Rivian CEO RJ Scaringe Bets Big on EV's Future
Optimism on R2 Model, Georgia Factory Under Construction
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ATLANTA— RJ Scaringe didn’t buildRivianto make just 50,000 electric vehicles per year.
It’s a company designed to build many times more, the CEO of the upstart EV maker told the editorial board ofThe Atlanta Journal-Constitutionlast week. To get there,Rivianis banking on its newest vehicle, the R2, a two-row crossover, to be a big hit.
Initial manufacturing of the R2will start inIllinois, but Scaringe said production will expand to its future factory an hour east ofAtlantawhen it opens, albeit years later than initially expected, in 2028. Future models, including the smaller R3 and R3X, are expected to follow.
“The more people that experience an EV, it’s like a one-way door,” Scaringe said. “It’s hard to go into an EV and then back to a (gas-powered) vehicle.”
He saidRivianwill start customer deliveries of R2 early next year, and soon start vertical construction of theGeorgiaplant aftera ceremonial groundbreaking in September. In a wide-ranging interview with the AJC, Scaringe went into detail about the company’s future, whyGeorgiais crucial to that success and the future of the auto industry.
Scaringe likes to say that software is as important to modern cars as the nuts and bolts of assembly.
Rivianis designed to do both. That strategy entranced investors while creatingits own challenges and setbackswhen the pandemic struck, but Scaringe argues it’s a framework made to support more than just a niche automaker.
The need to ramp up production is whyGeorgiais such a critical cog in Rivian’s machine aimed at rivalingTeslaas a leader of America’s new school of automaking.
“This is an investment you don’t make for one product cycle,” Scaringe said of his company’s planned $5 billion factory an hour east ofAtlanta. “You make the investment for many product cycles. It’s a multidecade, multibillion-dollar investment.”
Next year is a vital one forCalifornia-basedRivian, which plans to launch R2 at a starting price of $45,000 to target a mass market. The forthcomingGeorgiaplant is poised to multiply the number of R2s rolling off assembly lines.
Confident it will succeed, Scaringe said the R2 and its iterations will provide the same boost toRivianthatTeslafound with its mid-priced Model 3 sedan and Model Y crossover.
Those twoTeslamodels make up more than 40% of all EV sales this year through September, according toCox Automotivedata.Cox Enterprises, the owner of the AJC, also ownsCox Automotiveand a 3% stake inRivian.
Rivian plans to open its Georgia plant in 2028. (Rivian)
“In something like clothing or cars or goods that reflect your own personality, you tend to see many winners,” Scaringe said. “So having a single player with nearly 50% market share is not a reflection of a healthy market — it’s a reflection of a highly underserved market.”
September was a new high-water mark for EV sales, but it’s expected to be a temporary peak. Federal tax credits worth up to $7,500 for qualifying new EV purchases were revoked at the end of that month, creatinga fleeting window of opportunityfor the EV curious.
“The training wheels are coming off,” saidStephanie Valdez-Streaty, director of operations management atCox Automotive. “This shift will test whether the electric vehicle market is mature enough to thrive on its own fundamentals or still needs support to expand further.”
ForRivian, Scaringe said the startup’s history until now has been about learning and growing. He said Rivian’sGeorgiainvestments will show the company is ready for the expanded spotlight.
“We’re a much, much more mature business,” he said. “And we’ve built processes to handle some of these unexpected externalities.”
Learning Curve
The path forRivianhasn’t been smooth.
The company’s 2021 initial public offering was among the largest inU.S.history. The company’s valuation peaked at more than $100 billion, briefly surpassing juggernauts likeFord, an earlyRivianinvestor, andGeneral Motors.
Rivian ended its exclusive agreement with Amazon in 2023. (Amazon.com)
Rivianalso courted other deep-pocketed investors including Amazon, inking a $1 billion deal to supply the e-commerce giant with 100,000 EV vans.
But Wall Street’s stratospheric expectations soon came back to Earth amid the COVID-19 pandemic, a supply chain that buckled under the pressure and Rivian’s struggles to meet production demands. Scaringe said it was a tough time for his company,which has yet to turn a profit.
Among the challengesRivianfaced were getting components because it didn’t have the deep manufacturing history of traditional automakers.
“It was a combination of learning for the first time, launching multiple products, dealing with a global pandemic and then being last in line to get parts from suppliers,” he said.
Those scars have informed Rivian’s R2 strategy, reframing Georgia’s rolein the company’s long-term plans.
When unveiling the prototype R2inMarch 2024, Scaringe sent shock waves through thePeach Stateby pausing theGeorgiaplant’s development. The decision was cited asa temporary cost-cutting measureand an effort to focus on launching R2 more quickly from the company’s existingIllinoisfactory.
Within 24 hours of the R2 reveal,Rivianannounced it had nearly 70,000 preorders. Scaringe declined to provide any updates to that figure but said “the excitement hasn’t waned.”
Rivianlater announcedit would resume constructionof theGeorgiafactory in 2026, and will create 7,000 promised jobs.
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State and local leaders also provided an estimated $1.5 billion incentive package to recruitRiviantoGeorgia. Most of those benefits materialize only if the company meetsits job and investment figuresby 2030.Rivianwill also receive support froma $6.6 billion federal loan.
In recent days,Rivianopened itsEast Coastheadquarters along the Atlanta Beltline, which the company saidwill employ 500 workersby the end of next year. The back-end research and development work, Scaringe said, is just as vital to Rivian’s success as its mechanical chops.
“We didn’t design the business to be selling 50,000 cars a year,” he said, citing the company’s current production output. “We have a cost structure, particularly on theR&Dside, that was set up to be a much, much bigger business.”
Creating Leverage
Unlike traditional automakers,Rivianand electrified peers likeTeslahave developeda new technology backbonefor their vehicles.
Most conventional cars have more than 100 small computers called electronic control units to handle small tasks.
One ECU handles seat adjustments. Another is in charge of side mirror controls. Yet another is tasked with injecting fuel into the engine. Those ECUs are developed by separate part suppliers and often include a mishmash of operating systems.
“It’s a very, very messy architecture,” Scaringe said. “It’s precisely the opposite of what you’d want to have.”
Rivian, along withTesla, have a handful of more powerful computers called domain control units that handle several tasks. Scaringe said that decisionreduces assembly complexity, saves thousands of dollars on computer chips and will pay off once the company reaches a certain scale.
“We have more computer engineers and software engineers atRivianthan we have mechanical engineers by a pretty significant degree,” he said.
For automakers to succeed in the future, Scaringe said, they will have to have a software backbone likeRivianandTesla. They’ll get there one of two ways — developing it themselves or finding a technology partner.
The company’s technology platform caught the attention of the world’s second-largest automaker,Volkswagen Group.
InJune 2024,RivianandVWannounced a joint software partnership worthan estimated $5.8 billion.Rivianagreed to contribute technology to the German auto giant’s fleet of new EVs, while VW’s financial contributions would supportRivianas it ramped up production.
Scaringe said that partnership also givesRiviannewfound leverage when negotiating with suppliers and preparing to launch R2 — both inIllinoisand inGeorgia.
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“(Suppliers) are super excited to work with us because the choice we make inRivianvehicles is also the choice that goes intoVolkswagenvehicles, which is Porsche, Audi,VW, Bentley and a whole host of brands,” Scaringe said. “It’s a complete flip of the nature of that relationship.”
With the groundwork laid — and ground literally about to break east ofAtlanta— Scaringe said Rivian’s next chapter is filled with potential.
“Now it’s about execution,” Scaringe said.
