• The Rivian R2 is on track for launch in the first half of 2026, Rivian CEO RJ Scaringe said Thursday.
• The company has managed to reduce material costs by 50% over the R2.
• It also posted its first quarterly gross profit Thursday, so it may finally be hitting its stride. 

Rivian’s mass-market R2 SUV is a make-or-break moment for the company. It has proven it can build compelling products at the top end of the market, but a high-volume crossover would catapult it from a niche player to a major player. Rivian says it’s coming in 2026 and, according to CEO RJ Scaringe, it’s on track and looking good.

“We at Rivian couldn’t be more excited about what’s to come with R2,” he said during the company’s fourth-quarter earnings call. “It is a focal point for us as a business and it represents so many learnings we’ve had across the R1 product line and our commercial van product line.” 

Scaling its first three products has taught Rivian where parts can be consolidated or removed, which is the key to unlocking further cost savings. Some of those learnings have already gone into the second-generation Rivian R1S and R1T. Though they look the same as the originals, but underneath they have been massively simplified. Rivian cut 1.6 miles of wiring from the second-generation products.

The company reduced the ECU count—essentially, how many core computers they have—from 17 per car down to 7. Those changes and a more mature, streamlined production process led Rivian to a massive milestone last quarter: The company just posted a positive gross profit number for the first time ever. 

R2 is on track to make it even more money. The company has secured contracts for “95% of the bill of materials,” he said, referring to all of the raw materials and components that go into building a car. And while the company had to negotiate these contracts from a position of weakness with the R1—when it had no proven record and no brand name—it is now negotiating with a far stronger hand. As a result, costs are coming way, way down.

“The bill of materials in R2 is expected to be roughly half of what we have in R1,” he said.

Scaringe added that other input costs—including labor and production—”are significantly less than half of what we have in R1.” 

“R2 is going to really open up the market for us and bring in consumers today that may love the brand, may love our products, but just can’t [buy] vehicles with prices that are over $90,000,” Scaringe said. “Instead, they’re going to be looking at something that’s about half that with a starting price of $45,000.”

While some prospective R1 customers may choose the R2 instead, Scaringe isn’t concerned about that at all. He said that the cost of production on the R2 is so much lower that people opting for R2s instead wouldn’t be an issue for Rivian. The implication, I think, is that the margins will likely be higher on the cheaper product.

The company will use large high-pressure die castings to reduce the number of body parts, too. Scaringe says the company has taken out about 65 parts here while reducing the total joint count in the body by about 1,500. All of these changes should make it way easier and cheaper to manufacture the R2. Simpler manufacturing may also help Rivian improve reliability, which has been a serious pain point for the brand. 

Simplifying manufacturing may also exacerbate Rivian’s existing issue with collision repair, where even minor impacts can require expensive replacement panels. Yet the high-volume R2 may suffer from this less than the R1, since parts should be cheaper and more readily available. The R2 will also be considerably simpler in terms of technology, with no complicated hydraulic suspension or air shocks. 

Most importantly, however, it seems like the R2 really might arrive on time. That’s a huge deal in a world where almost every high-profile EV launch has seen massive delays. If Scaringe is confident they’ll hit their deadline, and that they’ll be able to drive costs down, I still have high hopes for the R2. Hell, I reserved one. I frankly didn’t expect it to be on time, but I suppose I shouldn’t underestimate Rivian. The company seems to have hit its stride.

Contact the author: [email protected].