Key Decisions in the Face of Adversity Have Helped Rivian Turn a Profit

Lifelong car enthusiast RJ Scaringe sees automobiles as the root of many of the biggest challenges the world faces. When he was in college, he decided to do something about it. Decades later, the success of Scaringe's vision, a new battery-electric vehicle automaker, is improbable at best. Rivian isn't just producing vehicles people want to buy, the company is turning a profit.

"I started the company to drive as much impact as possible, and to be a positive contributor to this really large change we need to see in how our transportation systems function. That's everything from how the vehicles are designed to how they're architected, to electrification," Scaringe told Newsweek.

Through partnerships with Amazon and Volkswagen Group, strategic government assistance and shrewd manufacturing practices, Rivian is beating the odds. It hasn't always been sunshine and roses. An early deal with Ford dissipated and the company has seen its fair share of employee churn.

"The nature of starting a business like this is really different than most types of new companies because you need so many things that are all hard to get. If you're being intellectually honest, you need many billions of dollars of capital. You need hundreds of suppliers to provide the components going to the vehicles. You need thousands of engineers working in parallel and on top of all that, you need technology and product that's highly compelling and would lead customers to want to purchase your product," Scaringe said.

"The first penny of revenue in a business like this takes many billions of dollars," he said. The CEO describes the origin of Rivian being "a system of challenges." He caught himself wondering how to raise capital when he didn't have the technology to back it up. How do you go to a supplier when you don't have a product or a company bigger than one person?

"If you think about it too much, it almost scares you away. You have to just start working on it. So, I started working on it."

Scaringe raised a small amount of capital, "enough to demonstrate some fraction of the idea of what we wanted to ultimately build," he said. "We had some big pivots along the way in terms of products and then ultimately got to a point where the product, the brand, the strategy, started to become really clear and after a bunch of experimentation that helped facilitate us raising a lot more money."

Before going public, the company raised around $12 billion and decided to launch three products at nearly the same time, in contrast to how Tesla, Lucid and most automakers started. One of Rivian's most pivotal moments was its 2019 agreement with Amazon, which provided much-needed cash in exchange for commercial van sales exclusivity for four years.

All this was during the COVID-19 pandemic. "You almost couldn't have imagined a harder operating environment to launch into," Scaringe said. The company wasn't just readying to build electric vehicles. It also had to build its manufacturing facility, a refit of a former Mitsubishi plant in Normal, Illinois.

"More than 100 truckloads of equipment was showing up between February and March of 2020, so it's like perfectly hard timing. And when our equipment was there, we didn't have people to come install the equipment, because you couldn't be on site or together. So, we had to learn how to run a large construction and capital expenditure project at the start of COVID and through COVID," he explained, as well as ramp up and hire people. The supply chain crisis of 2021 and 2022 hit the company hard, too, with many suppliers prioritizing larger automakers, but Scaringe toughed it out.

"We felt that ultimately, electrification going from where it is today, less than 10 percent of new vehicle sales, to 100 percent in the next decade or two is going to require highly compelling products," he said.

One of Scaringe's core ideas, keeping a technology stack completely in-house, was controversial. "I was a little bit crazy to do all of our software and all of our electronics in-house, but it's proven to be the exact right decision," Scaringe said. "There weren't a lot of people believing...and it's been remarkable to see that those decisions become validated."

Rivian's products aren't only its vehicles. Last year, Rivian signed a $5.8 billion joint venture with Volkswagen Group to license the startup automaker's software platform and some electronics. Those bits will underpin the new Scout Motors vehicles. Some of Scout's top engineers are Rivian veterans.

And this year, a subsidiary of the company received a $6.57 billion loan from the federal government to finance the development and construction of its new, 9 million square foot electric vehicle manufacturing facility near Social Circle, Georgia. The plant is expected to assemble up to 400,000 BEVs annually, starting with the R2 and R3 SUVs.

Strategic decisions that resulted in a gross profit of $170 million in the fourth quarter of 2024 and the maturing business model of the Rivian brand in a BEV-adverse environment are why RJ Scaringe is Newsweek's 2025 Executive Disruptor of the Year.

Read About All of Newsweek's 2025 Auto Disruptors Here