Is It Time to Buy Rivian Stock as R2 Deliveries Begin?

One of the big catalysts for Rivian (NASDAQ: RIVN) this year was the launch of its smaller R2 electric SUV. However, with the company beginning deliveries, the stock has pulled back after a nice spring rally.

The first version of the R2 will come with its Performance with Launch Package and be priced starting at $57,990. It will be followed later this year with the R2 Premium trim, priced at $53,900, and the R2 Standard Long Range trim, starting at $48,490, in early 2027. Finally, its much-anticipated base version will arrive in the summer of 2027, starting at $44,990.

Thus far, the R2 has gotten some pretty rave reviews from automobile publications. Ars Technica said the R2 "changes the electric vehicle (EV) game" and that it's superior to the Tesla Model Y. Electrek added that the vehicle offered everything people need to upgrade from the Model Y. Inside EV author Mack Hogan, meanwhile, said that "the R2 is the do-everything machine I've always dreamed of."

Is the stock a buy?

The R2 is not just simply another new model for Rivian. It is the company's venture into the much broader mid-luxury market, which offers a much larger revenue opportunity. By being able to sell a lot more vehicles, it also spreads its fixed costs over a significantly larger number of units, which will help it vastly improve its gross margins.

While it will take time, a successful launch of the R2 is an important step in the company ultimately becoming profitable and generating free cash flow. Rivian has already done a great job of lowering production costs through better sourcing, manufacturing efficiencies, and, most importantly, developing a zonal architecture that greatly reduces the number of expensive electronic control units (ECUs) and wiring that go into its SUVs.

Image source: The Motley Fool.

At the same time, the company is aggressively pursuing autonomous-driving software, which brings high gross margins with it. The company has been making nice progress in this area through a joint venture with Volkswagen, and it plans to offer point-to-point driving capabilities by the end of 2026. Its software is also scheduled to be included in Uber Technologies' robotaxi pilots with safety drivers in Miami and San Francisco later this year, and it is looking to reach full autonomy by 2028.

While Rivian is still a speculative play, the company continues to move in the right direction and is backed by some market heavyweights, including Volkswagen and Amazon. That makes it worth adding a small position on this recent dip.

Geoffrey Seiler has positions in Amazon. The Motley Fool has positions in and recommends Amazon, Tesla, and Uber Technologies. The Motley Fool has a disclosure policy.