Rivian has commenced production of its smaller R2 SUV, marking a significant step for the electric vehicle manufacturer as it seeks to expand its market reach with a more affordable model. The company announced on Wednesday that customer deliveries are expected to begin later this spring.

The introduction of the R2 SUV represents a strategic move for Rivian, which has previously focused on higher-end electric pickup trucks and SUVs, notably the R1 series. The new model is designed to compete directly with popular offerings such as Tesla’s Model Y and is seen as a critical factor in driving Rivian’s growth amid shifting market conditions. The recent removal of key federal tax credits for electric vehicles in the United States has contributed to a slowdown in EV demand, prompting manufacturers to adjust their strategies.

Rivian detailed its planned pricing structure last month, unveiling a launch variant priced at $57,990. This will be followed by a Premium trim expected later in 2026, priced at $53,990, and a rear-wheel-drive Standard version targeted for the first half of 2027 with a price of $48,490. Additionally, the company aims to release a more affordable $45,000 version by late 2027, expanding options for cost-conscious consumers.

Tom McDonough, Rivian’s Chief Financial Officer, highlighted that once production levels increase in 2027, the R2’s manufacturing costs will be less than half those of the R1 models. These cost savings are anticipated through an aggressive parts consolidation strategy and a streamlined design approach.

By introducing the R2, Rivian hopes to strengthen its foothold in the competitive electric SUV market and create a more sustainable financial foundation as it navigates the evolving industry landscape.