With Tesla Motors and its firebrand CEO Elon Musk in the crosshairs of divisive global politics, can Rivian move into a fast-track of growth, peeling off customers who remain attracted to battery-electric vehicles? The coming R2 model will be a test of Rivian’s staying power.

There’s no question Rivian founder and CEO RJ Scaringe sees existing Tesla owners as a ripe opportunity. Rivian has introduced specific incentives targeting Tesla owners interested in transitioning to Rivian vehicles, including this month’s “Electric Refresh Offer” that includes a $3,000 discount for customers trading in any internal-combustion-engine, hybrid or BEV. Under that program, Tesla owners receive an extra $3,000 incentive, totaling $6,000 in potential savings when trading in a Tesla.

The strategy likely would work better if the upcoming R2 were on sale now, but it won’t be ready for customer deliveries until the first half of next year.

Unveiled in March 2024, the R2 is a midsize SUV designed to be more compact and affordable than the R1S. It features a two-row, five-passenger configuration and is slated for production in first-half 2026.

The R2’s design is reflective of the larger R1S, featuring Rivian’s signature pill-shaped LED headlights and full-width light bars. Measuring 185.6 ins. (471 cm) long and 66.9 ins. (170 cm) tall, with a 115.5-in. (293-cm) wheelbase, the R2 is slightly smaller than a two-row Jeep Grand Cherokee, making it more maneuverable while retaining a spacious interior.

Rivian plans to offer the R2 with three propulsion options: single-motor rear-wheel drive; dual-motor all-wheel drive; and tri-motor all-wheel drive, featuring two motors on the rear axle and one upfront, enabling acceleration from 0-60 mph (97 km/h) in under three seconds.

Equipped with a structural battery pack integrated into its floor, the R2 is expected to deliver over 300 miles (483 km) of range across all motor configurations.

With its expected $45,000 base price, the R2 is positioned to compete with models like the Tesla Model Y and Ford Mustang Mach-E.

Wall Street Not Convinced

Market watchers remain cautious about Rivian’s prospects. Analyst Alexander Potter has downgraded Rivian's stock from “Buy” to “Hold,” reducing the price target from $19 to $13. He cites “too many short-term challenges” and a delayed payoff, noting that while Rivian’s long-term strategy is commendable, “growth will likely be difficult in 2025.”

Bank of America analysts downgraded Rivian's stock to “Underperform” from “Neutral,” lowering the price target to $10 from $13. They highlighted a “generally soft” demand environment for EVs and potential policy shifts that could impact Rivian's business.

In the first quarter this year, Rivian delivered 8,640 vehicles, marking a 36% decline compared with like-2024. Despite this decrease, the company maintains its full-year delivery forecast of 46,000-51,000 vehicles. It attributes the reduction in deliveries to seasonal trends and production adjustments and says it still expects to achieve a modest gross profit, thanks to cost reductions in raw materials and supply- chain improvements.

Rivian reported its first quarterly gross profit of $170 million in fourth-quarter 2024, a significant improvement driven by enhanced operational efficiencies and cost management. Revenue for the same quarter reached $1.7 billion. However, the company projects an adjusted loss before interest, taxes, depreciation, and amortization (EBITDA) of $1.7 billion-$1.9 billion for 2025. This projection reflects potential impacts from tariff changes and the expected elimination of certain EV credits by the Trump Admin.

The R2 will have an advanced self-driving option. In January, Scaringe announced Rivian’s plans to introduce an advanced hands-free driver assistance system in 2025, with an “eyes-off” system targeted for 2026.

Besides the R2, Rivian is expanding its product lineup with the planned introduction of R3 and R3X, a compact SUV with a design inspired by 1980s rally cars. The R3X is an off-road-oriented variant of the R3.

Commercial-Vehicle Business Cuts Two Ways

Rivian’s collaboration with Amazon, involving an order of 100,000 electric delivery vans, has provided substantial financial support and market visibility. This partnership has accelerated Rivian’s entry into the commercial-vehicle market and enhanced its credibility. Expanding sales beyond Amazon allows Rivian to diversify its customer base, reducing dependency on a single client and opening opportunities with various fleet operators.

But the commercial-BEV market is becoming increasingly competitive, with established automakers, notably Ford, and new entrants introducing their own electric delivery solutions. The rollback of clean-air standards and regulations in the U.S. under the Trump Admin. likely will delay fleet purchases by companies and governments.

Manufacturing Infrastructure Expanding

To support the production of new models, Rivian is enhancing its manufacturing capabilities:

Rivian is navigating production challenges, strategic financial planning and ambitious product and production expansion. Selling vehicles at a brisk growth rate without a traditional dealer network is not easy.

To meet growth targets, the automaker must enhance its brand awareness, engagement and trust with electric-vehicle enthusiasts and early adopters who tend to be influencers with the wider car-buying public.