With the R2 SUV Officially Here, Is Rivian Stock a Buy?

Rivian (RIVN +3.13%) recently revealed its much-anticipated R2 SUV platform, setting up the company for its next leg of growth. The company has made strong inroads into the luxury electric vehicle (EV) SUV market with its R1 SUV, which, in some trims, can cost upwards of $100,000. That’s obviously a somewhat limited market, and so with its cheaper R2 vehicles, it is looking to broaden its reach.

The company will start selling its R2 performance all-wheel drive (AWD) model with its launch package this spring at a cost of $57,990. Its $45,000 rear-wheel drive (RWD) base model will come out in late 2027. Rivian will also offer a premium AWD drive version for $53,990 and a long-range standard RWD for $48,490.

The R2 has thus far gotten rave reviews from the media; however, investors seem a little disappointed that its cheaper base model is still further off. The company has long been hyping a $45,000 starting price for the R2, despite the significant tariff headwinds that have popped up in the interim. Rivian also won’t have the luxury of the $7,500 federal EV credit, which went away last fall. However, it is still expecting big sales this year.

Last month, Rivian projected it would deliver between 62,000 and 67,000 vehicles this year, up from 42,247 vehicles in 2025 and 51,579 in 2024. That would be solid growth with less than half a year of R2 production and sets the company up for strong growth in 2027 as well, as it introduces new trims.

Importantly, the company expects the R2 to not only expand its reach but also to be gross margin accretive. Like many EV makers, Rivian has struggled to make an EV at a cost less than it can sell it. However, it was able to completely overhaul the internal design of its R1 and implement what it calls a zonal electrical architecture to reduce costs, along with improving its manufacturing process. That, along with strong software sales, has helped the company become gross-margin positive.

Image source: The Motley Fool.

Rivian will use that same zonal architecture in its R2 SUVs, and will have the added benefit of spreading fixed costs across much higher expected vehicle volumes. As R2 production and sales ramp up over the next few years, this should help lead to higher gross margins and eventually put the company on the road to profitability and free cash flow.

The stock is still speculative as execution risk remains and the company carries a fair amount of debt. But it is well positioned given its backing from Volkswagen and Amazon, which are both shareholders. As such, investors can use the recent pullback to start a small speculative position in the stock.