In Part I, I argued that R2 is the bridge from survival to monetization where even though Rivian's vehicle business was losing $66,000 per car, R2's lower bill of materials was the mechanism that stops the bleeding. I modeled $22,000 in BOM savings per vehicle across eight components, weighted by each component's part contribution to total build and used a conservative 10% saving on the battery pack.

Skip to the end to see the end total automotive gross profit I'm predicting.

What I did not model in Part I was the full picture as the $22,000 figure only captured BOM savings. Management also guided to non-BOM costs being more than 50% cheaper on R2, which covers labor, factory overhead, depreciation, and everything else that is not the physical parts of the car.

Hence this is what I will break down in this article.

How many R2s are we actually talking about in 2026?

On the earnings call, management said R1 and van production will be "in line with 2025 levels", and hence its logical the rest will be R2. In 2025, Rivian delivered approximately 42,000 vehicles across the R1 series and commercial vans per Kelley Blue Book's EV Sales Report. Management guided to 62,000 vehicles at the conservative end of their full year range, which implies roughly 20,000 R2 deliveries in 2026.

Management also said the R2 ramp will be back-half weighted, so I am assuming an even split of 10,000 units in Q3 and 10,000 in Q4. These are the quarters where management also stated that R2 will be "a tailwind to profitability"

What does Rivian actually collect per R2?

There is nuance in the fact that the sticker price will not actually be the final average sales price (ASP). To estimate realized revenue per vehicle I looked at what Rivian actually collected in Q1 2026. Total automotive revenue was $908M across 10,365 deliveries, implying a realized blended ASP of roughly $87,600 against a blended R1 base MSRP of $74,990.

That is a 16.8% premium above sticker, driven entirely by hardware options, trim upgrades, and destination fees with NO software revenue included.

I'm assuming R2 buyers will behave similarly and if so, the same 16.8% uplift to the $56,800 base MSRP gives a realized R2 ASP of approximately $66,300.

Thats evidence #1: 10,000 R2's per quarter starting Q3 at $66.3K revenue going forward.

What does it cost to build one R2?

Management hasn't stated this so I need to go off assumptions and what we know. We know that Q1 2026 automotive COGS was $970M across 10,365 deliveries, which gives $93,600 per vehicle.

From here two layers of savings apply:

The first layer is the BOM savings from Part I. Using component-level savings weighted by each part's contribution to total build cost, I estimated $22,000 in savings per vehicle across the eight major components, with the battery pack conservatively modeled at only 10% savings despite making up 38% of total BOM cost.

The second layer is the non-BOM savings management guided to on the earnings call. Non-BOM costs, which cover labor, depreciation, factory overhead and everything outside the physical parts, represent approximately 30% of total COGS using the standard industry split. Management guided to more than 50% cost reduction in non-BOM costs through design for manufacturing improvements, better sourcing, and fixed cost absorption at higher volumes. Applying 50% to the 30% non-BOM slice gives 15% overall COGS reduction, or $14,000 in additional savings per vehicle.

Now let's start tying these pieces together

Fully loaded R2 COGS per vehicle: $93,600 minus $22,000 BOM savings minus $14,000 non-BOM savings = $57,600

What does this mean for Q3 and Q4 gross profit?

Each quarter I am modeling 10,000 R2 deliveries, 10,500 R1 and van deliveries (at Q1 2026 unit economics), which is $87,600 revenue and $93,600 COGS per non-R2 vehicle.

Quarterly revenue:

• R1 + vans: 10,500 x $87,600 = $919.8M
• R2: 10,000 x $66,300 = $663M Total: $1.583B per quarter

Quarterly COGS:

• R1 + vans: 10,500 x $93,600 = $982.8M
• R2: 10,000 x $57,600 = $576M Total: $1.559B

Automotive gross profit: positive $24M

That is a $86M swing from Q1 2026's negative $62M automotive gross loss and validates what management said on the earnings call they expect R2 to be a tailwind to profitability in Q4 as scale ramps.

What this does not include

Software and services revenue, which generated $181M in gross profit in Q1 2026 alone at a 38% margin, is treated as entirely separate and additive. Autonomy+ subscription revenue, regulatory credits, and any incremental licensing deals are not in these numbers. The automotive gross profit estimate above is pure vehicle economics only.

Where this model can be wrong

• The single biggest source of conservatism in this model is the battery pack assumption. The battery makes up 38% of R1's total BOM cost and since management didn't guide to savings on this component I used only a 10% saving on the battery.

At 20% battery saving the per vehicle BOM saving grows from $22,000 to $24,500 so each 10% improvement on the battery alone adds roughly $2,500 per unit and $25M per quarter to automotive gross profit on 10,000 R2s.

• Another wild card where I might be wrong is that R2 might only need to break-even.

But this is low likelyhood because management would not have signed off on permanently losing money per R2. But it could be plausible because there are existing business models where companies lose money on hardware, but grow and make profit due to software, like Toast. Toast sells point of sale hardware to restaurants at a gross loss and hardware gross profit has been consistently negative across every quarter reported, but software segment runs at 66% gross margin and their fintech solutions generate hundreds of millions in gross profit per quarter

• Finally, speaking from experience, launching buildings in a manufacturing environvment is hard and there's many variables that affect production.

So I could be wrong on manufacturing ramp inefficiency where early production of a new platform like R2 due to elevated scrap rates, labor inefficiencies, and under-absorbed fixed costs, can temporarily increase per-unit COGS, meaning the assumed $57,600 cost could be structurally too low in 2026 even if it’s achievable longer term.

Not Financial Advice. I have 7% of my portfolio in Rivian.