The future of EVs

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JEFF BERMAN: This Masters of Scale Live event presented by Atlassian was recorded at Atlassian Team ’26 in Anaheim, California.

RJ SCARINGE: Resilience and comfort in chaos are really important. You have to go into it knowing this is like full-contact, multidimensional chess, and you’re doing it sometimes in the middle of a tornado inside a storm.

BERMAN: Multidimensional chess inside a tornado, perhaps also while making dinner, caring for a baby, and writing a Broadway musical. If you’re leading a business right now, that description probably feels pretty accurate. So how does Rivian founder and CEO RJ Scaringe weather the endless storms?

SCARINGE: For me, recognizing that resilience and comfort in instability, or comfort in chaos, are really important. With that, we have a whole process inside the leadership team for checking our own assumptions. The world’s changing so fast. The thing we thought six months ago, is that still right?

BERMAN: This is Masters of Scale.

[THEME MUSIC]

I’m Jeff Berman, your host. This week on the show: RJ Scaringe. He’s the founder and CEO of Rivian Automotive. Rivian just launched the much-anticipated follow-up to its first electric vehicle. This one is the R2. It’s a crucial moment in the company’s scale journey. In my onstage conversation with RJ, we dig into how he thinks about competing with Tesla, the hard-won lessons of building a company that makes both vehicles and software, and much more.

RJ, business is hard. It’s not easy leading teams, leading companies. Services are hard, software is hard, hardware is hard, logistics are hard. You’re kind of doing all of them. How does that work?

SCARINGE: I knew it would be difficult. It wasn’t something where I said, “This is going to be an easy path.” There have certainly been aspects that are much harder. But a lot of the elements of building any business ring true within Rivian, whether you’re looking at team-building, organizational structure design, processes, tool sets, or supply chains. But yeah, it’s a challenging business. I mean, I’m having a ball.

Copy LinkCoordinating thousands of people around one product vision

BERMAN: How do you think about teams working together when they work on such different parts of the business?

SCARINGE: This is one of the things that’s maybe most unique about building a car company. When you really look honestly at what’s necessary, you need many thousands of people to develop one product. That product requires, we estimate, on the order of about 40 million different decisions to bring it to life.

BERMAN: 40 million.

SCARINGE: 40 million. And there are millions of hours of engineering time necessary to deliver it. So the only way for this to work is to have lots of people working in parallel. Ultimately, at full size, you maybe have 5,500 or 6,000 engineers working at the same time on the same product. And so it becomes a real exercise in coordination, because you’re not just talking about homogeneous teams with the same background and the same skill set. You have chemists working on battery cell chemistry. You have structural engineers working on body design, teams designing electronics, and teams building software platforms across the stack, from the lower levels all the way up through the application layer.

Then you also have to build go-to-market teams. You have sales teams, service teams. Around that, you have a manufacturing team and a supply chain team. So there are very, very different backgrounds and very different experience sets. The risk is that you end up with a sea of many little islands of culture, many little silos that operate very differently. And I think one of the most rewarding things is when you see these very different skill sets, often from very different experiences, coming together around a common vision and coming together to create this amazing set of products.

But it takes practice. It takes practice around questions like: What are the values of the business? How do we interact? How do we challenge each other? Do we allow people to actively debate? Do we embrace that as an organizational culture and behavior? This is something we’ve really worked hard at iteratively. I think with these large organizations, when you’re building large, complex products, the natural tendency is to have silos, have walls go up, and have the manufacturing team say, “Well, if the engineering team would just make it easier to build, we could build these things.” And the engineering team says, “The car could be so much cooler if manufacturing wasn’t so difficult.” Those are natural tensions. Learning to accept that there are going to be different perspectives on how to solve the same problems is really important.

BERMAN: When you’ve got 40 million decisions that go into making a product, that’s not easy to manage. This is a lot. When there are disagreements within teams, I assume there’s a team leader who makes a call. When there are disagreements between teams, how do you manage that?

SCARINGE: Structurally, we’ve set up decision processes where here’s the vision for the product, here’s what we’re trying to achieve, and here’s the framework for making these decisions. Certainly, it can’t be me making every decision. It doesn’t scale. I learned that early. But often these decisions will escalate if there’s not alignment. We often have times where there’s a point of disagreement, and we say, “There’s a disagreement on how we’re going to approach this. We’re going to make a decision, and then we’re all going to align around that decision.” That process of accepting that we won’t always agree, just by virtue of the complexity of what we’re building, but that we ultimately have to build together, means that once a decision is made, everybody gets on board.

Copy LinkLearning to let go as the company outgrows the founder

BERMAN: You referenced that it doesn’t scale, and you learned that early if every decision runs through you. Was there a moment early on when you realized that was a pain point you had to solve?

SCARINGE: I’m an engineer. I started the company when I was 26, the day after I finished my PhD, and I love to build things. I grew up restoring and building classic cars. So, not surprisingly, on day one of the business, the first thing I did was get my CAD station set up and start designing parts. I was like, “Let me design this.” It’s not as if I wasn’t already thinking about what was going to go into the vehicle, but very quickly it became clear that there are thousands and thousands of components that go into a car. This won’t work if my job in leading the company is designing all the parts. I have to design the teams, get the teams to work together, and participate in creating scale.

Anytime an engineer is forming a business, there’s a tendency to be really close to the product, which I think is fantastic. It’s a wonderful characteristic of technical founders. But you also need to recognize that you can’t be in every decision or in every meeting. As the organization scales, you have to find ways to have influence and impact the product, but do it in a way that doesn’t lead to the whole team waiting to say, in Rivian’s case, “What’s RJ going to say?” and becoming paralyzed while waiting for a decision to come from the top.

I often describe a car company as an exercise in enabling highly distributed decision-making that’s highly coordinated, which are two things that don’t always go together. It’s thousands of people making decisions, but it needs to come out as a product that looks as if one brain, one human, did everything, which of course you can’t do.

BERMAN: There’s a theory of organizational growth: factors of one and three. One company, one person; then three, then 10, then 30, and so on. What tends to happen between 30 and 100 is, to your point about silos, companies literally create divisions. It’s one of the worst words you can use in a company. As you were going through that phase, 30 to 100, 100 to 300, et cetera, was there something you realized you had to do differently than you’d done before, or maybe differently than you’d seen other companies do?

SCARINGE: Yeah, many times. One of the things that, in hindsight, I can say was very fortunate is that Rivian was highly undercapitalized in the early years. The reason I say that it’s fortunate is that it allowed me to learn how to run a company. This was my first time starting a business, my first time running a business. One thing that was helpful for me is that we were able to grow slowly. I was making mistakes and learning, but the impact of those mistakes was fairly small, just by virtue of not having huge budgets or a huge team.

Through that, I directly experienced the difference between a one-person team, a 10-person team, and a 20-person team. It was happening at a pace that I was able to keep up with in my own learning. I remember early on we were doing all-hands every week. In the beginning, the whole company met every day because the whole company was sitting around the same table. But there was a point when we all didn’t fit in one room. The solution then was to move the all-hands to a bigger room. But eventually you get to a point where the room size doesn’t matter. You can’t have everybody in the room, and you quickly learn that disseminating and distributing information, both about the decisions being made for the business and how to approach making decisions, becomes a real key exercise.

I give this advice all the time to people starting businesses: recognize that the organizational structure is going to change all the time. You need to be really cautious about getting overly fixated on saying, “This is exactly the structure.” The way I characterize it today is that the organizational structure is the most efficient way to try to organize people to get work done efficiently. But by virtue of it being a structure, it’s not perfect. It’s always going to be imperfect. There is, of course, going to be communication and decision-making happening across the lines. So we should not look at this as how we communicate or how we work together. It’s how we’re trying to organize ourselves to be as efficient as possible, but it will change.

It looked very different at 30 people than it did at 100 people, which looks wildly different than it does at, let’s say, 1,000 people. Today we have 17,000 employees, and we couldn’t possibly all meet in the same room. We couldn’t possibly have an open discussion among the whole team. So I think getting ready for that was really important for me.

Copy LinkWhy owning the software stack became Rivian’s strategic advantage

BERMAN: At this point, a team meeting is in an NBA arena, and then at some point maybe an NFL stadium. One of the things I’m not sure everyone knows about Rivian is that you also are a software company, not just for yourself. You all made a decision to license software to Volkswagen, which is at least nominally, if not actually, a competitor. Why?

SCARINGE: Fair question. It’s a good question.

I have to wind the story back a little further. Early on in building the business, as an engineer, there’s a desire to build everything. I often joke that if we had infinite resources and no constraints, our supply chain would be that we buy land, extract resources, and make aluminum ourselves. We’d do everything.

BERMAN: Full vertical integration with no limits.

SCARINGE: We’d just own pieces of earth and make cars.

BERMAN: You’re not even using Atlassian. That’s how far you’re willing to go here.

SCARINGE: But that’s with unlimited resources. That’s the way I’m wired. Left unchecked, I might end up there. But of course there are constraints. Those constraints are not only money, but also time and focus. So you have to be very intentional about what you do build so you don’t end up buying plots of land to extract raw materials, which is funny because now we actually have done some of that.

But the way we looked at it, we said there are a few areas we need to completely own. One of those was the software platform in the vehicle. To do the software platform well, we have to own all the electronics, and we’re going to architect the way the vehicle networks and the way the software is integrated into the vehicle in a very thoughtful way, where we consolidate computers down to a very small number of what we call zonal computers.

Rather than the computers tying to a function, which is what essentially every car on the road does today, where you have a computer that corresponds to, let’s say, the air conditioning system or a computer that corresponds to the seats, with these little ECUs supplied by third-party suppliers and little islands of software on them, we’re going to have a very small number of computers where we build all the software.

I remember making that decision when Rivian was still much younger, and we had not a lot of money. Our board said to me, “RJ, you’re crazy. You want to build computers and write all the software yourself?” And I said, “Trust me.” I was very convicted. I was emphatic. I said, “Trust me, this is what’s going to be most important for us from a competitive point of view and from a product-differentiation point of view.” I obviously made the case, and we ultimately made that decision.

At the end of that conversation, I said, “Look, if we do this really well, who knows? We could end up licensing this as another way to monetize this huge investment we’re going to make.” Everybody was like, “That’s not going to happen.” Anyway, fast-forward about a decade, and we did a $5.8 billion software licensing deal with the second-largest car company in the world, Volkswagen Group. This was after Volkswagen Group had spent an enormous amount of money trying to build software architecture itself.

What drove us to say yes to doing this wasn’t just the financials of the deal. It really goes back to the core mission of the business. The core mission of the business, the reason I started it, was the desire to have an impact on how we think about transportation and to accelerate the speed at which we as consumers shift toward electrification and, increasingly, electrification coupled with highly intelligent vehicles. So vehicles that are capable of driving themselves and vehicles that are capable of performing a lot of tasks through software.

As we looked at that, we said, “Boy, we’re going to do that with our own products. We’re going to launch R2. This is our first high-volume product. We’re actually launching it as we speak. That’s followed by R3. You can imagine there’s probably an R4 and R5. We’re going to continue to grow our revenue and the business, and we want to be a company that’s making millions of cars over time. But we can also help enable the creation of really interesting and compelling products with other manufacturers.”

When we were thinking about that, we said that the best brand to start this with would be Volkswagen Group because it’s such a broad company with so many different brands and so many different form factors. It has some really incredible brands within it: Porsche, Audi, of course the volume brand Volkswagen, and a host of brands in Europe. We said, “Boy, that’s a really interesting exercise in showing how well we can productize the software.”

So we signed the deal, and the first product launches next year. It’s a product for Europe. It’ll be the lowest-cost EV in Europe. It’s going to be very cool. It’s called the ID.1. So you can Google it, check it out. I’m so excited for people to buy it and take the car apart. This is common in the auto industry. People buy the products, disassemble them, and benchmark them. The benchmarking companies are going to be blown away. The simplicity and elegance of the electronics and the network architecture are, in large part, what enable this incredible vehicle to be so low-priced. And so that ties right into our mission.

Copy LinkExpanding the EV market by creating more choices

BERMAN: Which is great, but if I’m on your board, I think I’m at least asking, well, if the ID1 is a hit and it’s a competitor to the R2, R3, R4, RJ, whatever you’re going to end up launching, doesn’t that cannibalize your own business? How do you run that analysis?

SCARINGE: Well, one part of our vehicle is software, and that’s what we’ve licensed to Volkswagen. But we didn’t license to them our self-driving platform. We didn’t license them our vehicle designs. But I’d say, put all that aside, there’s a deeper-held view within Rivian that obviously comes from my perspective on this, which is that for us to electrify, for us to shift away from dependence on fossil fuels and gasoline-powered vehicles or diesel-powered vehicles, it will only happen if we have a wide variety of great choices.

And the auto industry is unique in that it’s so big that it’s unlikely, and not exciting, to think about a world in which the hundred-ish million cars sold every year on our planet are provided by one company and you have two or three choices. Growing up as a car enthusiast, I think this is a space that benefits from having lots of choice.

In the United States, for example, one of the things that I think has really stalled EV adoption is we do have an extreme lack of choice. So in the 50-ish-thousand-dollar price point, which is where the majority of the market is, the average price of a new car in the United States is $50,000. In that price range today, now that R2’s launch is different, but prior to R2 launching, I’d say there’s really one highly compelling set of choices: the Tesla Model Y or the Tesla Model 3. And that vehicle generates 55 to 60 percent market share for the whole EV market in the United States.

That is not a reflection of a healthy market. That’s a reflection of a market that’s wildly underserved. And it’s not saying anything negative about the Tesla products. I’ve owned those products. They’re great vehicles, and it’s why they’ve accumulated so much market share. But we need other choices. We need different form factors, different brands, different styles. Not everyone is going to want that exact shape, that exact form factor, that exact look. And so Rivian can do a part in that. We’re doing as much as we can, but we’re very happy to help others do that.

And, of course, we generate meaningful profit and margin on the software business. So I think of it as we make money selling vehicles and we make money selling technology, and they can coexist.

BERMAN: Still ahead, RJ on competing with Tesla, how self-driving cars will transform our lives, and more.

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Copy LinkInside Rivian’s competition with Tesla

Because you referenced Elon and Tesla, I have to imagine you’ve benefited from some of the Tesla backlash. I was having breakfast two days ago with my friend, Leah Solivan, who founded Taskrabbit and is a Rivian driver, loves your product, and was raving about it. And she asked me to ask you: One, what has given you the intestinal fortitude to go up against Elon? And two, what have you learned from going up against him that would help others who are fighting their own evil empires?

SCARINGE: The classic way to think about competition, which is an important thing, is that we focus on saying, let’s make incredible products, let’s make those products super desirable, and let’s play our own game. And where I think folks have failed in automotive in competing with Tesla is when they say Tesla’s been very successful with, let’s say, the Model Y, and rather than having deep conviction around building a product that’s linked to your brand, there have been a lot of Model Y copies.

So if you were to take a number of the EVs that are in market that have been unsuccessful and draw a profile of the vehicle, the centerline profile, and look at the vehicle packaging — where are the seats, where does everything sort of sit inside the vehicle, look at the size and the dimensions — it is remarkable how many companies took the approach of saying, “Well, Tesla’s successful with this. Let’s make our own version.” And the unfortunate thing about that is, if you want to buy a Tesla Model Y, you don’t want XYZ company’s version of a Model Y. You’ll just get the Model Y.

So we’ve been really clear on this. If you look in the premium segment, in the flagship space, we have an SUV, our R1S, and by a pretty significant degree it’s the bestselling premium electric SUV in the country. It significantly outsold the Model X. It outsells everything. But it’s seven seats, it’s got four doors, it’s very quick. All those things I just said, you could have equally described the Model X that way. But outside of those characteristics, the cars couldn’t be more different. And I think that’s really important. It gets back to this point on variety and choice.

So Tesla was successful with Model X, successful with Model Y, and we developed R2. We didn’t say we want R2 to try to copy Model Y. We want it to be its own product. And so that’s informed a lot of how we think about the decision-making. We really go back to what do we believe? What’s the philosophy we’re approaching product development with? Where are we going to make trade-offs between cost and features and performance and capability? Everything’s a trade-off, and ultimately we create this set of trade-offs that lead into this product. And we have a perspective that we think draws people in.

So that’s where I see the important thing now. There’s lots of noise around Tesla. I always just try to tell people, focus on the cars and don’t get drawn into that.

BERMAN: You’re running your own race. You’re not looking at or thinking about what’s going on over there.

SCARINGE: One other thing I’ll say…

BERMAN: Yeah, please.

SCARINGE: This is unique to cars. I think in certain technology arenas, it’s not like this. But in the auto space, the largest car manufacturer in the world represents about 10 percent of global demand. And I say that to illustrate that this is not a space in which there’s one winner. That’s not true in all segments, but it is likely, I believe and I hope, that there are many winners.

I do think there is the potential of having fewer car companies in the future than we have today because of some of the technology shifts that are happening. But I do think there’s going to be certainly more than five large automotive players in the Western world that are the big dominant players. Maybe not more than 10, but more than five. And so our success doesn’t require someone else’s failure, and vice versa.

Copy LinkWhy Rivian partnered with Uber

BERMAN: One of the ways you optimize for being in that five, or however many there will ultimately be, is by finding advantages in distribution and creative ways to drive revenue. You recently did a pretty big Uber deal. Could you share what went into putting that deal together and why that deal is so strategic for Rivian?

SCARINGE: Yeah. So we have put an enormous amount of focus on self-driving, and the fruits of that are just starting to come out. When we launched our first products in 2021, they were using what I would call a 1.0 version of autonomy, and it was leveraging Mobileye cameras, which is a supplier that provided the front camera, and it was part of a rules-based approach to self-driving.

And the planner was not AI. The planner was actually a human-written code version of how to drive — to oversimplify, a whole series of if-then statements. And that was what was used until 2021, maybe 2022. That’s what we launched with, but we fully understood that that wasn’t the future state.

So in 2022, or late ’21 into the beginning of ’22, we began a process to completely redesign our system and pull it fully in-house. And with that, designing a system instead around sensors that we completely control, a very high level of compute in the vehicle, and then building a large multibillion-parameter model, a foundation model or a neural net, that we’re training with the benefit of all the data coming off of our vehicles.

That hardware stack took some time to build. The first version of that launched about a year and a half ago in what we call our Gen 2 vehicles, and that data flywheel started to grow. We’re now at a point where the data flywheel is allowing us to start to roll out features that are big steps forward from where we were in the past.

Later this year we’ll have full supervised point-to-point, which would be very similar to Tesla’s FSD, and that’ll roll out to all of our Gen 2 vehicles and, of course, R2. Then next year we allow it to go unsupervised, so you can take your eyes off the road, which is really nice. So unsupervised full point-to-point. And then next is it getting to full capability to be able to be driven empty, meaning no one in the car, or you not in the front seat. And that unlocks things like airport drop-offs, or you can pick your kids up from school.

We’ve been developing that for a while for our personal vehicles, so vehicles that you own, but we also see it as unlocking new business models, robotaxi being one of them. And we took the decision to partner with Uber so that we could focus on the tech and leverage them for their access to the big distribution channel. Of course, they have a huge number of users, and again, talking about competition, they’re really a category of one. There’s no one quite at their scale or at their reach.

So we were really excited that we’ll be deploying 50,000 robotaxi versions of R2. We start that in 2028 with paid regular rides, but leading into that, we’ll have vehicles on the platform with safety drivers, with people in the front seat. It’s almost mind-twisting when you recognize how much is going to change over the next five years, I think, in the world of autonomy.

And this is true in all physical AI. We’ve seen it play out in the world of written AI or videos or images with Gemini and ChatGPT and platforms like that. But the rate of change we’re going to see over the next five years, say between 2026 and 2031, is demonstrably different from the rate of change we’ve seen over the last five years.

BERMAN: So what do you see that might be science fiction to everyone watching and listening that you’re like, “Oh, this is coming”?

SCARINGE: Self-driving is one that we’ve talked about for a while, and we’ve had breadcrumbs of it where it’s implemented in a way that, if you’re tech-forward, it’s easy to understand. You can drive the vehicle, but you’re still in the driver’s seat providing some supervision, and that’s been around for quite some time.

The shift to the vehicle fully driving itself is going to happen over the next couple of years, and it’s going to go from something that is a nice feature for maybe 20 or 25 percent of buyers — an important feature to have some level of self-driving — to something that’s absolutely necessary. And I think it’ll become unimaginable to have a car that can’t fully drive itself.

In a way, it sounds funny to say this, but there was a time when all of our phones weren’t connected. The phone was just a phone.

BERMAN: Well, they were connected to the wall if you go back far enough, but yeah.

SCARINGE: Yeah, go even farther. But you weren’t sending emails on your phone. You weren’t doing anything other than maybe very simple texts. And now it’s like you couldn’t even imagine living in that world. It’s hard to picture.

So I think that will happen with self-driving. It’ll just happen very fast. And I don’t believe society fully recognizes how fast this technology is moving. The ability to deploy these AI models and train much faster is just staggering. Progress is happening so quickly, and it’s so different from what it looked like even two years ago. The rate of progress with transformer-based encoding and building these large multibillion-parameter multidimensional models is just mind-blowing, and it’s so exciting.

Copy LinkRivian’s RJ Scaringe on spinning out a robotics company

BERMAN: RJ, one of the other things that is clear now is that the technology that you’ve built, the data that you have, the hardware capability, et cetera, lends itself to robotics, to the point where you have spun out a robotics company. At what point did you realize that you had the opportunity to do that, and how did you make the decision to spin it out rather than keep it inside Rivian proper?

SCARINGE: I’ve been thinking about robotics for a while. Robots, particularly for industrial applications, are quite interesting because, in the fullness of time, when we talk about what the next 20 years look like, I think we’re going to see a very diverse set of mechatronic embodiments for different robots. You’re going to see different form factors with different capabilities.

When you think of robots, it’s easy to think of robots in a purely human form — a full humanoid robot — and we’re going to have those. But we’re going to see a diversity of form factors, maybe not as broad as the biological world, but certainly a lot broader than just human-shaped robots. We’re going to have robots that can do all sorts of tasks, and some of those robots will be very similar to humans, with maybe certain tweaks for their application, and some will be very different from humans.

A good example of that is a car, a car that drives itself. It does not look like a human, but it’s doing something that humans used to do. And so we started really studying this within Rivian to look at it through the lens of manufacturing. About a year ago, I came to the view that we should absolutely go build this business. The addressable market is enormous. It’s like a third of the world’s GDP is in industrial labor.

Industrial labor is a real shortage for manufacturing goods, and it’s a real challenge given our cost structure in the United States for us to be competitive globally in manufacturing. And because of that, we’ve seen a very significant portion of manufacturing in the United States, and for that matter in the Western world, move to very low-cost countries.

And so I deeply believe that the way we bring a lot of that manufacturing capability back into the United States and into the Western world is not by asking people, “Hey, you’re going to have to make one-eighth what you make today and you have to work 70 hours instead of 40 hours.” It’s using technology and using robots in conjunction with people to run much more sophisticated plants.

Anyway, that was a long way of saying I decided to start a company, and I’m so enormously excited by this company and what we’re building. That was late last year. We’ve raised a lot of capital for it, and so we’re moving very quickly to deploy our first robots into manufacturing applications, with Rivian as a first customer, but ultimately with the goal of being in many manufacturing plants for many different types of products quite quickly.

BERMAN: And was the decision to spin it out because you could unlock more value and have more freedom, not as a public company, to do what you wanted to do there?

SCARINGE: Yeah. The scale of this is huge. The goal is to build one of the largest robotics companies in the world, and to do that you need a lot of capital, more capital than Rivian was able to invest at this point. And then we also wanted to create absolute clarity of focus within this business on building and deploying robotics at scale.

So it’s really enjoyable for me because I’ve been building Rivian for 17 years. As we just described, I’ve learned a lot about building a company. And so I often get asked the question, “What would you do differently?” And now I’m having the chance to build another company from scratch. In this case, it doesn’t have the same capital constraints that Rivian had, so it’s going very, very fast. But it’s as if the last 17 years with Rivian were training for how to run this other business.

BERMAN: What’s the biggest lesson you’ve applied from your growth at Rivian to the robotics company?

SCARINGE: It’s a lesson I applied within Rivian as well. I think that when you’re looking at an overwhelmingly large challenge, like a big technical task, and especially if you have people who are watching — let’s say investors or a board — it is very common, and lots of businesses do this, to do things that don’t contribute to making progress but generate motion.

And so this is the curse of infinite loops of demos, and some of that, very unfortunately, is necessary. If you don’t have the ability to raise capital very quickly, you end up spending a lot of time building presentations, building mock-ups of what you want to build to convince somebody that’s a good idea. But the reality is a lot of that is just a waste of time.

So within Rivian, this is true; within Mind Robotics, this is true: we’re very focused on making progress, not motion. We actually have an expression: make progress, not motion. That means it’s very enticing to say, “Let me just get my CAD station out and start drawing parts,” or “Let me start generating a model. I’m just going to spool up these 64 GPUs to do a run on the model really quick,” without being thoughtful and planning.

So what’s the architecture? What’s the intent? How does this work cross-functionally? Being very intentional in building things actually allows you to go much faster later on. R2 is a great embodiment of that within Rivian, where the program is ramping much faster than R1. It’s much smoother, but we were much more thoughtful in how we went about developing it versus the sort of chaos and lack of planfulness that existed on our first set of products due to the immaturity of the business and the immaturity of our processes and systems.

BERMAN: On the R2, the question I really want to ask you is, I’ve given you my hundred bucks. Do you know so we can move you up the list? We’ll talk about it offstage.

SCARINGE: It’s sitting outside.

Copy LinkWhat drives costs for Rivian

BERMAN: Great. Awesome. To get a Rivian down to this price point, how do you decide what goes into it and what gets left out?

SCARINGE: A lot of it’s subjective. I’d say there are three big categories of what ultimately is going to drive costs. The first is engineering the product to deliver the same capabilities but in more cost-effective ways. So that’s part consolidation, part elimination, maybe new processes.

The second is heightened supplier leverage. And this is a very important category. For Rivian, when we launched R1, you have to imagine going into a supplier, a windshield supplier, and saying, “I want to buy windshields.” And they say, “Well, tell me about your company.” “Well, we haven’t sold any cars yet.” “Well, can I drive one?” “Well, no, it’s not ready to drive.” “Are you convinced customers will like it?” “I’m really convinced.”

So you end up in a situation where the suppliers are making a leap of faith on R1, that the brand was going to work, that we could execute the product, because the suppliers have to commit way before the product is in production, obviously. And so we were carrying an enormous, call it first-time tax, or additional costs, just because of the risk factor of launching a first product. R1 resonated so well, the brand connected, all the things that you sort of hope will happen had happened in terms of the brand coming across to the world in the way that we wanted it to, such that when we went to R2, we had all this supplier leverage. Suppliers are much more willing to work with us.

And then the third is content. And the content decisions are very subjective. Some will say, “Why did you make this decision?” I think often their perspective is that we forgot. On R1, here’s a really good example, we didn’t put a glove box in the car. So we have a really big center console, and we said, “We want to use this space in the area of the glove box. Actually, we have a bunch of computers in there, and we can make the front trunk a little bigger, and it also saved us some costs so we could put more money into suspension.”

Now, a lot of people disagreed with that. We reflected, and we said, “You know what? We think we’re going to take that decision differently in R2.” So in R2, we have two glove boxes. And it’s like, “There you go.”

BERMAN: Yeah. The sweet spot might be in between.

SCARINGE: Maybe.

BERMAN: I don’t know. One and a half. You pick a number.

SCARINGE: But it’s a very good example. It’s not like we forgot. It’s not, “Oh shoot, we forgot to put a glove box in R1.” No, it was a very intentional decision. As I described, there are millions of decisions. It’s like the Bob Dylan line: You can make some of the people happy some of the time. It’s a challenge to get every single feature that everyone wants. And this is why it’s so important to have a very small number of people making the very customer-facing decisions.

One of the things we do now to help make those decisions thoughtfully is, in the first six months of a program, we don’t allow more than 50 people to be involved. We learned this because Rivian on R1 naturally had this. The team was small. We grew into a larger team. As we finished R1, we said, “Let’s put that whole team on R2.” So R2 went from day one to day 10, with thousands of people involved, and it was like, “Whoa, we can’t make progress. We have all these decisions to make, and there are way too many people.”

So we reset the program and said, everyone that was on this should focus on making improvements to R1 while we define the architecture, define a lot of these big decisions, and get the rough pieces all in the right place. We put this very small SWAT team together with that in mind. We did that within Rivian R2. We did that with R3. We’re doing that on our future, you can imagine, R4, to get these really small, highly cross-functional teams to make these trade-offs that are inherently going to have a lot of subjectivity to them.

Copy LinkBuilding resilience in constant uncertainty

BERMAN: I want to close by asking about, we talked about the pace of change being truly unprecedented. It’s AI, of course, but it’s not just that. I mean, it’s dizzying, right? We’ve got trade issues with China, we have climate change, we have shifting EV subsidies in a more niche way. How are you staying on top of it, and how are you working with your team to make sure they’re staying on top of these ever-evolving circumstances?

SCARINGE: I think if you’re building a business today, you have to go into it knowing this is full-contact, multidimensional chess, and you’re doing it sometimes in the middle of a tornado, inside of a storm. Things are moving, and it’s really critical that you have a highly flexible mindset. You need to be convicted on the vision and the mission, but you need to flex on a lot of the details.

For Rivian, we launched the company, we launched three products within six months, in the middle of a pandemic, which was not something we planned for. We did not plan for work from home in 2020 as we were trying to build a plant and turn a plant into something that could operate. So it was maybe the most challenging environment to launch a plant into.

We then had huge supply chain challenges in 2022 and 2023, where I was flying around begging suppliers to get parts. In all of those situations, it’s built in me a recognition that resilience and comfort in instability, or comfort in chaos, is actually really important. So with that, we have a whole process inside the leadership team of checking our own assumptions. The world’s changing so fast. The thing we thought six months ago, is that still right?

I think businesses that are sitting still or have their head in the sand are just going to have a really hard time in the world of the future. Things are changing faster. Whether those are exciting things like the advent of AI completely remapping how we run our businesses, or whether they’re more challenging things like global conflict, either way they introduce uncertainty and instability that you have to manage around.

BERMAN: Well, we can’t wait to see what you all do next. It’s hard to imagine a more compelling guest for the first live podcast recording from Atlassian Stage, RJ. Thank you so much. Thanks again to RJ Scaringe for joining us, and a giant thank you to the entire team at Atlassian for hosting Masters of Scale as part of their incredible event, Atlassian Team ’26. I’m Jeff Berman. Thank you for listening.