Tesla Cybertruck Knocks Rivian’s Rise Off Course

Rivian is the hot new EV stock. But Tesla cooled things down with the Cybertruck news over the weekend.

Rivian had been experiencing a Tesla-like surge in its stock over the past two weeks — with comparisons being made to Tesla’s rise as an electric vehicle powerhouse. Shares had almost doubled in price since June 26 before pulling back on Monday —two days after Tesla’s first Cybertruck rolled off the production line.

The Cybertruck news also prompted Ford to cut the Price of its F-150 Lightning electric pickup by up to $10,000. And even elicited a comment from Tesla CEO Elon Musk. “The Ford Lightning is a good vehicle, just somewhat expensive, especially given the high interest rates these days for any kind of loan,” Musk said Monday.

Before Cybertruck

Before all hell broke loose with the Cybertruck production news, Rivian had been making a good case for its stock price surge.

Rivian, which started its pickup truck production in 2021, delivered 12,640 vehicles in the second quarter, beating analyst estimates. And anecdotal evidence points to Rivian catching on in key markets. For example, its pickups and SUVs have become popular in trendy recreational locations such as Lake Tahoe among what one observer called the “REI crowd.” An indication that buyers of vehicles for outdoor adventure and off-road recreation — a key market segment — have bought into the Rivian story.

It doesn’t hurt that Rivians come with a plethora of adventure-friendly features such as a “tunnel” behind the seats for storing gear, a built-in air compressor to inflate tires (or a river raft), and a Rivian-Yakima three-person tent that sits on top of the car, replete with a ladder.

Rivian next

But the Rivian experience can be pretty pricey — well over $70K — limiting appeal to well-heeled buyers with lots of disposable income. A lot like Tesla’s beginnings in 2012 when the upscale Model S was all it offered.

Problem is, this is 2023, more than a decade after Tesla introduced the Model S. So, Rivian is competing in a different world. EVs are everywhere now and being aggressively pushed by all the major automakers — plus a bevy of startups. And Tesla is now focusing more and more on driving down price.

“Rivian is not on a similar growth pattern to Tesla,” said Jessica Caldwell, Edmunds’ executive director of insights, in an email responding to my queries.

“The Tesla name is the most well-recognized in the space and they brought EVs to the forefront a decade ago. In 2023, Tesla still has a greater than 60% share of the EV market, so players like Rivian will mostly be relegated to niche player status,” she said.

But added a qualifier. “Until they can introduce more affordable vehicles.”

When that happens, things could break out for Rivian.

“Comprising just 7% of all new vehicle sales, the EV market is still in its infancy, and there is definitely room for startups to flourish,” she said.

Caldwell continued. “At this point, newer entrants may have more success producing EVs for the masses rather than expensive EVs that already have a robust market with established players and a limited number of consumers who can afford them.”

Indeed, Rivian appears to be getting that message as other startups like Lucid continue to peddle $87K-and-up sedans.

The next-generation Rivian R2, hitting the market by 2026 (and slated to be shown in early 2024), is expected to be a compact SUV priced at between $40,000 and $60,000. A pickup version is also expected.

Like Rivian’s current R1T truck and R1S SUV, the R2 will be off-road-capable. In a recent Bloomberg interview, Rivian CEO RJ Scaringe brought up the R2 repeatedly, indicating its importance going forward.

Rivian’s “business will grow disproportionately” based on the coming R2, according to Scaringe, with the “R2 platform representing a significant step up in volume and at a much lower price point, much larger addressable market,” he said, adding that the R2 will be the “core focus” now for Rivian.

The R2 will also have domestically made batteries that meet Inflation Reduction Act (IRA) federal EV tax credit criteria. Currently, Rivian cars are not eligible for the entire credit. The R2 will be eligible for the entire $7,500 credit, potentially driving down the price even more.