Step aside Tesla, as Luxury EV startup Rivian readies itself to start production of the fully-electric and semi-autonomous versions of typically gas-guzzling SUVs and pickups in 2020.

In November 2018, Michigan-based Rivian unveiled its gas-free five passenger pickup truck (dubbed R1T) at the the Los Angeles Auto Show. Starting at $61,500, its price is comparable to that of high-end trucks in the market. And the world also got a first look at Rivian’s seven seater drivable concept SUV (dubbed R1S), the very next day, which has a base price of $72,500.

Now available for preorder, both vehicles come fitted with highly futuristic interiors, cloud-based digital architecture, ‘Level 3’ autonomy hardware (eyes off, hands off), long-range of up to 450 miles, and upto 640-km electric range. The battery-electric cars also come with off road capabilities that are expected to exceed that of the Jeep and Land Rover apart from ‘enough torque to get from zero to 96 km/h in 3 seconds’.

The high-end version of both self-driving vehicles will be rolled out first (R1T in 2020 and R1S in 2021), featuring a 180 kilowatt-hour capacity battery pack that can travel 410 miles on a single charge. A 135-kWh unit model delivering 480 kilometres of range will also be available at launch. In comparison, Tesla’s much touted Model 3 sedan can deliver just 310 miles per charge. Production of Rivian’s base models, of 105 kWh-battery (250 miles on one charge), is expected to follow in 2021.

With this preview, Rivian has gotten a headstart over Tesla which, back in April 2017, announced that it will have a an electric pickup truck ready within 18-24 months. So far, this deadline is yet to be met, while Rivian has whizzed ahead in the race. This is particularly interesting as Scaringe, a self-proclaimed car buff, notes that his startup’s beginnings were heavily inspired by Tesla’s offerings.

The Origin Story of Rivian

In 2009, Scaringe set up Mainstream Motors in Florida – with the intent of developing an industry-leading low-cost and efficient vehicle – frustrated by a lack of environmentally sustainable options in the market.

But the timing couldn’t have been more off. “General Motors and Chrysler had gone bankrupt and no one knew what Tesla was doing,” said the MIT alumni.

Eventually, the startup was renamed Avera Motors in 2010 but that too didn’t stick for long. Partly to evade an expensive trademark infringement lawsuit from Hyundai over the use of the name Avera (that allegedly sounded very similar to the South Korean automotive company’s Azera nameplate), it was finally renamed Rivian in March 2011. This happened alongside the relocation of its corporate headquarters to Livonia (Michigan) that improved the company’s proximity to suppliers.

Around this time, he also decided to change track a bit a build an electric sports car, like the one Tesla was working on. Towards this cause, Scaringe ended-up raising some funds, with which a 20-person team was assembled and a prototype built.

But by then, the electric vehicle industry had matured, adding more options and ideas for the fledgling startup to explore. In an interview with The Verge, Scaringe said, “[I could] take the small amount of capital I had left and continue developing that product, or accept that we need to rethink the product strategy, [and] how we were financing the business.”

Clearly, he chose the latter. This business pivot made absolute sense at a time when none of the other OEMs were focused on creating an adventure-oriented vehicle that combined performance, utility and capability. Scaringe also recognized that one of the best ways to reduce vehicular carbon emission is by electrifying trucks and large format SUVs. So, by the end of 2011, Rivian shifted focus on to building electric pickup trucks and SUV that could better support latest technologies.

Speaking about the vehicles’ superior specs Scaringe said to Fox News, “We wanted to make sure we deliver something that’s exceptional on road, exceptional off road, and at the same time doing those performance elements, still very usable. So it can fit your family, your kids, your gear, your stuff very easily in the vehicle.”

Soon after, it entered a stealth mode, to avoid making commitments that they may not make good on. Even the much advertised Tesla (and most other automakers) have missed several deadlines, demonstrating the  difficulty of scaling up production of electric vehicles. So, the company that employs 450+ people, across its facilities in San Francisco, California and Illinois, decided to stay tight lipped about its functioning for 6+ years.

Finally in January 2017, Rivian broke its silence with the acquisition of the former Mitsubishi Plant in Normal, Illinois for $16M. This plant is being readied and modified for production of Rivian’s SUVs and pickups. The startup also plans to manufacture its own battery packs at the same facility. The purchase was a well calculated move on Rivian’s part, being financially more prudent than spending millions on building and setting up a new factory from scratch. The deal also came with a sizeable grant from state government, $50M in subsidies (income tax credits or property tax waivers) linked to investment and job creation at the plant.

Silicon Valley-based electric car startup SF Motors and Tesla, much like Rivian, also own former automotive assembly plants.

From Spending to Making Money

In the short run, the company hopes to produce 50,000 cars annually at the plant in Normal, IL. Over 1,000 employees will be hired in the Twin Cities to make this goal a reality.

But by 2020s, it hopes to add new models that will increase the production numbers to hundreds of thousands. For this reason, Scaringe believes that they will need to invest more than $40M into the plant by 2022.

So far, Rivian has raised $500M in funds from the likes of Sumitomo Corporation of America and the investment arm of Middle Eastern conglomerate Abdul Latif Jamee. Latest of the lot being the $200M of debt financing from Standard Chartered Bank.

But clearly, Rivian’s aim of becoming a full-scale EV automaker is a capital burning initiative. And if Morningstar analyst David Whiston is to be believed, Rivian’s $500 million in investor capital is “nothing,”, especially without the marketing prowess of someone like Elon Musk.

Though Tesla is the only that has achieved full scale production, it has had to face 6Bn+ in losses (since its inception) and what Musk calls “production hell,”. Then there is the matter of competition from Chinese players and other US-based automakers such as Audi, BMW, Mercedes, Porsche, Jaguar-Land Rover, Ford who intend to explore the new market opportunity within the next few years. According to the Wall Street Journal these traditional car companies have invested $70Bn in electric-vehicle technology since early 2017.

Truck maker Workhorse Group Inc is working towards an electric pickup (for commercial use), while Bollinger Motors is focussed on an electric SUV – both expect to start production by 2019.

Uber Technologies and Waymo, being developers of self-driving systems, could also crop up us potential competitors in the near future.

While all these players are planning ahead, anticipating future demand, currently the consumer appetite for EVs is limited according to Jeremy Michalek, professor at Carnegie Mellon and director of its Vehicle Electrification Group. Only 0.6 percent of the 17.2 million light vehicles sold in the U.S. in 2017 were battery-electric and by mid-2020s pure battery power will account for just 7 to 8 percent of global automotive sales according to Moody’s analytics.

Therefore, much like any other electric automobile company, Rivian (according to Scaringe) too is looking for a full-scale disruption of the automotive industry to survive. The need of the hour is a  strong push that will convert consumer interest into demand.

Futuristic View of Mobility with Rivian

With the 2020 launch target looming over the horizon, Rivian is working towards building demand for its luxury off-road trucks, setting up a dealership network, and earning consumer trust.

To enter international markets such as in Europe and China, Rivian is looking at building its “next platform”, according to a report in The Verge, of smaller format SUV. The target is to reach 100 sales markets within 6-7 years of launch.

Since Rivian vehicle’s chassis (body frame) can be easily modified to fit vehicles in different segments, it is also considering lending the design to other automakers. It also recently revealed its strategy to share its technology with other companies (even those that manufacture jet skies and snowmobiles) to earn extra revenue.

But beyond all this, it has crafted a unique vision for the world where consumers get to use a Rivian vehicle regularly without having to own it. Scrainge believes that car ownership is expensive and has at many occasions espoused his futuristic views on mobility and car ownership. Much like what peer-to-peer startups such as Uber have achieved, all users would need to do is request for a self-driving Rivian vehicles (with the click of an app) and it would come pick them up for their journey!

“For me the really exciting part of that is what it can do to the economics of mobility,” said Scaringe to GLT. “The cost per mile (for user) can drop significantly. Your own mobility will go from a dollar a mile, 90 cents a mile to 15 -20 cents per mile.”

Additionally, he sees a future where owners of Rivian vehicles could ‘employ’ their own cars, when not being used, as taxis (sans drivers) to generate revenue.

“Our second set of vehicles … is designed for pure mobility-as-a-service. You press a button on your phone, and a vehicle shows up. Of course, the vehicle is driving itself, and of course you don’t own the vehicle. You’re paying for that service on a variable basis,” Scaringe said. Such a scenario is hoped to ultimately reduce the number of cars on the road and in turn carbon emissions.

“That’s something we see happening in the post-2020 environment…We’ve designed our organization to facilitate a lot of that transformation,” he added.