Shares of Rivian surged approximately 4% on Friday, following the unveiling of its more affordable R2 SUV, which garnered an impressive number of reservations within hours of its launch. The electric vehicle (EV) maker’s stock climb reflects growing optimism that Rivian could make significant inroads into the mass-market segment.
CEO RJ Scaringe revealed that the smaller R2 SUV, priced at $45,000, has already amassed over 68,000 reservations since its debut on Thursday. This development has prompted analysts at Bank of America to suggest that Rivian might be poised to capture a larger share of the mass-market segment, which constitutes about half of total U.S. auto sales.
Analysts also believe that the R2’s smaller size could help Rivian tap into international markets that traditionally favor smaller vehicles over large pickups and SUVs.
Rivian intends to commence production of the R2 at its existing U.S. factory, aiming to expedite deliveries by the first half of 2026. The decision to halt the construction of its second factory in Georgia, backed by Amazon, is expected to yield cost savings that could delay the need for further fundraising, analysts noted. This move is anticipated to generate additional savings of more than $2.25 billion compared to the company’s previous forecast.
See also:Â Rivian R2 Accessories: Enhanced Kitchen, Tent, Bike Rack, and More Unveiled
The Illinois plant, where Rivian also manufactures its electric delivery vans, has the capacity to produce 215,000 vehicles annually once production of the R2 begins.
In a surprising move, Rivian also unveiled the R3 and a more powerful R3X variant on Thursday. The R3, priced lower than the R2, is scheduled for launch after its predecessor.
These announcements come at a time when EV demand is growing at a slower pace than anticipated by automakers, which has weighed on the shares of EV companies this year. Prior to Thursday’s launch, Rivian’s stock had declined by half. However, including Friday’s gains, shares are now up 19%, marking their best week since the week ending December 15.
See also:Â Everything You Should Know Rivian R2 Battery Cell
The current increase in share price is poised to add about $500 million to Rivian’s market value of $12.23 billion. Since the R2’s launch, the company’s market value has surged by nearly $2 billion.
While market leader Tesla has slashed prices to stimulate sales and is exploring the development of a cheaper model, analysts believe that Rivian could become a favored choice among investors seeking EV SUVs in the coming years. According to Evercore ISI analyst Chris McNally, “Rivian could be one of the few EV SUVs on the market that most investors will likely want to buy over the next 3-4 years,” as Tesla has shown limited interest in the SUV space.
