Rivian Automotive Developing Future Transportation Model

Dec 13, 2016

Rivian Automotive CEO R.J. Scaringe in the GLT studios.
Credit Staff / WGLT

The founder and CEO of Rivian Automotive thinks people may be tiring of traditional car ownership.  He calls cars "poorly performing assets." R.J. Scaringe was in Normal as the company moves toward purchasing the former Mitsubishi car manufacturing plant. The town council voted unanimously on an economic incentive package Monday. 

"This is an asset that sits still 97 percent of the time," Scaringe said of the automobile. "It depreciates very rapidly. So we're talking about 60 to 65 percent of the value is lost over a five year period. And it takes a surprising amount of capital to keep that asset functional. Between fueling, service, cleaning, storage, there is a lot of cost to keep that asset functional so you can use it on rare occasions -- that three-percent of the time."

In other words, car ownership is expensive. Scrainge says this has created fertile ground for new types of mobility to emerge such as ride share services like Uber or fleet share programs like Zipcar. Scaringe is moving Rivian into a model somewhere in between. And the vehicle in development will be electric and autonomous, or self-driving. 

"We're at the very beginning of a major shift in how we look at the customer model with regards to the vehicle," said Scaringe during Sound Ideas. "This is like 1992 in the internet days."

Or 1902 in the automotive industry. The shift is not only in the customer model, but also in the vehicle operational model. Rivian's initial products may be owned. Later, they would be shared and autonomous, pushing utility from three-percent to as much as being used 60 percent of the time. 

"For me the really exciting part of that is what it can do to the economics of mobility." said Scaringe. "The cost per mile (for user) can drop significantly. Your own mobility will go from a dollar a mile, 90 cents a mile to 15 -20 cents per mile."

Former manager of the now closed Mitsubishi plant, Jerry Berwanger, talking with B-N EDC CEO Kyle Ham, center, and Scaringe.
Credit Staff / WGLT

Scaringe says in the future, under Rivian's model, people would use a mobile device, access an app, order a vehicle, it would drive to their location -- without a driver, and transport them to their destination, and then move on to the next customers. People who decide to own a Rivian could put their own cars to work as part of the network when they're not using it, generating revenue. 

It would also mean fewer cars being used more, which means the enterprise would be more environmentally sustainable. 

Scaringe said a portfolio of cars could be available for viewing in 12 to 18 months and purchase in 2020, after production begins in 2019. He said people may see the car on the street as it's being tested. The car, he said, is a "large format vehicle" designed for active lifestyles, such as biking and hiking or weekend projects with trips to the home improvement store.