a volume standpoint when you consider what price point they're selling at.

They've taken share in the luxury SUV market.

In March 2024, Rivian unveiled its next generation vehicles, the R2 and R3, which it intends to sell at a lower price point and is hoping will appeal to a broader market.

Within about 20 hours, we had just under 70,000 reservations.

It hits the segment of the market that is obviously a little bit more price sensitive.

It is squarely positioned in the same segment as Model Y.

The Tesla Model Y was the best selling EV in America in 2025 by far.

R2 is an opportunity for them to really be much more focused on scale and generating profit.

In many ways this is the most important thing that we've developed as a company.

Most important, product starts at $45,000.

It's a dramatic reduction in the cost structure to build it.

So it's the most popular configuration of vehicle in the United States in our view.

We don't have enough choice of electric vehicles in that segment.

We made hundreds and hundreds of decisions to optimize around cost through part elimination, part consolidation.

We went through every single part and said, does this deserve to be on the car?

How do you avoid the, you know, the famous production hell that other automakers went through, having gone through a version of that ourselves, where we just had so many challenges when we first launched R1, we built a lot of rigorous systems to make sure all of our suppliers and our suppliers suppliers are ready to ramp.

Now Rivian has spent billions of dollars and it's on track to spend many billions more.

But behind that is an intense focus on, on cutting costs.

One way it's doing it, simplifying designs with every generation of vehicles.

It's trying to reduce the number of parts and vertically integrate as much as possible.

This is where all our hardware engineers do the bulk of their design testing and development.

We saved 1.6 miles of wiring going from R1 gentleman to R1 gentleman.

We shave 2.3 miles of wiring, 2.3 miles going from an R1 gen 2 to an R2.

The entire philosophy is how do we build a product that really takes the entire essence of the Rivian brand with an architecture that simplifies the hardware, reduces cost and then move that complexity to software.

All this together is now part of this unit.

And you multiply that by the volume and this is where you see how this investment is paying off for us.

The importance of the R2 to Rivian is actually underneath the vehicle skin.

Rivian has said that this vehicle is far less expensive to produce.

Rivian's next big bet is to follow in Tesla's footsteps and add autonomous driving features to its vehicles.

In December 2025, the company hosted its first autonomy and AI day where it showed off its latest AV developments and roadmap to level 4 self driving.

Following eyes off, the next major step will be personal level four.

The autonomy plus features will be an upsell in the R2 and second gen R1 vehicles coming in early 2026.

So we call it universal hands free and then point to point.

So you put the address in the car will drive you to where you're going, but

you as the occupant of the vehicle will still be required to sit in the front seat, still be required to be alert.

And then once we get past that point, we'll then start to enable what we call personal L4 so the vehicle can drive you entirely itself.

It can drive empty to go, let's say, pick up your kids.

Their new systems now are coming out with hands free driving.

And RJ was even talking about robo taxis with L4.

It's something that Wall Street's looking at as a possible growth opportunity for them.

Rivian vehicles are equipped with the hardware to support autonomy.

But the company says the new R2 will be a step up from the R1.

We have 11 cameras, five radar including a front imaging radar.

And not at launch, but shortly after launch.

We'll be also adding a lidar that'll sit at the top of the windshield along with an in house compute platform.

The cameras deliver 65 megapixels of images.

So it's a very camera heavy architecture.

Another Upgrade following the R2 launch will be the self driving computer which features silicon developed in house by rivian.

We have two of them for 1600 tops in the system.

So it's by a significant degree the most powerful inference platform in a vehicle today.

The messaging from Rivian here was that this was critical in unlocking a better bang for buck of processing per unit.

And really this allows them to tailor fit the processing capabilities to what the vehicle is going to need.

In 2024, the company announced a partnership to license its software to Volkswagen group in a $5.8 billion deal to create next generation software defined vehicles.

The Rivian Volkswagen deal made all the sense in the world.

Rivian needed cash, Volkswagen needed technology.

The Volkswagen relationship, it's a great proof point for us or demonstration of just how capable our platforms are.

We see that as a really interesting growth opportunity in the long term.