American electric SUV and van maker Rivian is to launch a new smaller SUV which will have a starting price of around £31,000 in the US ($40,000) when it is launched in 2026, putting it squarely up against the Tesla Model Y and Fisker Ocean.

The news was revealed by Rivian’s CFO Claire McDonough, who spoke at last week’s Deutsche Bank conference and first reported in CarBuzz. 

McDonough said that the R2 SUV was almost ‘signed off’ in the styling studio and “still maintains some of that adventure aesthetic” from the R1 ranges but admitted there will have to be compromises to make it affordable. 

“We’re spending a lot of time in the studio on some of those key trade-offs today, but wanting to make sure it truly has some of that Rivian brand essence embedded in it as well.”

A hint about the size of the R2 was given in an official Q&A video hosted by Robert Scaringe, Rivian’s founder & CEO. When asked a question about the R2, Scaringe chatted to the design team in front of an R2 covered in a black sheet which showed the car as being boxy and compact.

There is no news on European or UK sales yet, but the R2 is likely to be the car which will really see the company’s expansion plans being ramped up. Rivian is also contracted to make electric delivery vans for Amazon.