Originally published in February 2024
Recently, a marketing colleague looking to enter into BEV ownership, raised a discussion of the strongest brands in the EV sector. Consistently, Tesla was mentioned as top of mind. Not surprising. After all, while Tesla didn’t invent the sector, it did proliferate it. And, while not all responsible for proliferating a sector have the same fate (memories of BlackBerry), today Tesla is revered as a pioneer and an agent/catalyst to making sustainable movement accessible to the masses (even despite its current struggles).
Other brands identified were ICE-turned-EV brands whose equity and positioning were hinged on longstanding ICE histories. Toyota, Cadillac, Audi, and Hyundai were all mentioned. Sensing that the ‘non-Tesla, BEV-only’ brands were not getting the time of day, the assertion is that Rivian is one of the most saliently-positioned brands in the sector. For those newer to EVs, Rivian is a BEV-only manufacturer that has three current market entries: the R1T Pickup, the R1S SUV (full-size) mostly for the consumer segment and the EDV (500 and 700 trims) commercial van. It was founded in 2009 and is headquartered just south of Los Angeles.
Furthermore, from a meaningfulness perspective, the Rivian brand could go neck-and-neck with Tesla, and the ICE-turned-EV brands. The reasoning was simple: Rivian knows who it is – a ruggedness and luxury BEV play for (1) adventurers, (2) stewards of the the natural environment or (3) both.
But how durable is this positioning long-term with imminent pressures of profitability and mass production? This is not a challenge unique to Rivian but to all new EV manufacturers, especially the independent ones. In fact, even those with strong ICE brands supporting them are facing these pressures (as recently as Q2, Ford, Toyota and GM all had several months of EV inventory sitting on dealer lots). After all, when a sector is post-emergence and on the cusp of embedding itself with the masses, often quarterly targets and financial stakeholder appeasement trump staying true to the brand. And with T. Rowe Price, Cox Automotive, and Amazon among Rivian’s ownership group, the financial pressures on Rivian will only grow.
That said, Rivian is in a strong place to own its positioning for the long-term. Here are six reasons why:
- The deep roots of Rivian’s positioning begin with its founder, RJ Scaringe.
Scaringe fell in love love with cars and ‘things that move’ early in life. Determined to build his own brand of automobile, prior to founding Rivian, he shifted his focus to EVs disheartened by how ICE vehicles were harmful to the environment. This commitment to the natural world and his philosophy of ‘adventure is life’ has permeated the culture and brand of Rivian since its inception. Whether Steve Jobs’ focus on design and simplicity for Apple, or even Elon Musk’s focus of creating an EV for the masses, brands that endure long-term can often trace their roots back to their founders or early executives.
- The timing of Rivian establishing and owning this position.
In the ICE sector, it is difficult and time consuming to alter brand positioning/perceptions because of the 100+ year maturity of the industry and therefore, the number of competitors jockeying for the consumer’s attention. There is simply less white space to own at all, much less to own quickly. It took Hyundai years to overcome its quality deficiencies and price-based perceptions to be treated closer to par with Honda and Toyota. This was in large part because the longstanding positioning that Toyota especially owned as a paragon of quality (with its kaizen philosophy). The same can be said of Honda in the context of its engines.
Rivian didn’t have as high a mountain to climb in the BEV category. Because for years, there were fewer entrants in BEVs, while Tesla was doing the heavy lifting to ‘build the road’ for the sector. During this time, there was white space in the BEV category to be had. And Rivian not only found its white space, it declared it and then it gradually chipped away at owning it for over a decade by the time its first vehicles hit the market in 2021. And today, while Rivian has formidable competition (among others, R1T with the Cybertruck and F-150 Lightning and the R1S with Audi’s e- tron and MB EQS SUV), the uniqueness of the brand (among other things) allows Rivian to hold its own against them.
- Enduring brands put their money where their mouth is.
And Rivian is doing that. On the environmental stewardship side, look no further than (1) its support for protecting public lands through Mobilizing for Monuments in the US Southwest, or its (2) support for the Blackfeet Nation to maintain the cultural and environmentally-protective impact of buffalo on its grasslands. And by doing these things and being proactive and vocal about doing them, Rivian puts itself top-of-mind as a credible player in the stewardship positioning.
On the BEV-for-the-adventurer side, Rivian is also stepping up. Case in point: (1) its participation in and victory in the Rebelle Rally (America’s longest offroad race), where it was the first EV to ever win, (2) its support of gathering and publishing a community of adventure-stories from its consumers around the US.
- To be relevant in the long-term, you have to weather the short-term.
And Rivian’s is doing that too. With EV sales declining across the board in Q3, Rivian’s units delivered increased by 23% in Q3 vs Q2 and it appears on track to deliver its 52,000 target by year end. Amazon’s 100,000 unit order of the EDV (by 2030) also provides consistent cash flow to manage some of Rivian’s short-to-medium term financial pressures. So, while the sector struggles, Rivian is moving forward.
Further, in the short-term, Rivian’s positioning strategy somewhat insulates it from price increases in the pick- up/SUV category, which were recently ignited by the Cybertruck’s announced 50% above-estimate price point. In targeting adventurers and environmental enthusiasts, particularly those that are among the Innovator and Early Adopter category, Rivian has targeted a high- income demographic that has less price-sensitivity than other targets. This doesn’t mean that Rivian is immune to future sales declines, especially in tough economic conditions, but it does mean that it is slightly less vulnerable (at least in the short-term, than for example Tesla and Ford) because of its premium positioning and pricing strategy.
- Rivian’s positioning may currently target a higher income, special interest demographic but it is naturally extendible and aspirational to the masses.
By owning stewardship for the natural environment, Rivian generates strong loyalty among the Innovator and Early Adopter segment. However, given that 61% of Americans believe that global climate change is affecting their community a great deal or some, it is also capitalizing on a rampant environmental sensitivity, or at least awareness, that lives among the Early Majority, if not the masses beyond that.
Part of Rivian’s positioning being extendible comes from the reality that it is also aspirational. Rivian’s positioning plays well in Maslow’s higher order emotional needs for exhilaration/esteem (as an adventurer) and self actualization (for the environmental steward). As people, we all aspire to be greater than we are and perhaps see ourselves as more of an adventurer/steward than we actually are. And as people, we often revere and even buy products (especially status symbols such as our cars) that support this aspiration. By boldly and vocally appealing to these aspects of human esteem and self actualization, Rivian’s aspirational positioning enables it to have a mass appeal. And that’s a good thing long-term.
- The fact that this aspirational appeal is backed by reality – given demographic trends favour both the adventurer and the environmental steward.
On the adventurer side, according to the Outdoor Industry Association, outdoor participation in the US increased 2.3% in 2022 versus 2021 and has grown year-over-year since 2018. Within this growth, 80% of outdoor activity categories grew in participation in 2022; this includes adventurer-friendly activities such as camping, hiking and fishing.
On the environmental steward side, Pew Research reports that 67% of Americans want the US to prioritize developing alternative energy (e.g. wind, solar) while 69% favour the US’ move towards carbon neutrality by 2050.
Both these trends will keep Rivian relevant for the long- term. Add to this the imminent launch of a more financially- friendly R2S SUV (circa 2026), and you begin to see how Rivian can not only survive, but actually thrive in the long- term.
As with any independent EV entrant not run by Elon Musk, Rivian’s long-term future, while promising, is not guaranteed. It still needs to cross into profitability. Because it’s no longer a well-kept secret, competitive pressures will only grow, including from the formidable Jeep that currently has PHEV entries with BEV entries imminent. And it has to navigate the inevitable operational, and therefore cultural, challenges that come with scaled production (including the balance between forecasting, production and inventory management). However, from a brand positioning and salience standpoint, Rivian has done right by itself to endure for the long-term.
