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Thanks to Tesla, Rivian is exploiting a gap in the market — and shipping a lot more vehicles.
Have you been seeing Rivians on the street more often? Well, I have. Even on Brooklyn’s narrow and parking-deprived streets, these luxury trucks and SUVs — the look of which seems to split the difference between “rolling over a field of human skulls under the direction of Skynet” and “Pixar” — are making more of an appearance. I don’t think I’m imagining things either: The ballyhooed electric vehicle manufacturer has in fact seen a surge of shipments this year.
In the second quarter, Rivian produced 13,992 vehicles and delivered 12,460 of them, bringing its total for the first six months of the year up to 23,387 vehicles made and 20,586 delivered. That’s compared to 24,337 produced and 20,332 delivered in all of 2022.
The company said Tuesday that it expects to produce 52,000 total units this year, up slightly from its previous 50,000 estimate. It’s still burning money, though. Using its preferred earnings measure, it expects to lose $4.2 billion this year while pouring $1.7 billion into capital expenditures. Its net loss in the second quarter was $1.2 billion.
“As more and more vehicles are on the roads — and we now have tens of thousands of R1s on the roads — it continues to feed the flywheel of awareness about the brand,” Rivian chief executive R.J Scaringe said on the company’s earnings call Tuesday. “Some of our strongest advocates are people that are driving our vehicles every day. And so we’re quite bullish on the continued strong demand we have for our products.”
In the United States, Tesla still dominates the EV market, and Rivians have only recently even shown up in the data or on the streets in a meaningful way. Rivian’s consumer products (they also sell vans to Amazon) are unabashedly luxury trucks and full-size SUVs, cutting the company off from the crossover and mid-size EV market that Tesla has dominated. But while the size of the potential market is smaller than the niche filled by the Tesla Model Y, it’s one that Tesla has left open, with its delay in refreshing its model lineup and unclear timeline for sales of its Cybertruck.
According to data collected by Morgan Stanley, there were 2,200 R1Ts, (Rivian’s pickup truck) and 2,100 hundred R1Ss (its SUV) sold in June of this year, compared to 1,867 and 200 respectively last year. By contrast, there were over 33,000 Tesla Model Ys sold in June 2023 and 24,640 sold in June 2022.
Ford has sold almost 32,000 electric vehicles so far this year, including 10,309 F-150 Lightnings, the electrified version of its best selling pick-up truck.
That Tesla dominates the American EV market is hardly surprising — the unmatched brand awareness has become supercharged by aggressive pricing (aided by Inflation Reduction Act subsidies), turning its Model Y SUV and Model III sedan into something like “normal” cars.
Tesla’s ubiquity may have begun to trade off with its luxury or exclusive status, Morgan Stanley analyst Adam Jonas has argued: “A car is an expression of personal style and values. Many luxury car buyers want an attractive alternative to the ubiquitous Tesla,” he wrote in a July note to clients.
And that luxury is something customers are paying for. The R1S SUV starts at $78,000, while the R1T starts at $73,000. The F-150 Lighting, on the other hand, is listed closer to $50,000 (although in reality it typically ends up being much more expensive), while the luxury Tesla Model X starts at around $100,000. Lucid, another small electric automaker, is also competing in the unabashedly luxury space, with its sedan the Air starting at around $80,000 and an upcoming SUV the Gravity that is supposed to go on sale sometime next year. Other luxury brands like Cadillac, Mercedes, Audi, and BMW also have electric SUVs and crossovers on the market.
The Tesla model lineup, on the other hand, has not been refreshed meaningfully in years and its Cybertruck, which would compete directly with the R1T, remains unreleased to the general public with an unclear timeline for when it will be. The R1S, on the other hand, literally outsizes the crossovers and mid-size SUVs in the Tesla lineup, the Model Y and Model X.
“You can definitely tell Rivian hired a lot of former Tesla employees. The software and vehicle controls feel very Tesla-like. Rivian fit and finish feel superior to Tesla in just about every way,” Chris Hilbert, a Rivian R1S (and Model S) owner in Fishers, Indiana, told me. “The driving experience is really great — the vehicle has so much room and utility. We recently piled five kids and two adults into it for a road trip to Michigan. The luggage and kids stuff I got into it was nothing short of impressive.”
Hilbert noted, however, that Tesla’s software and driver-assist capabilities are more advanced and its service is available in more places across the country: “That’s a big issue for Rivian right now — service locations and availability. Many potential buyers have balked due to the lack of service centers.”
In short, Rivian has proven in the last year that they can be a company that makes cars that customers want and can get delivered to customers. What remains to be seen if it really wants to compete with Tesla is whether it can be the combined automobile, software, and services company that contemporary EV buyers expect, let alone a profitable one that investors want too.
In the meantime, Hilbert has also put in an order for a Cybertruck.
Matthew is a correspondent at Heatmap. Previously he was an economics reporter at Grid, where he covered macroeconomics and energy, and a business reporter at BuzzFeed News, where he covered finance. He has written for The New York Times, the Guardian, Barron's, and New York Magazine. Read More
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Bob Inglis was snorkeling in Australia’s Great Barrier reef in 2008 when he had what he called “an epiphany.’’
The then-Republican congressman from a very conservative district in South Carolina had scoffed at climate change throughout his two terms in the House, but his certainty had begun to give way four years earlier when his son told him, upon turning 18, that he needed to “clean up his act on the environment.’’
The comment stung. Inglis was still thinking about it in 2008 during a congressional trip to Antarctica, where he saw researchers extract ice cores that showed steadily rising levels of carbon dioxide since the Industrial Age began. His belief that climate change was a hoax began to weaken.
It was on another fact-finding trip that Inglis toured the Great Barrier Reef. Alongside the Australian oceanographer Scott Heron, he saw that the once-colorful reef was being bleached and killed by warmer, more acidic waters. It was visible proof of the destructive power of climate change.
Heron, a fellow Christian, talked about the need to save the reef and the planet with such passion, Inglis said, that “I could see that he was worshipping God in what he was showing me. My metamorphosis was complete. I decided that I was ready to act.’’
The next year, Inglis co-sponsored legislation to impose a tax on carbon emissions. That “heresy’’ did not go over well in his district, and he was crushed in the 2010 primary, 71% to 29%. (The bill, meanwhile, never made it out of committee.) “I knew that I was making the right choice,’’ he said. “It’s a choice that I’d make again.’’
His newfound commitment to addressing climate change led him to launch a nonprofit group, RepublicEn, devoted to bringing conservatives into the climate conversation. Today, Inglis tours the country, doing about 100 events a year at conservative groups such as College Republicans, Rotary Clubs, hunting and fishing clubs, and local GOP organizations.
The following interview has been edited for length and clarity.
You’ve talked about how, as a Republican congressman, you refused to accept climate change because the issue was associated with Al Gore, a Democrat. Do you think that what political scientists call “negative partisanship’’ is a major reason why conservatives still resist action on climate change?
Yes, it is. That’s why we need credible messengers who can speak the language of the tribe and who can make the tribe believe that conservative ideas can add something to this conversation. Conservatives have an undeserved inferiority complex on climate and energy. We understand the concepts of negative externalities and market distortion and accountability. Free enterprise — accountable free enterprise — can fix climate change.
You are referring to the libertarian concept of negative externalities, actions that negatively affect other people. Can you explain how it relates to carbon emissions?
When you burn fossil fuels, you’re basically dumping trash into the sky. You don’t pay a tipping fee for putting carbon waste into the atmosphere and contributing to climate change, so there is an implicit subsidy for burning these fuels and belching carbon — in fact, it’s the granddaddy of all energy subsidies.
Take that subsidy away and everything changes. Virtually all coal would be quickly replaced with natural gas and wind and solar and other methods. If you use a tax to set the real price of carbon, the free market will figure out cheaper and better ways to produce electricity. Things will start happening faster. You’ll see more development of hydrogen and better batteries that don’t use lithium to store the energy created by solar and wind. Climate change is an economic problem. Just fix the economics and innovation will happen. That’s the language of conservatism, and it’s how I talk to conservatives about it.
Why do you believe a carbon tax is the best way to bring Republicans aboard?
It is still the most obvious way to solve climate change, and the most efficient. This is an idea that goes back to Milton Friedman in the 1980s, when he said, instead of trying to regulate polluters, tax pollution. Make them pay for their negative externalities. You tax the trash they dump into the sky, just the way we impose a cost for dumping trash on land. It has to be a substantial tax, and it has to be steadily rising to increase incentives to find other forms of energy that don’t turn the sky into a dump for emissions. If you do that, you don’t need tax incentives for solar and wind — the rising cost of fossil fuels will provide all the incentives they need. But you also need to make this tax apply to other nations and the goods they import into the U.S.
How do you do that?
You can put a tax on the carbon produced in goods imported from China. Sen. Bill Cassidy [R-Louisiana] recently proposed a foreign pollution tax like the carbon border adjustment mechanism the European Union has already adopted. We very much welcome this idea because it’s a way of making the transition away from fossil fuels worldwide. Many Republicans say it’s not fair if the U.S. lowers emissions while China can do what it wants. The beauty of a foreign pollution fee is that it addresses this problem in an efficient way. It creates economic incentives for China to reduce its own emissions.
A carbon tax has been talked about for a long time but has gone nowhere in Congress. Do you see any evidence that it’s more politically palatable today?
I think a carbon tax is like the rescue of the banks after the financial crisis in 2008. Until the banks collapsed, bailing out the U.S. financial system seemed impossible. But when the consequences of not doing it became clear, the bailout went from impossible to inevitable without passing through probable.
Several catalyzing events could propel the carbon tax forward. The most likely is the momentum created by the European border adjustment mechanism, which is really a carbon tariff. Companies in the U.S. who deal with Europe are going to be calling their members of Congress and Senators and saying, wouldn’t you really rather collect that revenue for carbon emissions here at home through a carbon tax rather than sending the money to Europe? At some point, the light will go on at the U.S. Capitol — wow, the Europeans are getting a lot of revenue with a tariff on carbon, and we could do that, too. We could do that to China. We could say, the stuff you are selling here, you have to pay a carbon tariff.
Another momentum-maker is our federal debt. If interest rates stay high, interest will really start eating more and more of the federal budget. I have always said that a carbon tax should be revenue neutral, but given what’s happening to the deficit, it could also provide that revenue. Necessity may force Congress to turn to what used to seem impossible.
Could extreme weather provide another incentive?
Yes, there could be some catalyzing climate event that really focuses the mind. I don’t know what it will be. During the civil rights movement, when Americans saw segregated cities turn the police dogs and fire hoses on protestors, it really turned the tide on Jim Crow. We’ve had so much extreme weather that people are getting desensitized to it, but there still might be a catastrophic event that changes people’s priorities.
This year, we’ve already seen some of the most extreme weather and weather-related disasters in recent human history — massive wildfires that darkened skies across the country, relentless heat waves, fierce storms, and destructive flooding. Do you see evidence that this is registering with conservatives?
A lot of people won’t change their minds because of what a scientist says. But experience is different. Experience is a harsh teacher. You can’t argue with the thermometer. You can’t argue with the yardstick showing that sea is rising. You can’t argue with the water coming into your home. In 2010, when I was getting tossed out of Congress, there was a lot of aggressive disbelief in climate change. People told me, I don’t believe in climate change, and you shouldn’t, either.
Right now, it’s quite different. Conservatives say to me, sure, you can switch to clean energy here, but what difference does it make if you don’t get the rest of the world in on this? Why should we do this alone? That’s when I talk about negative externalities and a carbon tax, and imposing a carbon tariff on China and other countries. That changes their perspective.
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What do you say to The Wall Street Journal conservatives who concede that climate change is occurring but insist that it’s less disruptive and cheaper to invest in adaptation to a hotter, more extreme climate?
Adaptation is a defeatist argument. Good luck building a seawall in Miami-Dade, for example. As sea levels rise, the water there is coming up into streets through the porous bedrock under that area. In South Carolina, go to coastal areas and you’ll see the big stands of pine trees dying because of salt water intrusion. In Montana, the forests are now filled with dead and dying trees because bark beetles that used to die in the winter now survive and go on attacking the trees year-round.
Adaptation won’t work in many places where people are going to lose what they love. It won’t work in New England when maple trees no longer produce maple sap for syrup because the winters are too warm. It won’t work at ski resorts that no longer have snow. When you stop arguing and pay attention to what you’re losing, you start saying, wow, how do we fix this?
Polls show there is still a big partisan divide on climate change. Do you think that can change?
The problem is no longer a lack of information. People can see what is happening. The problem is a lack of validation, and it’s a lack of hope. We need validation from conservative leaders that climate change is obviously real, and that we obviously need to do something about it. And we need to show conservatives that the free enterprise system can provide solutions once we get the true cost of carbon right.
If you keep telling people about all the terrible things happening and that we’re all hosed, it’s depressing. It makes people say, I don’t want to work with you. But if you can come to conservatives and say, we can light the world with new energy sources, and we can have more energy and more freedom and more manufacturing and more jobs — we can have a better world if we act on this. We can have true energy independence, so we don’t need to depend on energy from authoritarian regimes who chop journalists up into pieces. I’d like to be free of those people. I’d like to able to say to the Saudis, we don’t need your oil. Why don’t you see if you can drink that stuff?
The current Republican presidential field is not validating that climate change needs to be addressed.
In the first debate Nikki Haley did say climate change is real, but immediately pivoted to talking about how China and India have to lower their emissions, too. That’s a step forward, but it’s not enough. In 2018, when Republicans lost the House, it dawned on then-Majority Leader Kevin McCarthy and some other Republicans that you can’t win suburban swing districts with a retro position on climate change. So McCarthy convened a special Republican conference on climate, and the takeaway was, we need to get with it.
Polling data shows a majority of young conservatives and young evangelicals want action on climate change, and if you want to win in 2024, 2028, and 2032, you need to have a plan that you can talk about. But then Trump decided to run again, and he’s doubling down on climate disputation, and everyone in the party is afraid of the Death Angel. Trump can’t get anyone elected, but if he comes after you, he can get you killed in a primary.
But even if Trump wins, he will be a lame duck by 2026, and then the party is going to ask, where do we go next? My prediction at that point is that Republicans will be tired of reruns of the Trump show and will want a fresh approach that can win over young voters and suburban voters. And if he loses in 2024, that’s when you’ll have the reevaluation.
You’ve said of climate change, “We’re all in this together.’’ That sounds progressive — maybe even vaguely socialistic. Does that message resonate with conservatives who are suspicious of collective action?
[Laughs.] Maybe I should examine that statement more closely. But as a person of faith, I think it is just obvious we are literally in this fight together.
I think you can summon all Americans to a higher cause. I think if we can assure conservatives, I’m not trying to cancel you, and you have ideas to contribute to this discussion about the power of economic incentives, free enterprise, and innovation. You have to make conservatives feel that they have something important to contribute.
You have to make them feel they have something to gain from the solutions. If you the United States makes a bold move on carbon taxes and tells China and other nations, you have to pay a carbon tariff on the stuff you export to us, then it becomes an international effort to curtail emissions. Then conservatives start saying, we’re really talking about realistic and fair solutions. That’s when you can say, we need to take action because we do not want to lose this amazingly beautiful planet. That’s when you can say to them, we’re really all in this together.
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