In a 2006 blog post titled “The Secret Tesla Motors Master Plan.”, Elon Musk set out Tesla’s strategy for success, and it broke down into three steps.
- Build a sports car
- Use those proceeds to build an affordable car
- Use that money to build an even more affordable car
The company took that route step by step. The Roadster came out in 2008, arriving at about $100,000. The Model S appeared next in 2012, landing close to $60,000. Then the Model 3 made its debut in 2017, showing up at just $35,000.
The question now concerns whether Rivian or Lucid can duplicate it. Both are manufacturers of electric vehicles. One appears to be the next Tesla.
The Two New SUVs
This year saw both Rivian and Lucid roll out fresh models, and the contrasts between the two are notable.
The Gravity SUV from Lucid is a luxury model, and its base price sits close to $126,000. When taxes, fees, and options are added on top, the total cost can quickly rise past $150,000. This is not a car that will help Lucid build mass scale.
Rivian’s R2 SUV debuted with an opening price point around $45,000, while pricier variants of the model approach $60,000. Given that roughly 69% of Americans are aiming to spend under $50,000 on their next car purchase, Rivian has at least a shot at reaching large-scale sales.
What the Numbers Show
Tesla’s market capitalization currently hovers around $1.2 trillion. Rivian is valued at just $23 billion. Lucid’s market cap recently fell below $2 billion.
Tesla rose by beginning small and then moving down. Rivian, in contrast, has started closer to where Tesla began. The comparison is not fair to Rivian, but the pattern is visible.
The Road Ahead
Self-driving technology and robotaxis make up Tesla’s current lineup of opportunities. The company was able to chase those pursuits only after it had built up enough manufacturing capacity to produce affordable cars.
From that perspective, Rivian is arguably well ahead of Lucid. Rivian’s R2 is priced for mass sales. Lucid’s Gravity is priced for luxury buyers.
The Missing Piece
The entire case depends upon retail shelf prices. It fails to consider a key fact: neither firm is turning a profit.
Both Rivian and Lucid have been losing money for years. The former has not yet shown the kind of sustained growth that Tesla achieved once the Model 3 hit. Lucid, meanwhile, has struggled with production.
The asking price for the R2 shows what Rivian is aiming to sell. That figure says nothing about whether Rivian can actually deliver on it.
The Case for Rivian
What backs up the argument that Rivian could become the next Tesla is cost. The R2 carries a base price of $45,000, and Rivian has announced that it will roll out two additional models, the R3 and R3X, each with an even lower starting point.
Tesla took that route: start cheap, move down, build scale. Now Rivian is following the same course.
The Case Against Rivian
For years, Rivian has lost money, and that is the whole case against it. Its current valuation of $23 billion remains unchanged.
Lucid’s market cap fell below $2 billion. The company has struggled with production.
Neither firm has demonstrated the consistent expansion Tesla displayed after the Model 3 became a hit.
The Verdict
Rivian’s R2 is priced for mass sales. Lucid’s Gravity is priced for luxury buyers. The former fits the Tesla model better.
Profitability isn’t the same thing as pricing, and both companies have had trouble making money: Rivian has lost money for years, while Lucid has struggled with production.
The vehicle that follows Tesla must achieve two things simultaneously: produce cars that consumers desire and manufacture them while turning a profit. Rivian possesses the pricing. Its ability to deliver on that promise remains an open question.
On paper, Rivian reads like a company built to be the next Tesla. Its record so far has not yet backed up that promise.
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