Cheapest EVs Are Selling In Today’s Market

Cheapest EVs Are Selling In Today’s Market


The standard EV playbook just won’t cut it anymore.

This was a bad week for Rivian. The Irvine, Calif.-based EV maker. said on Wednesday that it expects to produce about the same number of cars this year as it did in 2023, about 57,000, undermining analysts’ expectations. It also announced a 10% cut in its paid staff. Relegation occurred. In the days that followed, the stock price rose, falling to around $10 on Friday, a record high from around $16 a week earlier. And it continues to lose a lot of money per car. “The company lost $43,373 per unit it delivered to customers in the fourth quarter, worse than the $30,648 per vehicle it lost in the third quarter,” according to a report in the Wall Street Journal.

The old EV master plan won’t work today: copying Tesla’s old playbook is not a good deal today. The plan seems to be: sell the R1T pickup and the R1S SUV (think: Model S prices) for five years and then hit the pay dirt with a future high-volume, low-cost car, namely the future R2 (think: Model 3). The problem is, Rivian pricing starts now at around $70,000 for the R1T and $75,000 for the R1S in a very price sensitive market. And R2 isn’t expected until 2026.

I asked Ivan Drury, Edmunds’ director of insights, late last year about Rivian’s strategy. “While it may seem like mass production vehicles at a high level of consumers can drive brand visibility and provide more flexibility for the production budget, perhaps this approach would be more appropriate for the early phase of EV adoption,” Drury said.

And the market situation will not be better for Rivian. EV prices are collapsing in real time. Tesla slashed Model Y lease prices in late January to $379 per month, Alex Bernstein, Senior Manager, Content & Website Ops at CarsDirect.com, told me in an email. “The SUV already seemed like a good deal with an inventory discount of up to $8,000 that made it cheaper than the new Model 3,” he said. And, last week, Ford matched that with up to an $8,500 incentive in some regions and at lower MSRPs, Bernstein said. “The market for EVs has made a big shift toward affordability. While there is a small market for $80K+ EVs — and cars in general — there are millions more pickups in the $40K price range,” Edmunds’ Drury said.

Finally, it must be understood that many people look to Rivian to live – and thrive. Rivian R1T and R1S are amazing cars. I ran each test for a week. They are full of technology, well built, tough and easy to look at. It’s equally surprising that the company can produce such large cars in such a volume after only a few years (the first R1T was shipped in October 2021). But you’ll soon run out of that group of elite buyers who can drop $80K on a car. Or at least hit a wall for a large number of those buyers. “Staying at the upper limits of what most consumers can pay limits the likelihood of seeing these units on the road at higher rates,” Drury said. Let’s hope Rivian survives and is still around to make R2.