Rivian CEO: 2027 will be a “year of inflection” with the rise of R2 and autonomy

It’s been five years since Rivian Automobile celebrated its IPO with CEO and founder RJ Scaringe ringing the Nasdaq opening bell from the company’s factory in Normal, Illinois, while the company’s sleek vehicles sat outside the stock exchange in Times Square.

It was a euphoric time for all-electric vehicle makers, but it has since diminished. And just like the electric vehicle hype, Rivian’s stock price has fallen more than 80% since Amazon-The backed company debuted on the Nasdaq at $78 per share on November 10, 2021. This includes a nearly 30% decline this year.

A host of internal and external factors have contributed to Rivian’s stock decline, but the company continues to be the most promising electric vehicle maker in the early 2020s as most of its peers that went public during that time no longer exist.

Rivian founder and CEO RJ Scaringe acknowledges that not everything has gone as planned amid supply chain shortages, geopolitical tensions and slower-than-expected consumer adoption of electric vehicles, but he said he believes the next year will prove to be a catalyst for the company and investors.

“2027 is really an inflection year for us,” Scaringe told CNBC in an exclusive interview. “I’m excited to start really showing what we fully believe in, the potential of the company.”

Scaringe’s optimism comes as Rivian ramps up production of its R2 midsize SUV — intended to expand the brand into the mainstream market — and as the company continues to invest in its next generation of vehicle software and autonomy.

Scaringe said the R2, with an entry-level model at around $45,000, remains the core business for being able to showcase its latest technologies. Rivian delivered a record 19,248 vehicles in the third quarter of 2026, up 46% year-over-year, and said the R2 was already its best-selling vehicle by volume, outpacing both its flagship R1 and commercial van.

“It’s going to define the business. The path to profitability, the path to very significant revenue growth are all built around R2 and then some of the variations that follow R2,” Scaringe said.

For the most recent period, Rivian said automotive cost of goods sold per vehicle improved by more than $12,000 quarter-over-quarter, helped by higher R2 mix and better fixed cost leverage.

Rivian is also building a new multibillion-dollar factory in Georgia, which Scaringe says is necessary for the company to achieve the volumes it needs to reach net profitability.

Its sole plant in Normal, Illinois, is capable of producing 215,000 vehicles per year. This includes up to R155,000 alongside R1 models and electric vans. Rivian said the Georgia factory will be capable of producing up to 300,000 units per year once the initial construction phase is completed in late 2028.

Of course, all this means additional capital expenditures and pressure on the company to improve profits.

“We made the decision to simultaneously work toward profitability…and invest deeply in our technology, and particularly in autonomy,” Scaringe said.

Rivian’s operating performance is improving, but several Wall Street analysts expect the company’s investment needs to significantly increase in 2027.

Rivian generated $176 million in consolidated gross profit in the third quarter, but its automotive business posted a gross loss of $80 million, while its software and services unit generated $256 million in gross profit with a margin of 42%.

Wall Street analysts largely agree that Rivian’s R2 launch shows encouraging early demand and lower manufacturing costs, but they question whether that can offset rising autonomy spending, factory construction in Georgia and continued cash burn.

“Funding has long been a key debate for Rivian investors,” Edison Yu, an analyst at Deutsche Bank, said in an Oct. 30 investor note after the company reported quarterly results that beat Wall Street expectations. “The idea of ​​a multi-year (even if credible) path to cash flow breakeven will be less attractive to investors.”

Rivian said on its conference call in late October that its total future available liquidity is expected to be around $13 billion when taking into account available credit and money from partnerships with Volkswagen and Uber as well as a $4.5 billion loan from the U.S. Department of Energy for the Georgia plant.

Rivian said its balance of cash, cash equivalents and short-term investments stood at $5.5 billion at the end of the third quarter.

The company may still need to raise more capital. Scaringe said Rivian plans to be “opportunistic” about any additional capital raises, which previously included equity deals with Volkswagen and Uber.

“As we think about the environment, we want to continue to position ourselves to be able to invest in technology. So that means we will be opportunistic when it comes to capital. But I want to be clear: we are very focused on achieving profitability,” Scaringe said.

The company has significantly improved the software and hardware capabilities of its vehicles to prepare them for autonomy technologies, or physical artificial intelligence, as Scaringe calls it.

The next step is to unlock “point-to-point” driving capabilities, in which vehicles can drive from one destination to another on their own, with the driver acting as a monitor in case of unexpected problems.

American leader in electric vehicles Tesla is the only automaker to currently offer these features on its vehicles. Scaringe said Rivian plans to not only catch up to Tesla’s capabilities, but surpass them by using multiple types of sensors to allow the vehicle to “see” better, especially in bad weather.

“It’s not like the finish line. … Think of it as the starting point where you suddenly have a comparison between Rivian and Tesla,” Scaringe said.

The diffusion of point-to-point in the weeks and months to come, first among employees then among customers, should be followed by autonomous vehicles with Uber by 2028.

Scaringe said he believes these technologies will become a differentiator for the company in the years to come.

“I think it will go from being a purchasing consideration for maybe 10% of the buying public that is among the top five things considered when making a purchasing decision to being the No. 1 or No. 2 purchasing consideration for the vast majority of buyers,” Scaringe said.

Rivian plans to offer more details on its AI and autonomy plans at a second annual technology event for investors on December 9.

“We view this as a likely positive catalyst as the event could pave the way for AV features, leading to additional vehicle demand and higher (software) revenues in 2027, building on 2026 growth,” Itay Michaeli, an analyst at TD Cowen, said in a note to investors last week.

Rivian’s stock is currently rated overweight with a price target of $17.70, according to analyst estimates compiled by FactSet. That would represent an increase of about 26% from its closing price on Monday, but still a long way from its IPO.