In a pivotal moment for electric vehicle (EV) manufacturer Rivian, the recent unveiling of its latest model, the R2 SUV, has resulted in a surge in market value by over $1.7 billion since the Thursday event. The positive response comes as a welcome development for the Amazon-backed company, which faced challenges, including a disappointing quarter, a downgraded outlook, and a workforce reduction of approximately 10% last month.
Rivian’s market cap, which peaked at $153 billion in 2021, had plummeted to $12.5 billion, prompting speculation about the company’s future. Notably, Gene Munster, managing partner of Deepwater Asset Management, pondered the possibility of Apple acquiring Rivian, citing its low valuation and Apple’s need to make a substantial move after discontinuing its own EV project.
Tesla CEO Elon Musk had previously commented on Rivian’s product design but expressed skepticism about its ability to achieve volume production with positive cash flow. Musk suggested that Rivian would face bankruptcy in six quarters without significant changes and cost-cutting measures.
In a surprising move, Rivian announced a delay in its plans to build a $5 billion factory in Georgia, opting to manufacture its new models at its existing plant in Illinois. This decision is expected to save more than $2.25 billion in capital expenditures, providing relief and reducing the immediate need for capital raises.
Rivian further surprised investors by unveiling another model, the R3 compact SUV, and a more rugged version, the R3X. CEO Robert “RJ” Scaringe shared that the company received over 68,000 reservations for the R2 within 24 hours, showcasing significant interest in the new offering, which is priced starting at $45,000.
While the recent developments have provided a boost to Rivian’s market value, questions linger about the company’s financial performance, given its history of losses and the broader challenges in the EV market. The positive momentum following the R2 SUV unveiling leaves investors cautiously optimistic, with the industry watching closely to see if this marks a turning point for Rivian.
