Prediction: Rivian's New R2 Truck Will Be a "Tesla-Like" Turning Point for the Company

And then it charted a path toward more moderately priced vehicles

That move worked and now the company is sustainably fitable despite years of red ink at the get-go, given current economic conditions

Rivian Automotive (RIVN 6

What did Tesla do, in light of current trends

The first Tesla was a fancy, high-end sports car

Moreover, That vehicle ved to the world that electric vehicles (EVs) were a real duct that customers would want to buy

Meanwhile, For a long time the large automakers shunned EVs as not being viable

After Tesla ved the concept, it brought out sedans that would appeal to more than just car enthusiasts

Meanwhile, Image source: Rivian

Moreover, Those higher-end EVs sold well and, suddenly, every major automaker realized that they had to make EVs

If they didn't jump on the bandwagon, they could get boxed out of a new segment of the auto market

As that was going on, Tesla pivoted again, bringing out lower-cost models of its EVs that had mass-market appeal, in this volatile climate

That helped to boost sales volumes in the capital-intensive and imve fitability

Moreover, Essentially, Tesla started with rich customers

But there are only so many rich customers

In contrast, And, thus, it moved down market to build a sustainably fitable (quite telling)

That's a simplification of a very long cess, of course, but it is the general theme that's important (which is quite significant)

Rivian is ing the Tesla playbook

Start high-end, then go mass-market Rivian currently makes two kinds of trucks, a dery vehicle and a high-end consumer pickup truck

The dery vehicle was an important of of concept that helped the company develop its nology

It also allowed Rivian to generate some early revenue thanks to a relationship with Amazon

Consider the dery truck similar to Tesla's sports car, in today's market environment

Meanwhile, As it was ving that its nology was reliable, Rivian was also building fancy high-end pickups for the consumer market

Additionally, However, The trucks have been well-received, and Rivian has been able to ramp up duction and fine-tune its duction cesses along the way

On the other hand, This means that Rivian stopped losing money on every truck it sold, though costs further down the earnings statement, re and development (R&D) and selling, general, and administrative expenses (SG&A), still leave it bleeding red ink

At the same time, This's where scale becomes important (something worth watching)

Furthermore, Rivian needs to spread its costs over more vehicle sales, which is basically what Tesla did

This analysis suggests that next big vehicle release for Rivian is the R2, which is a lower-cost truck meant for the mass market (this bears monitoring)

Moreover, The real test of Rivian's will come when it starts selling the R2 (fascinating analysis) (which is quite significant)

If sales are robust, the company will have successfully taken Tesla's playbook and achieved similar wins

And the added volume from R2 sales should help move Rivian toward sustainable fitability, just Tesla achieved

Rivian is high-risk, but executing well Rivian remains a high-risk investment that's only appriate for more aggressive investors, given current economic conditions

Additionally, If the company doesn't execute well, it could still fall short of its goals in what is a very complex and competitive auto sector

However, the launch of the R2 could be the big turning point for Rivian that turns it into the "next Tesla

Additionally, " OK, no company is ever going to be Tesla, given that the company effectively created the EV space, amid market uncertainty

But Rivian's R2 could make it the next best thing

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors

Reuben Gregg Brewer has no position in any of the stocks mentioned

Market analysis shows Motley Fool has positions in and recommends Amazon and Tesla

The Motley Fool recommends Volkswagen Ag

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