Automakers prioritizing internal combustion engines over electric vehicle (EV) technology face a significant risk of becoming technologically obsolete by the end of the decade, according to Rivian founder and CEO RJ Scaringe. While many traditional manufacturers have retreated from EV investments to chase short-term profits in petrol and hybrid vehicle sales, this pivot could leave them unable to compete as software-defined vehicles become the market standard.
Why are major automakers pulling back from EV investments?
A collective shift toward traditional powertrains has resulted in more than $70bn (£53bn) in written-off EV investments across major manufacturers, including Ford, General Motors, Honda, Stellantis, and Volkswagen, according to data from Reuters. This retreat is largely concentrated in the US market, where shifting federal incentives have led companies to prioritize the immediate profitability of petrol-powered SUVs and pickup trucks.
Scaringe describes this move as a “fork in the road.” While these strategies may stabilize financial reports for 2026 and 2027, the lack of investment in next-generation software architecture could leave these firms “woefully behind” by the early 2030s. Unlike legacy designs, modern electric vehicles rely on centralized software systems that allow for easier updates and more efficient manufacturing, a capability that represents a long-term competitive advantage.
How does software architecture determine long-term success?
The primary danger for traditional carmakers is not just the engine type, but the failure to transition to software-centric vehicle design. According to Scaringe, petrol-dependent manufacturers remain tied to legacy designs that distribute chips across disparate systems—from engine management to seat adjustments. This fragmented approach increases production complexity and costs compared to the centralized, software-first approach adopted by newer entrants.
Rivian has sought to mitigate these risks through strategic partnerships. The company secured a $5.8bn software and electric technology joint venture with Volkswagen in 2024 and an additional $1.25bn investment from Uber.
What is the outlook for the EV market?
Scaringe noted that the dominance of Tesla’s Model 3 and Model Y in the US indicates a market “starved for great choices” rather than a fundamental rejection of electric mobility.
Rivian is banking on this demand with its R2 SUV, which the company views as a critical product for reaching profitability. With US EV sales accounting for 7.8% of the total market in 2025, the company aims to capture additional market share as it expands its reach beyond the US into the UK and mainland European markets.
Pro Tip: Evaluating EV Stocks
When assessing the long-term viability of an automotive manufacturer, look beyond current quarterly profit margins. Investigate the company’s investment in centralized software architecture and R&D for autonomous driving systems, as these technologies are primary indicators of a firm’s ability to survive the shift away from internal combustion engines.
Frequently Asked Questions
- Why are carmakers writing off EV investments?
Many manufacturers are responding to shifting regulatory incentives, choosing to focus on the immediate, higher profit margins of traditional petrol vehicles, according to Reuters. - What is a software-defined vehicle?
It is a car that relies on a centralized computer architecture to control its functions, allowing manufacturers to improve vehicle performance and features through software updates rather than hardware changes. - Is Rivian profitable?
No. The company reported a $3.6bn loss in 2025 as it continues to invest heavily in new vehicle platforms like the R2 and autonomous driving technology.
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