Rivian founder and CEO RJ Scaringe sat down with more than a dozen auto reporters for a lengthy Q&A session during the R2 launch drive event. What follows are his comments on a few topics, each of which bears on the R2’s prospects. They have been edited for clarity and length.
On zonal architecture and the VW deal
RJ Scaringe: Outside of Tesla and Rivian, Western manufacturers do not have software-defined architectures. They have not moved into even zonal ECU consolidation. When you start to think beyond software-defined vehicles, into AI-defined vehicles, there’s a very significant gap I think the vast majority of Western manufacturers have a real challenge with.
Outside of Tesla and Rivian, Western manufacturers do not have software-defined architectures. They have not moved into even zonal ECU consolidation.
It was precisely that which led to the very large partnership we have with Volkswagen. It’s a $5.8-billion deal that essentially takes our zonal ECUs and associated base-level OS, and deploys that across a wide variety of form factors, price points, and of course brands within the Volkswagen portfolio. We’ve been pretty open on saying we think of that as the first of what we hope are many deals like that.
On Chinese carmakers’ technology
Scaringe: We’re very bullish on our technology, so I look at the Chinese makers from two angles. One is from a technical point of view, for similar reasons to why Rivian as a company is built very differently. If you designed a car company today, the talent profiles, the location of where you build, the teams, would all look very different than if you had designed a car company going back half a century, maybe more. You would end up with a very different topology of electronics and software—and that’s a big structural advantage, relative to the classic Tier One-dependent distributed systems that have 75 to 125 ECUs in a car.
There are only a couple of companies in China that actually have done that. A lot of them have just copied what’s in the West. A handful—call it maybe five companies—are very technically advanced. I am personally super-familiar with the architecture of Xiaopeng and others, which are among the most advanced in China. I can happily say that our architecture is more advanced, and there are a lot of concepts that we’ve been able to take from a first-principles standpoint that are actually ahead of the Chinese cars. That really makes us extremely bullish on how we see things in the future in the United States, because of the same trend that is happening in China—cars are becoming more and more electric.
On Chinese carmakers’ cost structures
The Chinese cost of labor is about one seventh what it is the US, and the cost of capital is free, or better than free, meaning zero-percent-interest loans from the government—or in many cases, grants.
Scaringe: All the Chinese companies have a second element, which is a very low cost structure. For that, there’s no magic fairy dust. The Chinese cost of labor is about one seventh what it is the US, and the cost of capital is free, or better than free, meaning zero-percent-interest loans from the government—or in many cases, grants from the government to build plants. We don’t have that. In the West, there’s not free capital to build production capacity. So the compounding effects of that across the tiered supply chain, all the way up to the OEM, have resulted in cost structures for the Chinese that are just unattainable with Western labor and capital cost structures. And that’s why I think you’ll see tariffs in many countries, to try to bring some equilibrium to that.
On future owner expectations
Scaringe: What I think is going to happen over the next five years: Consumers increasingly are just going to expect things to know stuff. For instance, you’ll be frustrated when, if a service technician calls and says, “I’d like to have your car serviced,” and you’re like, “Wait, I’m in Europe, how do you not know that? That’s so frustrating that you don’t know that.”
All the other services in your life are going to start to know all these rich, contextual things. So, in 2030, if a service tech asks, “Is the car making a clicking noise?” you’ll respond, “Why are you asking me that? Why don’t you ask the car?” We think that that’s going to become much more part of the expectation. It won’t be a binary step change—it’ll just be this gradual growing expectation. I think you’re going to have your car know everything, how it’s been used, and a good idea of how you’re going to use it. To the degree you want it to know those things, anyway, and to the degree you open up access to your calendar. But I think that’s just going to become more and more the way things work.
On the lack of “compelling” electric vehicles
Scaringe: I really disagree with the idea that customers don’t want EVs. And I have an existence proof that supports my hypothesis: I think we have an extreme lack of choice in highly compelling products. And when I say highly compelling, I don’t mean mediocre. I don’t mean good enough. I mean something that you’re actually really excited to get into.
“I think we have an extreme lack of choice in highly compelling products.
The existence proof is there’s a car that launched in 2016, and a sibling car that launched in 2019, the Tesla Model 3 and Model Y, that are selling around half a million a year. They represent close to 60% of the EV market share in the US. And they’re great cars. They’re highly compelling. That’s a big enough number, they’re selling enough volume, that this is not just Tesla fanboys. This is regular people—families, college students, retirees, regular people, Uber drivers—everybody is buying these, and it’s not as if they’ve just launched—they’ve been on the market for a while. So the existence proof we see is that there’s really one example of a highly compelling set of vehicles: the Model 3 and Model Y. Great tech, great dynamics, nice packaging, the right price point, great range.
So it’s not at all surprising that, if you’re running a large car company, and you’ve just spent $20 billion launching a bunch of mediocre products that haven’t done particularly well in the market, you wouldn’t say, “Oh, well, we just whiffed it. We just launched a bunch of products that are dogs.” Of course, you’re gonna say, “The market doesn’t want EVs.” You can sort of see why they would. We think the market is very hungry for EVs. I should say it differently: We think the market is very hungry for great cars, and the fact that they’re EVs is secondary.
