© Reuters. Rivian CEO RJ Scaringe speaks at an event to unveil a smaller R2 SUV during an event in Laguna Beach, California, U.S., March 7, 2024. REUTERS/Mike Blake
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By Chris Kirkham and Abhirup Roy
LAGUNA BEACH, California (Reuters) -Rivian on Thursday unveiled its smaller and less expensive “R2” SUVs and “R3” crossovers amid a slowdown in demand for EVs and also said it would start producing the R2 at its existing facility in Illinois to ensure deliveries in 2026.
Rivian (NASDAQ:) shares were up 10% at $12.16 on Thursday afternoon.
The R2, with a starting price of $45,000, well below the company’s flagship R1 SUVs and pickups, is seen as critical to Rivian’s success. High interest rates have led to a sharp slowdown in demand for EVs, which are typically more pricey than gasoline-powered cars.
Rivian had previously planned to produce the R2 at a yet-to-be-constructed $5 billion plant in Georgia but some analysts have questioned the need for building the factory amid slowing demand for EVs.
Rivian said the decision to produce the R2 at its facility in Normal, Illinois, would help the company deliver the vehicles in the first half of 2026, cut the amount of capital needed and reduce risk to the launch.
The move will help the company save more than $2.25 billion, it said, adding that it had sufficient capital to fund operations through the launch of the R2.
The R2 is a five-seater version of the automaker’s larger R1S SUV and offers more than 300 miles (483 km) of range.
Rivian produced 57,232 vehicles last year and said growth this year would be flat as it tackles slowing demand and multiple weeks of production downtime to make upgrades intended to cut costs and improve margins.
Despite the immense popularity of SUVs and pickups in the United States, ramping up production and generating demand beyond the initial wave of enthusiasts has been an uphill battle.
Offering affordable EVs at scale is seen as key to attracting customers still unwilling to switch over from their cheaper gas-guzzling vehicles.
In a surprise move, Rivian also unveiled its R3 crossover and a more powerful R3X variant on Thursday. The R3 will be priced below the R2 and launched after that vehicle. The company did not disclose any other details.
A crossover refers to a vehicle built on a car platform but with increased ride height and ability to handle rough terrain like an SUV.
