Rivian eyes subscriptions for EV trucks

ATLANTA — Rivian, the electric- truck startup that keeps attracting support from the industry establishment, is looking to offer a subscription service as part of its factory-direct retail model after it launches next year, its CEO said here last week.

Subscriptions have emerged as a new model in the luxury sector to give customers access to a range of vehicles for a monthly fee.

"We talk about inflection points, and this is one that allows us to interact in different ways with the customer," Rivian CEO RJ Scaringe said. "You may use one solution to get to and from the office during the week. But on the weekend, you may want a subscription program."

The concept has been pioneered, with mixed results, by other automakers, including Cadillac, Volvo and Mercedes-Benz. The high-end nature of its early proponents has led many to perceive the concept as a program for wealthy consumers.

"As we think about how you consume miles, 96 percent of the miles in the United States are consumed through ownership. But we see that changing," Scaringe told a private industry audience at the headquarters of one of its key new investors, Cox Automotive. "Not just on the moderate price side, but also on the premium side, on the aspirational side. And we see those worlds living together in a meaningful way."

The company plans to produce a number of electric vehicle models at its plant in Normal, Ill., and sell them directly to customers without a traditional franchised dealer network, Scaringe said.

"From a sales and retail point of view, it's a direct-sales model," Scaringe told the audience, which included auto retailers and automaker executives.

"Core for us is maintaining direct ownership of our customers, which means it's a direct-sales model. But that doesn't mean we don't have partners that are working on the back end, running and maintaining and operating that ecosystem."

Scaringe has been working on his startup since 2009, when he envisioned it being a sports car manufacturer. But he told the audience last week that he shifted gears in 2011 — even though his early employees and partners disagreed — to make Rivian a truck producer.

The venture plans to build a pickup and an SUV that will retail in the $69,000 to $72,500 range. Rivian owns the former Mitsubishi Motors Corp. factory and is refitting it to make vehicles and the battery modules that power them.

Though initially perceived by industry veterans as a fanciful business proposal, Rivian has been gaining momentum. Since February, Amazon led a $700 million investment in the venture, Ford Motor Co. put in $500 million, and Cox Automotive said this month it has taken a $350 million stake.

Also this month, Rivian said it has a deal to produce 100,000 electric delivery vans for Amazon.

But for competitive reasons, Rivian has kept its cards close to its chest as it develops business plans.

But the path to factory-direct distribution has been controversial and thorny. State franchise laws make it difficult for a manufacturer to also operate as a retailer. Tesla, an early adopter of factory-direct selling, has butted heads with state dealer associations for the past decade.

Scaringe's retail plan puts at least two of its new investors in the limelight.

Ford remains a committed advocate of its traditional franchised dealer model, while Cox Automotive is a diverse giant of products and services for franchised retailers.

It is unclear what role, if any, Ford or Cox might play in Rivian's retail plan. But Scaringe said Rivian intends to consider new approaches.

"If you look at the type of shareholders we've brought in, Amazon, Ford and Cox are all very strategic in supporting us in creating products but also in creating really sticking and powerful customer experiences," he said.

"Cox is really an impressive company in its ability to deliver on robust customer processes, whether that's service or thinking about the future of charging," he said. "There are a lot of aspects to the relationship that we're excited about."