Rivian’s last chance to take on Tesla

0:02Hello and welcome to The Verge Cast, the flagship podcast of midsize SUVs. I'm your friend David Pierce and on today's episode we are going to talk about Rivian. Rivian is a fascinating company at a fascinating point in its life. It has been around a long time as one of the most interesting and consequential and in some ways successful competitor to Tesla in the EV space. But Rivian is also at a point now where if it can't figure out how to start selling mainstream cars at mainstream prices, it might look like a very different company soon. Meanwhile, the whole idea of EVs, especially as a political thing, have changed a lot in the couple of years.

0:38Tariffs have changed the price of EVs. Some of the Trump administration's policies about energy have changed the price of EVs. Gas prices, believe it or not, have changed the price of EVs. All of this stuff is so tied up together and Rivian is just about to come out with a car, the R2, that it is hopeful will be its true mainstream success story. The Verge's Andy Hawkins was actually in normal Illinois at one of Rivian's factories a couple of months ago and put together a big story all about everything Rivian is up to and why this moment matters so much. He's going to come on the show and we're going to try to figure out whether Rivian is really going to make it.

1:12But first, here's a look at everything else happening on The Verge today. This is 90 Seconds on The Verge for Wednesday, July 1st, 2026. The age of the physical video game appears to be almost over. Sony announced today that starting in January of 2028, it will no longer produce physical PlayStation discs at all. Sony's argument is that that's because most game buying has shifted to digital anyway, which is certainly true, but no discs means you can't resell games, it means you can't share them with friends, and it means you can't even really preserve them over time. It also just gives Sony more control over its games.

1:43Sony's announcement here is obviously the big deal, but this trend has been happening for a while. Just last week we learned that Grand Theft Auto 6 will have a physical edition, which is actually just a download code in a box. There's probably a middle ground here that is something like Nintendo's virtual game cards that attach the digital game to a more generic physical object. Personally, I totally get this trend, and I really hate it. And I suspect there are more weird bad ideas to come. Meanwhile, Meta is starting to paywall its smart glasses. Starting now, you will need a$20 monthly Meta 1 Premium subscription, which is a real thing that exists, if you want to use more than a few hours of a feature called Conversation Focus.

2:21But the bigger bummer here is that Meta is also making clear that there are more premium features to come. Actually, I expect a lot of the AI in your AI glasses to eventually come at an additional price. Everywhere you look right now, there are stories about AI companies running out of compute or having to throttle users or raise prices. Frankly, we've had it good with AI and the price is about to go way up. And finally, The Verge's Gen 2e published a review of the Google Home Speaker, which is Google's latest attempt to bring its AI assistant into your house. Long story short, it's a good speaker, actually a surprisingly good speaker for such a little guy, but the AI is too slow and sometimes, frankly, just too stupid.

2:59I do still love the red one, though. You can read more about all of this at TheVerge.com. That is 90 Seconds on The Verge for Wednesday, July 1st. Avoiding your unfinished home projects because you're not sure where to start? Thumbtack knows homes, so you don't have to. Don't know the difference between matte paint finish and satin? Or what that clunking sound from your dryer is? With Thumbtack, you don't have to be a home pro. You just have to hire one. You can hire top-rated pros, see price estimates, and read reviews all on the app. Download today. Trying to locate news sources that reliably separate fact from fiction can seem like looking for a needle in a haystack.

3:40That's why The Guardian is launching Stateside with Kai Wright and Carter Sherman, a conversation with experts who slow down the news and wrestle with the questions we all have about what's actually happening in the world. Three times a week, hosts Kai and Carter utilize all the reporting resources The Guardian has to discuss the news, international affairs, climate, culture, sports, lifestyle, fashion, and wellness. And The Guardian is not billionaire-owned, meaning they're free to report the whole picture without interference. Go to theguardian.com slash stateside to learn more. And listen wherever you get your podcasts or watch on YouTube.

4:18That's theguardian.com slash stateside. All right, now let's talk cars. Andy Hawkins, the Virgis Transportation Editor, is here. Hi, Andy. Hi. I am going to fight my instincts to talk about the bike bus because I'm desperate to talk about the bike bus. Wrapping up another great year of the Bike Bus. I'm glad to hear it. Yeah. But today we're going to talk about Rivian. And I want to start with a trip you took a couple of months ago to Rivian's factory a few days after Rivian's factory was hit by a tornado. Yes. Tell me, just tell me about that day. What was the scene like? Set the scene for people a bit.

4:54Sure. Yeah, it was, first of all, it was not planned. Obviously, I did not anticipate there being a tornado that hit the factory. You didn't book that three months ahead. Didn't know. So it wasn't on the schedule. But yeah, four days before I was planning on flying out to the factory, I had arranged with Rivian to go out and see the R2 come off the assembly line and interview a number of their executives. A tornado did indeed hit the factory. It took a sizable chunk out of part of the complex that is actually specifically involved in producing the new R2 vehicle, this very crucial make-or-break vehicle for Rivian.

5:32There's like a wall that's missing. There's a huge hole in the ceiling. They had a lot of flooding. There was a lot of damage. But from what I was able to see, they were cleaning it up. Things were still moving. They had this event to commemorate the R2 coming off the assembly line. And there was a lot of talk amongst the workers and amongst the executives there about sort of resilience and sort of in the face of adversity coming together and tackling this challenge. And you can tell that, you know, it wasn't just the tornado they were talking about. There were obviously a lot of other things that they were referring to with some of that language as well.

6:08yeah there's a certain uh push and pull between in in your telling of this that is like rivian has gone through this hard time and you happen to be there at this moment of like we're gonna make it through sort of a rah-rah moment for for everyone at rivian we've been through this trauma together we're gonna come back stronger but also sort of a real moment of like i i don't want to call it desperation but i almost want to call it desperation of like Like, this is the car we need to work. Like, I want to spend a bunch of time on the R2 because I think, to me, the story of Rivian and the story of, in some ways, this era of EVs is kind of about the R2.

6:53Did you get that sense of, like, oh, my God, we need this car to work so, so, so badly, even in the room on that day? Yeah, it absolutely was. I mean, there was obviously a lot of, you know, it was sort of through the lens of this is a great car, right? Obviously, everyone there has drank the Kool-Aid. They firmly believe in the R2 as the vehicle that will sort of get them to catapult to that next level of success as an EV company. And that was very much the message that was coming down from the top, that they had sort of come together. They had tackled this challenge. They had made this car. It's going to be a huge success.

7:31and Rivian's future is nothing but bright. But no, yeah, you could obviously sort of under the current of all of that is there is very much a recognition of the enormous challenge that still remains, that the current climate around EVs is extremely bad. You know, the sales have essentially stagnated. Rivian does not expect to sell any more R1 vehicles than they did last year. Like that's not a segment that they see is growing. They see all the growth, basically, in this new vehicle, but that's going to obviously rely on their ability to successfully produce the vehicle in enough time to deliver it to customers and getting those cars to customers, making sure that those customers are not experiencing any delays.

8:16There are one, the very first vehicle, the truck and the SUV, was very delayed when it first came out about five years ago, and they're trying to avoid some of the similar delays. while also dealing with some of these more macro concerns that they have that are sort of looming over them like a tornado, you could say. Right. Yeah, I'm struck by how little has changed since you came on this show a little over two years ago and we talked about Rivian. And this was right after the launch of the R2 and the R3. The first time they showed them off, they were super exciting. People immediately grok this as like, oh, this is Rivian's turn toward the mainstream.

8:56This makes total sense. The sort of immediate response was hugely positive. But even then, you came on the show and were like, there is absolutely no guarantee that any of this is going to work for Rivian. Rivian is going to have to endure enormous costs to make this happen. Scaling production is incredibly hard. The winds against EVs in the sort of political space were blowing even then. Has the situation changed for Rivian in those two years? Have the headwinds gotten stronger or less strong for Rivian as a company in the two years since that car came out? Yeah, I think you could arguably say that they have gotten more strong.

9:33The last two years alone, since Trump has come into office, the regulatory environment has gotten very dire around EVs. He got rid of the tax credit. He got rid of basically any emissions regulations at all, which was very beneficial for pure EV companies like Tesla and Rivian because they used to be able to sell these regulatory credits, and that was like hundreds of millions of dollars in revenue every quarter that they could rely on. That's gone. Sales are obviously stagnated without the tax credit in place. People are, you know, I think there's still a demand out there. People still want good EVs.

10:10They like EVs. They're interested in them. But the cost is still extremely high for most people. The cost in general for all cars across the board is high. It's over$50 ,000. on average. So people are absolutely feeling the pinch. But at the same time, you have gas prices rising because of the war with Iran. And people are certainly sort of trying to overcome some of their skepticism and their concerns about those costs to look at EVs because there is this sort of this broader issue with rising gas prices. So there's just all this in the mix right now around Rivian. And I do think that despite these headwinds, the company is sort of projecting that this is going to be a modestly successful vehicle.

10:54Maybe it won't be, you know, the Model Y necessarily. And I think that there is some question, does this need to be like on the level of the Model Y? Does the R2 need to rise to that level and be that successful? I mean, the Model Y, you know, is the best-selling car in the world, you know, and has been for several years in a row. And that is despite, you know, Tesla's own sales dropping on a year-by-year basis. So there's just a lot to take in at the moment. I think Rivian is hoping for, obviously, great success with the R2. And I think that they've got production and the manufacturing sort of squared away.

11:29I don't think they're going to run into, barring any more last-minute tornadoes, they're not going to run into any of the problems that Elon Musk and Tesla ran into with production hell and the Model 3. Somewhere as you're saying this, RJ Skarange, the CEO of Rivian, is knocking on every piece of wood he can find, as you're saying this out loud right now. But I do think, yeah, I think the major question is going to be, are the customers going to be there? Is the demand going to be there? Is this car going to be a hit in the same way that the Model 3 was for Tesla? I think that we won't know that necessarily.

12:00We'll have a better sense, I think, by the end of the year, once we start to see some of the sales numbers. You know, Rivian is banking on the R2 being, you know, one of the most successful and the fastest new EV launches in history. They're projecting between 20 ,000 and 25 ,000 delivered to customers this year alone. We're talking just the second half of this year. That would be an enormous figure if they're able to achieve that. You know, that would essentially double their customer deliveries in a year. So that would be a huge success for them if they're able to achieve that. But, you know, we're going to have to wait and see.

12:36Well, so I want your read on it as somebody who has now seen the car in person. One of our writers has driven the car. I think we know a lot more about what this car actually is in the real world in all of these contexts you're describing. What do you make of the R2 so far? Obviously, like you said, there are a lot of things left to come. But I think we have some real information about whether this car is any good that we didn't not very long ago. What's your current temperature on the R2 itself? It seems like it's a big win. I have not personally driven it yet. I just want to sort of clarify that at first.

13:10Did you take a selfie next to it? That's like half of that at this point. I basically did. And I've gotten to sit inside it and check it out and sort of get the feel of it. And it is a really, I mean, it's, you know, it's everything about the R1T and the R1S that so many people were drawn to and liked about the company, right? It's the attention to detail, the design, obviously the software and, you know, the ability to have all of these, like this tech just works seamlessly in many ways. You can tell the difference between these vehicles that were designed from the ground up to be all electric versus some of the more retrofitted cars that we've seen and trucks that we've seen over the last, you know, half a decade or so that have been less successful.

13:52Things like the Ford F-150 Lightning and, you know, some of the cars that, you know, that GM was putting out. I do think that there is a lot that is attractive and winning about this car. And you can see why so many people are cheering for Rivian and like the company. They like what sort of the brand represents, this sort of outdoor adventure, you know, in touch with nature kind of vibe that they've been putting out. That is certainly carried forward with the R2. I mean, it is in many ways. It is an R1S in miniature, right? It looks very similar. They are not, you know, sort of like cracking open a whole new design language or anything like that.

14:33This is not a Ferrari Luce moment, right, where people are rejecting this as looking nothing like a Rivian. It obviously looks very much like a Rivian. And I do think people are obviously very excited about the R3, which is still, you know, sort of like a question mark in the future. But this is, I think it's, you know, one of the major things that they had as an obstacle was the cost, right? The R1 was too expensive for most people. It started at around$70 ,000 but could easily be optioned up to about$90 ,000, over$100 ,000. That was just something that was never going to have as big of a fan base as you would like.

15:10So this is Rivian's obviously big play to expand that fan base, get more people into the brand, into experiencing Rivian. And, you know, I do think there's still going to be some challenges, right? It's still not as cheap as I think a lot of people would like. It starts like right under$50 ,000, right? The first versions are over$50 ,000 or are going to be in the$57 ,000 to$58 ,000 range because we're talking the sort of premium performance versions. This is like a well-worn tactic in the auto industry, right, to put out your more expensive versions first and then gradually work your way down to like the cheaper base model version.

15:46That version, the one that starts under$50 ,000, is not going to be available until late next year. So people who are still waiting for that version, and Rivian claims this is not a decontented, you know, sort of like base model. This is not the Slate auto truck or anything like that. It has power windows, has screens. It will have paint. Has paint, has a radio. But there is only one paint color, actually, for the base model. But that one's not going to be available until the end of next year. And then after that, you know, Rivian has said that they're going to make the R3, which is going to be even cheaper than the R2.

16:19So that will be a major moment for them if they can actually get to the point where that vehicle becomes available. And we'll see if that demand is truly there.

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18:10What's your sense of how much price is guiding the whole EV market right now. Because I'm forever torn between this idea of, clearly there were a lot of people with a lot of money with appetite to buy EVs. And I think, to some extent, the market feels a little bit, to me, like Peloton, where all of those people already bought them, right? And it's like, and everybody's like, oh, this will scale forever. And then it's like, no, the number of people who want an EV and have$100 ,000 already bought their car. And some of them bought Rivians, like kudos to Rivian. But now there's this bet that, okay, we can bring it down in the market a little bit and find a whole giant new group of people.

18:47But then I look at something like the Nissan Leaf and some of these other relatively, I say relatively, less expensive EVs that have just not worked. And I wonder if your Rivian is the only positive case of if we make the thing cheaper, more people will buy it Tesla. And if so, is it possible that Tesla is just a weird, unique company that came at a weird, unique time that is actually not a model to follow in any possible way. Like, again, back to my original question, like, how much do you think price is the game in EVs right now? I think it's a major, major part of it. I think that for a long time, it was range and it was charging, right?

19:27That those were the main concerns from people that were reluctant to maybe take the plunge into electrification. And they were worried about, you know, how far they would be able to drive on a charge, where they would be able to charge, and whether or not the public infrastructure was keeping up. I think since then, even despite Trump throwing up a lot of obstacles, the charging has improved dramatically. There are more charging stations. They tend to work more than they don't. That's still sort of a challenge. They win in the EV world that most of the pumps work. I know that you need to have an actual – the electrons need to flow and the software needs to work.

20:08And I do think it's getting a lot better. This is from personal experience. I own an EV. I'm out there driving. I'm having a lot easier time charging at public stations than I have in the past. And this is also backed up by the data as well. Yeah, that's huge. So I do think that now the concerns are certainly around price. And this has lots to do with the rising prices across the auto industry. Cars have gotten more luxurious. They have gotten more expensive. People want more of these features than a lot of them can afford. And we're starting to see they're starting to buy vehicles that they really can't afford to begin with, right?

20:47People are taking out longer and longer car loans that are more and more expensive. These predatory loans are becoming a really big problem for people in the auto market. And I think we're also seeing in the used car space prices increasing dramatically. And that's also having an effect too, right? So usually if you were price sensitive, you would just buy something to use. Now those used cars are also going up at a pretty high rate. So I do think that overall people are feeling extremely pinched. We live in a country where if you don't own a car, it's very hard to have a job and to have a life.

21:20You know, public transportation is lacking in so many places. And so it is something that, you know, it's the largest purchase that a lot of people will make and still make. And so I do think that the bet on affordability, which is what Rivian's doing, but is also what some of these legacy automakers are doing as well, right? This is sort of at the crux of what Ford is trying to do with this new universal EV platform that they're building out in California, trying to find a way to make things more aerodynamic, reduce the cost of the battery, slim things down, make things a lot more affordable.

21:53But also, it has to be profitable for the company. And this is something, when you come back to Rivian, they've never had, you know, they've had a few moments of gross profitability, but they have not been overall on a yearly basis been profitable. They still lose thousands of dollars on every R1 vehicle that they sell. This is going to be their big play to bring those costs more in line so that they can get out of the valley of death, as it's called, and into a more stable position. They have these partnerships with Volkswagen and Uber, these major investments that have provided them with some lift over the years.

22:25But I do think that if the R2 is not successful, especially not as a profitable vehicle, then the company is going to be in big trouble. Yeah, you made a case in a piece you wrote for The Verge that there's a world in which Rivian's future looks more like software company than car company if the R2 doesn't go well. How does that play out? Yeah, so a couple of years ago, they made this deal with Volkswagen that would eventually net them about$5.8 billion in investment. that basically made Rivian the software provider for all of the Volkswagen Group electric vehicles and gas vehicles going forward.

23:02So this is a project. They created this joint venture project. Rivian's head of software, Wasim Ben-Sayed, is the head of this JV, along with he has a counterpart at Volkswagen. And they're basically designing, they're taking Rivian's software platform and using that as the foundation to create a software experience for all of Volkswagen's vehicles, Lamborghini, Audi, the VW brand itself. Is this good software news, by the way? Like, people generally like Rivian software, right? If you were like GMs doing its weird Android thing in every car everywhere, I would be in like a full-blown panic attack right now.

23:38But people like Rivian stuff. There's a lot to like about Rivian software. That said, there have been some noticeable glitches and problems over the years, as every car company has had. I don't think that they've been immune from some of those problems. And Rivian's R1 vehicles, while they rate very high on the scale of customer satisfaction, they also rate at the bottom for reliability. And a lot of that has to do with some of the tech problems that they had over the years. Rivian claims that they're aware of this, you know, that they're very much working to fix any problems and bugs that come up, that they are creating what is essentially a software-defined vehicle, a vehicle that can be updated and fixed over the air constantly, much in the way that Tesla does and much in the way that, you know, everyone's phone does, right?

24:27That this is going to be something that if there do end up being problems, that they can fix them remotely and fix them quickly. The R2 is on a brand new platform. We have yet to see any Volkswagen vehicles yet with the Rivian software, so that still remains to be seen. But it's going to be, you know, I do think that, like, if the R2 is not as much of a hit and Rivian continues to sort of struggle as a manufacturer, as an OEM, they could potentially have a future in the software space. And also, you know, there's the autonomy piece on top of all that as well, the robotaxis. Yeah, there's a really interesting piece of it with the robotaxis and the autonomy thing, because when you were talking to the folks there, they seem very excited about autonomy all of a sudden.