Tesla Inc.'s (NASDAQ:TSLA) rivals have replicated its Model Y in a bid to develop cheaper EVs, resulting in a lack of choice for customers in the U.S. EV market looking for cheaper electric vehicles, according to Rivian Automotive (NASDAQ:RIVN) CEO RJ Scaringe.

What Happened: The slowdown in EV sales, as per Scaringe, is largely owing to the 'truly extreme' lack of choice within the U.S. EV market for vehicles priced under $50,000.

"If you want to spend less than $50,000 for an EV, I'd say there's a very, very small number of great products. Tesla Model 3 and Model Y are highly compelling, great products, but they don't have a lot of competition," Scaringe said in an interview with The Verge.

While other EV makers have tried to make EVs that fit the below $50,000 price range, they "unfortunately" replicated the shape and overall proportions of the Model Y such that it ultimately provides no choice to the customer, the CEO opined.

"Ironically, because of the Model Y's success, you have a lot of incumbents that have built products that look and feel and are shaped a lot like a Model Y. That's very different from the internal combustion space where you have hundreds of choices, lots of brands, lots of variety of form factors," Scaringe said.

Model Y is Tesla's best-selling vehicle, seconded by its mass-market sedan Model 3. The Model Y starts at $44,990 for the base version in the U.S. while the Model 3 starts at $38,990.

Why It Matters: Rivian itself is currently gearing up to start production of a smaller, cheaper R2 SUV priced under $50,000, unlike its pricier R1 offerings which start at around $70,000. While the R2, expected to be priced at around $45,000, will compete directly with the Model Y in terms of pricing, it has a very different form. The R2 is a smaller version of Rivian's R1S SUV, while Model Y is a crossover SUV that largely resembles a car.

"The R2 very intentionally, much like we did with R1, is not trying at all to be a Tesla Model Y. It's going to compete from a price point of view, with very similar pricing. It's a very similar size. It's slightly shorter than a Model Y, but it's not trying to replicate a Model Y," Scaringe said about the R2's design. The CEO admitted to having owned a Tesla Model Y before which he termed "an awesome car."

R2 is expected to go into production in early 2026.

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