For Rivian (RIVN -4.45%), 2026 can't come soon enough. That's when the company plans to begin rolling out its R2 model, a more competitively priced product for mainstream consumers. The R2 launch is likely to open the doors to a much wider audience and boost deliveries.
And while investors wait for the R2 launch, there is some good news about Rivian introducing its second generation R1T and R1S.
What's going on?
CEO RJ Scaringe issued a press release saying: "We continue to evolve our flagship R1 vehicles, offering quality and performance without compromise. Our revamped R1S and R1T push the technical boundaries further, creating our most capable products to date."
The revamped R1 vehicles now offer new motor configurations, hundreds of hardware improvements, redesigned software, and premium trim options. The new R1 platform offers better power, range, and performance, including a 1,025-horsepower motor that can deliver 0-60 mph acceleration in less than 2.5 seconds.
Perhaps most importantly, the motors are now designed and manufactured fully in-house, which should help prevent the production bottlenecks seen early in Rivian's story.
More profitability
Rivian has also made a couple of moves to potentially increase revenue and margins. It has a new subscription service called Connect+ that will support streaming video through Alphabet's Google Cast and improve entertainment options for owners. Subscription services will remain an important avenue for revenue growth as technology continues to be packed into new vehicles.
Another smart move by Rivian was to introduce two entirely new premium Ascend trim packages, as well as a new Storm Blue exterior paint and blackout trim options. Premium trims are generally associated with bigger margins and often higher price tags.
And the new generation of the R1 will lower manufacturing costs and reduce the number of component parts, crucial for the company to improve its financials with production and deliveries expected to remain flat in 2024 compared to the prior year.
The second generation R1S will start at $75,900, and the R1T will start at $69,900, with delivery available immediately, the company says.
The road to 2026
For Rivian investors hoping the company will take the next step to becoming a go-to investment in the electric vehicle (EV) industry, 2026 can't come soon enough.
Fortunately, the wait has already been shortened with management's decision to bring initial R2 production into its original Illinois factory, rather than waiting for its next factory in Georgia to be completed.
The move will not only accelerate the R2 launch schedule, but it will also save roughly $2.25 billion. And it will help the company take advantage of the extra production capacity in its Illinois factory, which will be key to improving its scale.
What it all means
It's no secret in the automotive industry that newer products sell better. That's why automakers will often refresh their vehicles in between full redesigns, and Rivian is no different with its move to update its second generation of R1 vehicles.
The revamp will be a bridge between the company's original vehicles and the R2 launch in 2026. And it could help spark some demand at a time when the broader industry is slowing down. Ultimately, it's just a little good news for Rivian investors hoping 2026 gets here quickly, and it enables the company to take a step forward with its production and delivery numbers.
