All eyes are on Rivian (NASDAQ:RIVN), as the electric vehicle (EV) company will unveil its new R2 SUV this afternoon. The R2 will be Rivian’s most affordable EV yet with an estimated price between $45,000 and $50,000. A source code leak from Rivian’s website showed a starting price between $47,000 and $47,500 with an estimated range of 330 miles. The leak also revealed a zero-to-60 mph time of less than three seconds and a powered rear window.
Interested customers will have to be patient, as the R2 isn’t expected to be available until 2026. However, Chief Financial Officer Claire McDonough believes that the vehicle will be well worth the wait.
“When you get down to these lower price levels, it’s really how you think about the brand positioning, the UI/UX experience for the customer, and how you think about the leverage and opportunities that we have with all of these cross-platform investments,” said McDonough.
RIVN Stock: Rivian to Unveil R2 SUV Today
According to Reuters, Rivian lost $154,000 per vehicle in 2022 and about $40,000 per vehicle in 2023. Amid the steep cash burn, analysts are wondering whether the company will need to raise capital in order to support R2 production. Rivian is expected to use $4.3 billion in cash this year after ending 2023 with $9.4 billion in cash.
Jefferies seems to have a good feeling about the R2, as it initiated coverage of RIVN stock with a “buy” rating and a price target of $16. Analyst Philippe Houchois provided both positive and negative factors about the company, such as its similarity to Tesla (TSLA) in “spirit” and its high spending. For 2024, the analyst believes that Rivian will face two critical challenges.
The first is a $35,000 to $40,000 decline in unit production costs, which Houchois believes can be accomplished through supplier negotiations and increased efficiencies in design and production. The second challenge is to prove that the R2 will be able to be produced in a cost-efficient manner and for much less than the R1 vehicles.
“These will determine the terms under which Rivian will raise the estimated $2.5bn funding it needs to see through the launch of R2 and whether the business can remain independent or its IP assets could be more valuable to a larger organization,” wrote Houchois.
On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
