Unveiled on Thursday, the smaller R2 SUV, which will start at $45,000, has attracted more than 68,000 reservations, CEO RJ Scaringe said in a post on X.
"With this new product, Rivian can potentially break more into the mass market segment, which represents about half of total U.S. auto sales," said analysts at Bank of America.
"The vehicle's smaller size could also give it an opportunity to gain traction in international markets that are typically not receptive of large pickups and SUVs."
Rivian plans to start producing the R2 at its existing U.S. factory to hasten deliveries in the first half of 2026.
The Amazon-backed (AMZN.O) EV maker hitting pause on the construction of its second factory in Georgia may result in cost savings that will delay further fundraise, analysts said.
The move is expected to drive additional savings of more than $2.25 billion for the company compared to its prior forecast.
The Illinois plant, where Rivian also makes its electric delivery vans, can produce 215,000 vehicles year after production of the R2 starts, the company said on Thursday.
In a surprise move, the company also introduced the R3 and a more powerful R3X variant on Thursday. The R3 will be cheaper than the R2 and will be launched after it.
The reveals come when EV demand is rising at a slower pace than automakers had expected, weighing on shares of the companies this year. Rivian's stock had halved in value this year, before the launch on Thursday.
Including Friday's gains, shares are up 19% and set for their best week since the week ending Dec. 15.
At current levels, about $500 million was set to be added to the company's market value of $12.23 billion. Since the launch, Rivian's market value has increased by nearly $2 billion.
Meanwhile, market leader Tesla (TSLA.O) has slashed prices to spur sales and is also pursuing a cheaper model.
"Given Tesla has shown little ambition to move into the SUV space, Rivian could be one of the few EV SUVs on the market that most investors will likely want to buy over the next 3-4 years," Evercore ISI analyst Chris McNally said in a note.
