Rivian Automotive CEO RJ Scaringe raised concerns about memory chip shortages impacting the company's R2 SUV production ramp at the Aspen Ideas Festival last weekend. Scaringe told Axios that supply chain constraints, driven by explosive AI demand for memory chips, pose the biggest risk to R2 scaling—not consumer demand. The R2, priced around $50,000 and positioned as an existential test for Rivian, began customer deliveries in June, with second-quarter delivery numbers set to be announced Thursday.
Rivian CEO Identifies Supply Chain as Primary R2 Risk
Scaringe told Axios the R2 vehicle represents an existential test for the company. "If R2 doesn't go well, the whole company is not designed properly," he said at the Aspen Ideas Festival last weekend. "Make or break sounds negative, but it's actually the plan."
According to Scaringe, demand is not the issue for the R2. "I think the biggest risk for R2 is actually on the supply side, and there's a lot of unknowns here," he reportedly said. "The whole semiconductor space is gonna be quite constrained. By far my biggest worry about ramping R2 isn't demand. It's, you know, can we get enough parts to build cars? We're quite nervous about global supply."
Memory chip supplies are tightening now because of explosive AI demand. Major tech firms, including Apple, have already raised prices to offset surging costs. "I think it is helpful for the world to see that even somebody as big and capable as Apple had to raise prices," Scaringe told Axios. "I mean, these are not like rounding error costs."
The R2, priced around $50,000 and below Rivian's R1 offerings, is expected to expand the company's total addressable market. Company executives have warned that the new SUV is expected to drive volume only to the end of the year.
Automakers Secure Long-Term Chip Supply Amid AI-Driven Shortages
The chip concerns are not limited to Rivian. General Motors and Micron Technology announced a Strategic Customer Agreement on Wednesday to lock in long-term supply of memory and storage chips for GM's next-generation vehicles. The deal covers products used in AI-powered cabin features and advanced driver-assistance systems.
Tesla is pushing ahead with its Terafab semiconductor project to meet exploding demand for advanced AI chips that existing suppliers cannot deliver fast enough. The joint venture with SpaceX and xAI, announced in March, aims to build a vertically integrated fab in Texas capable of producing logic chips, memory and advanced packaging under one roof—targeting up to one terawatt of annual AI compute for vehicles, robotaxis, and Optimus robots. "We either build the Terafab, or we don't have the chips, and we need the chips, so we build the Terafab," Elon Musk said.
RIVN Stock Falls 12% Year-to-Date Ahead of Q2 Delivery Report
Shares of Rivian were down 0.5% at the time of writing, as investors await the company's second-quarter delivery numbers slated to be announced on Thursday. RIVN stock has fallen 12% year-to-date.
On Stocktwits, retail sentiment around RIVN stock stayed within the 'bearish' territory over the past 24 hours, while message volume rose from 'low' to 'normal' levels. A Stocktwits user voiced optimism for Q2 delivery numbers being better than the first quarter's. "One thing the street loves is Under Promising, and Over Delivering. The second half of this year is going to be amazing from a fundamentals point of view, and the number one reason for increasing accumulation," they wrote.
Another user voiced hopes for the company divulging the split between R1 and R2 deliveries in its upcoming delivery report.
FAQ
What did Rivian's CEO say about R2 production risks at the Aspen Ideas Festival last weekend?
Rivian CEO RJ Scaringe told Axios at the Aspen Ideas Festival last weekend that memory chip shortages pose the biggest risk to R2 production scaling. He stated that supply chain constraints driven by AI demand for semiconductors are his primary concern, not consumer demand for the vehicle.
Why are memory chip supplies tightening for automakers?
Memory chip supplies are tightening now because of explosive AI demand. Major tech firms, including Apple, have already raised prices to offset surging costs. Scaringe noted that even large companies like Apple had to raise prices due to these cost pressures.
When will Rivian announce its second-quarter delivery numbers?
Rivian's second-quarter delivery numbers are slated to be announced on Thursday. The company started customer deliveries of the R2 in June.
