RJ Scaringe and team on opening day at Rivian's manufacturing campus in Normal, IL. Source: Rivian

It's been five years since Rivian Automotive celebrated its initial public offering with CEO and founder RJ Scaringe ringing the Nasdaq opening bell from the company's factory in Normal, Illinois, while the company's sleek vehicles sat outside the stock exchange in Times Square. It was a euphoric time for all-electric vehicle companies that has since diminished. And much like the EV hype, Rivian's stock price is down more than 80% since the Amazon -backed company debuted on the Nasdaq at $78 per share on Nov. 10, 2021. That includes a nearly 30% decline this year. A host of internal and external factors have contributed to Rivian's stock decline, but the company continues to be the most promising EV maker to emerge during the early 2020s, as most of its peer group to go public during that time no longer exists.

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Rivian founder and CEO RJ Scaringe acknowledges that not everything has gone to plan amid supply chain shortages, geopolitical tensions and slower-than-expected consumer EV adoption, but he said he believes the next year will prove to be a catalyst for the company and investors. "2027 is really an inflection year for us," Scaringe told CNBC during an exclusive interview. "I'm excited to start to really show what we believe so fully, the potential of the business."

R2 SUV

Scaringe's bullishness comes as Rivian ramps up production of its midsize R2 SUV — meant to expand the brand to the mainstream market — and as the company continues to invest in its next generation of vehicle software and autonomy. Scaringe said the R2, with an entry-level model at about $45,000, remains the core business to be able to showcase its newest technologies. Rivian delivered a record 19,248 vehicles in the third quarter of 2026, up 46% year over year, and said R2 was already its best-selling vehicle by volume, outselling both its R1 flagship products and its commercial van. "That's going to define the business. The path to profitability, the path to very significant growth in revenue is all built around R2, and then some of the variants that come following R2," Scaringe said.

Exterior of Rivian's new all-electric R2 SUV. Michael Wayland / CNBC

For the most recent period, Rivian said the automotive cost of goods sold per vehicle improved by more than $12,000 quarter over quarter, helped by a higher R2 mix and better fixed-cost leverage. Rivian also is in the midst of building a new multibillion-dollar Georgia factory that Scaringe has said is necessary to get the company to the volumes it needs to achieve net profitability. Its sole factory in Normal, Illinois, is capable of producing 215,000 vehicles annually. That includes up to 155,000 R2s alongside R1 models and electric vans. Rivian said the Georgia plant will be capable of producing up to 300,000 units annually once the initial phase construction is completed in late 2028. Of course, all of that means additional capital spending and pressure on the company to improve profits. "We've made the decision to simultaneously work towards profitability … and deeply invest in our technology, and in particular in autonomy," Scaringe said.

Profitability vs. cash burn

Rivian's operating performance is improving, but several Wall Street analysts expect the company's investment requirements to rise significantly in 2027. Rivian generated $176 million of consolidated gross profit in the third quarter, but its automotive business posted an $80 million gross loss, while its software and services unit generated $256 million of gross profit at a 42% margin.

Stock Chart Icon Stock chart icon Rivian's stock since going public on Nov. 10, 2021.

Wall Street analysts broadly agree Rivian's R2 launch is showing encouraging early demand and lowering manufacturing costs, but they're concerned about whether that can offset rising autonomy spending, the Georgia factory buildout and continued cash burn. "Funding has long been a key debate for Rivian investors," Deutsche Bank analyst Edison Yu said in an Oct. 30 investor note after the company reported quarterly results that exceeded Wall Street's expectations. "The notion of a multi-year (even if credible) path to cash flow breakeven will be less attractive to investors." Rivian said during its late October earnings call that its total available future liquidity is expected to be about $13 billion when factoring in available credit and money from partnerships with Volkswagen and Uber as well as a $4.5 billion U.S. Department of Energy loan for the Georgia plant. Rivian said its cash, cash equivalents and short-term investments balance was $5.5 billion to end the third quarter. The company may still need to raise more capital. Scaringe said Rivian plans to be "opportunistic" about any additional capital raises, which have previously included equity deals with Volkswagen and Uber. "As we think about the environment looking out, we want to continue to position ourselves to be in a place to invest in the technology. And so that means we'll be opportunistic as it pertains to capital. But I want to be clear: We're like very focused on getting the profitability," Scaringe said.

Autonomy

The company has significantly upgraded the software capabilities and hardware on its vehicles to prepare them for autonomy technologies, or physical artificial intelligence, as Scaringe calls it. The next step in that is releasing "point-to-point" driving capabilities, in which the vehicles can drive on their own from destination to destination with the driver acting as a monitor in case of any unexpected problems.

A motherboard from one of Rivian's all-electric vehicles. Michael Wayland / CNBC

U.S. EV leader Tesla is the only automaker to currently offer those features on its vehicles. Scaringe said Rivian plans to not only catch up to Tesla's capabilities but exceed them as it uses multiple sensor types to allow the vehicle to "see" better, especially in inclement weather. "That's not like the finish line. ... Think of it as like the starting point where you suddenly have a more apples to apples comparison between Rivian and Tesla," Scaringe said. The release of point-to-point over the coming weeks and months, first to employees and then to customers, is expected to be followed by autonomous vehicles with Uber by 2028. Scaringe said he believes such technologies will become a differentiator for the company in the coming years. "I think it will go from a purchase consideration for maybe 10% of the buying public that's in the top five things considered in making a purchase decision to the No. 1 or No. 2 purchase consideration for the vast majority of buyers," Scaringe said.

A Rivian R1T electric pickup truck during the company's IPO outside the Nasdaq MarketSite in New York, on Wednesday, Nov. 10, 2021. Bing Guan | Bloomberg | Getty Images