Rising memory-chip prices are adding “many hundreds of dollars” to the cost of each Rivian vehicle, Founder and CEO RJ Scaringe said, putting a per-car figure on a cost pressure the company had until now described only in general terms.
“In the case of a vehicle that has a lot of capability, you’re adding many hundreds of dollars in costs with the price of memory going up so much,” Scaringe said at TechCrunch Disrupt in San Francisco.
“That was not something 12 months ago, 18 months ago, you would have predicted,” he said before adding that he thinks that “everyone who has products that have any sort of electronics is dealing with this.”
The comments came as Rivian ramps up the R2, its mid-size SUV, which started a second production shift in Normal, Illinois, before the end of September.
Two Responses
Scaringe said there were “really two ways” to deal with the squeeze.
“One is you fight very, very hard to get the amount of memory in every product down,” he said, calling that “a tactical exercise.” “The other is building lots of potential supply paths, so multiple different suppliers providing memory,” he said.
“And then at the end you’re paying more,” he added. Rivian had previously flagged memory as a cost headwind without quantifying it.
Chief Financial Officer Claire McDonough told analysts on the July 30 earnings call that “increases in raw material costs, increases in memory costs, as well as increases in logistics costs” had offset better regulatory-credit revenue and higher volumes in the company’s full-year guidance.
McDonough will be leaving Rivian by the end of October to join GE Vernova.
Rivian expects an adjusted loss before interest, taxes, depreciation and amortization of $1.8 billion to $2.0 billion this year.
Data Centers Compete for Parts
Scaringe said the supply chain was “by far” the biggest challenge in the R2 ramp, more than any surprise in the vehicle program itself.
“We have cost structures that have gone up dramatically around the physical world, largely driven by the demand for a lot of those same resources for building data centers,” he said.
“If you’re building manufacturing plants, there’s constraints on resources,” he added.
He described the operating environment as “probably the most complex they’ve been in a long time,” citing “very dynamic geopolitics” and tariffs.
Outside Rivian, memory prices have climbed across the industry this year as AI data centers absorb DRAM supply.
Nio Founder and CEO William Li said in March that memory prices were adding 3,000 to 5,000 yuan per vehicle for each affected component category on the brand’s premium models, and TrendForce expected contract DRAM prices to nearly double in the first quarter.
Rivian’s first truck, the R1, launched in late 2021 into the pandemic-era chip shortage, and Scaringe said the R2 program had far fewer surprises because the company was “so much more mature.”
“If any single one of those is late, that can delay the program, that can delay ramp-up,” he said of the tens of thousands of parts in a car.
The Chip Rivian Built
Scaringe set the memory squeeze against the one piece of silicon Rivian now controls.
The company decided “four years ago” to design its own inference processor for self-driving, he said, a program that cost “many hundreds of millions of dollars.”
“But ultimately at the end you have a structural cost advantage where you’ve taken the inference cost in the vehicle down by many hundreds of dollars,” he said.
Rivian unveiled that chip, the RAP1, at its Autonomy and AI Day in December 2025, as a 5 nm processor that integrates processing and memory on a single multi-chip module and delivers 1,600 sparse TOPS.
Evercore ISI analyst Chris McNally called the decision to drop Nvidia in favor of an in-house chip the “lone surprise” of that event, in a note to clients.
Mukund Chavan, Rivian’s VP of ASIC Design, said in a March interview with Creative Strategies that Rivian had pulled the memory off the board and into the multi-chip module, eliminating a high-density interconnect board and reducing system cost.
The first R2s with the chip and LiDAR go to employees at the end of this year and to customers in 2027, Vice President of Investor Relations Chip Newcom said on September 29, and that cost sits in automotive cost of goods sold.
Scaringe said the same approach covers “motors, gearboxes, power electronics, all the electronics in the vehicle” and all of its software.
“If you had infinite time, infinite resources, we wouldn’t have any suppliers,” he said, adding that Rivian still buys steel, aluminum and copper from upstream suppliers.
The R2 Ramp
Rivian delivered a record 19,248 vehicles in the third quarter, up 57.8% from the second, without saying how many were R2s.
Cox Automotive estimated that Rivian sold 3,456 R2s in the US in the quarter, the model’s first full quarter on sale.
Rivian recognized about $100 million in incremental cost of revenue in the second quarter from the R2 ramp compared with normalized production, McDonough said on the July call.
The company expects to deliver 65,000 to 70,000 vehicles this year, a guidance reaffirmed earlier this month when reporting its third-quarter delivery figures.
