Rivian's Q1 2024 Earnings Call

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[00:01:27] Welcome to the Rivian First Quarter 2024 earnings conference call.

[00:01:30] At this time, all participants are in listen only mode.

[00:01:33] Please be advised that today's conference is being recorded.

[00:01:36] I would now like to hand the conference over to your host.

[00:01:57] Hello everyone and welcome to Killawata podcast about electric vehicles, renewable energy,

[00:02:01] autonomous driving and much, much more.

[00:02:03] My name is Bodie and I am your host.

[00:02:06] And on today's episode, we're going to talk about Rivian's Q1 2024 earnings call.

[00:02:12] Let's start off with the legal language.

[00:02:14] Good afternoon and thank you for joining us for Rivian's First Quarter 2024 earnings call.

[00:02:20] Before we begin, matters discussed on this call, including comments and responses to questions,

[00:02:25] reflect management's views as of today.

[00:02:28] We will also be making statements related to our business operations and financial performance

[00:02:33] that may be considered forward-looking statements under federal securities laws.

[00:02:37] Such statements involve risks and uncertainties that could cause actual results to differ materially.

[00:02:42] These risks and uncertainties are described in our SEC filings and today's shareholder letter.

[00:02:48] During this call, we will discuss both GAAP and non-GAAP financial measures.

[00:02:52] A reconciliation of GAAP to non-GAAP financial measures is provided in our shareholder letter.

[00:02:58] I encourage you to read it for additional details around some of the items we'll cover on today's call.

[00:03:03] All right, now that we got that stuff out of the way,

[00:03:05] we'll get right to RJ Scorringe's opening remarks.

[00:03:08] As always, these are edited opening remarks.

[00:03:10] I only included the stuff that makes the most amount of sense for what we do here on this show.

[00:03:15] If you want the full unabridged earnings call, I will put a link in the show notes.

[00:03:20] But for now, here are RJ's edited opening remarks.

[00:03:33] The R1T is the fifth best-selling EV maker in the United States with a market share of 5.1%.

[00:03:38] Our vehicles have driven more than 900 million cumulative miles

[00:03:42] and our brand awareness and market position continues to grow.

[00:03:45] Additionally, the R1T is the only pickup in the United States

[00:03:48] to receive the Top Safety Pick Plus Award from the Insurance Institute for Highway Safety.

[00:03:54] Building on this, the results of our recently implemented demand generation

[00:03:57] and brand awareness strategies have been encouraging.

[00:04:01] We hosted over 28,000 demo drivers in the first quarter of 2024,

[00:04:05] an increase of 90% versus the fourth quarter of 2023.

[00:04:09] We recently launched R1S Leasing and grew the number of states with this offering.

[00:04:14] While the broader vehicle market is still experiencing challenges,

[00:04:17] we are encouraged by the early results of our initiatives

[00:04:20] and have confidence in our 2024 delivery outlook.

[00:04:23] In March, we unveiled our new midsize platform

[00:04:25] which underpins the R2, R3, and R3X products.

[00:04:28] It is great to see the outstanding support for our brand and upcoming products.

[00:04:31] R2 is our versatile new midsize SUV with room for five people.

[00:04:35] It captures the essence of Rivian.

[00:04:37] It's built for adventures as well as everyday use

[00:04:39] with its exceptional utility, performance, and capability.

[00:04:42] We expect the price to start at $45,000

[00:04:45] with deliveries slated to begin in the first half of 2026.

[00:04:48] R3 is our midsize crossover.

[00:04:51] This unique vehicle is tidy in dimensions

[00:04:53] but delivers big in terms of performance, passenger comfort, and storage.

[00:04:57] R3X is the performance variant of R3

[00:05:00] offering even more dynamic abilities both on and off-road.

[00:05:03] R3 demonstrates the scalability of Rivian

[00:05:06] across different form factors and segments.

[00:05:08] It will be priced below R2

[00:05:10] and deliveries will start after R2

[00:05:12] to ensure a smooth launch and rapid ramp.

[00:05:15] Our massive focus on cost and efficient manufacturing for R2 and R3

[00:05:19] is achieved by deeply analyzing every system and associated component

[00:05:23] and asking if it can be simplified

[00:05:25] or through opportunities for park consolidation or elimination.

[00:05:28] Use of large high-pressure die castings

[00:05:30] in the body structure,

[00:05:32] a structural battery pack whereby the top of the battery

[00:05:35] is the floor of the vehicle,

[00:05:37] further simplification of the electrical system

[00:05:39] and associated wiring harness

[00:05:41] through a focus on electronic control unit design topology

[00:05:44] are just a few examples of how we are using innovation to drive down costs.

[00:05:47] Beyond engineering opportunities, when compared to R1,

[00:05:51] R2 also has significant cost opportunities through competitive sourcing.

[00:05:55] Turning to our recent tooling upgrades in our normal facility,

[00:05:58] the team made meaningful progress

[00:06:00] and we are now back to producing R1 vehicles on our production line.

[00:06:03] The upgrade introduced new technologies

[00:06:05] and cost-focused material changes into the R1 vehicle platform.

[00:06:09] The plant retooling upgrade also provided the opportunity

[00:06:12] to improve manufacturing processes

[00:06:14] that enable the R1 line to run at approximately 30% higher line rate.

[00:06:18] In addition, we improved the flow materials

[00:06:20] and inventory in the plant.

[00:06:22] These changes are expected to improve cycle time, utilization and cost.

[00:06:26] The opportunity ahead is significant.

[00:06:28] We hold the deep conviction that the entire automotive industry

[00:06:31] will electrify over the long term

[00:06:33] and we continue to take the necessary steps

[00:06:35] to best position Rivian as a leader in this transition.

[00:06:38] Alright, I have a few comments.

[00:06:41] RJ said that Rivian was the fifth best-selling EV maker in the United States

[00:06:47] and I was like, well that's not much of a brag.

[00:06:49] How many EV makers could there be in the United States?

[00:06:52] Because in my head there was like 10 maybe, maybe 12.

[00:06:57] Well, turns out there's quite a bit more.

[00:06:59] We have Audi, BMW, Bright Drop, which is a delivery van, which counts.

[00:07:04] Cadillac, Chevrolet, Ford, Genesis, GMC, Fisker, Hyundai, Jaguar, Kia, Lexus, Lucid, Mazda, Mercedes, the Mini.

[00:07:16] Nissan, Polestar, Porsche, Rivian, of course.

[00:07:20] Subaru, Tesla, Toyota, Vinfast and Volvo and VW of course.

[00:07:26] So yeah, there's actually quite a few EV makers here in the United States.

[00:07:32] I do this multiple times a week.

[00:07:36] I don't know why I didn't put that together, but there you go.

[00:07:41] He did mention, I don't know if he said this in the clip or not,

[00:07:46] but he did mention that the R2 would start at around $45,000

[00:07:52] and they were working on production line upgrades, which he did say.

[00:07:57] Now Claire McDonough, who is the CFO, I did not put the clip in of her talking for time purposes,

[00:08:05] but here's what I got out of her opening remarks.

[00:08:09] So in the first quarter of 2024, Rivian produced 13,980 EVs and they delivered 13,588 EVs.

[00:08:20] So not too bad for Rivian.

[00:08:23] They expect to be profitable by Q4 of 2024,

[00:08:28] and they're going to do this by retooling, which they are currently doing at their normal Illinois factory,

[00:08:34] and they're renegotiating with suppliers, and many of these contracts are already signed.

[00:08:39] So they might have completed all the renegotiation.

[00:08:42] Rivian is going to get $100 million in different types of incentives from the state of Illinois.

[00:08:49] Let's see here. They expect to deliver 57,000 vehicles total in 2024,

[00:08:55] and recently I drove past a parking lot that must have been a staging area for Rivian delivery vans

[00:09:01] because it looked like there was about a hundred of these small Rivian delivery vans just sitting in a parking lot waiting to be distributed.

[00:09:08] So that's not too shabby.

[00:09:10] All right, let's go ahead and move on to our analyst questions.

[00:09:13] And the first question is about a unknown phone maker, large phone maker, read into this Apple,

[00:09:20] potentially collaborating with an EV startup, read into this possibly Rivian.

[00:09:26] And what are RJ's thoughts were on this news if he wanted to comment on it at all?

[00:09:33] So let's go ahead and listen to this very convoluted question.

[00:09:39] Thank you. Our next question comes from Adam Jonas with Morgan Stanley.

[00:09:44] Your line is open.

[00:09:48] Hi, thanks. Good afternoon, everybody.

[00:09:51] So RJ, I'm going to assume you're not going to comment on the widespread story today of a large maker of phones potentially collaborating with an electric vehicle startup.

[00:10:05] Unless you want to. But what would be in it for a player of that ilk to work with you or what?

[00:10:15] What would be worthwhile to Rivian to benefit from player like that, that Amazon doesn't already strategically and technically provide support to you already have a follow up.

[00:10:26] Thanks.

[00:10:29] Thanks, Adam. Yeah, yeah, we don't comment on Mark rumors or speculation.

[00:10:34] As you alluded to, we have a history of partnership and of course, Amazon is our largest shareholder today and a very close partner across a variety of avenues has been really a foundation element of the business.

[00:10:51] They were quarter launching the commercial arm of the business and today represent the vast, vast majority of our commercial vehicle sales.

[00:11:00] But, you know, as we think about what we've built as a company, one of the core core elements that makes us unique is just the level of vertical integration around our software and associated electronics platforms.

[00:11:14] So the ECU is in the vehicle and essentially the various computers across the vehicle and then the base software, you know, the base operating system all the way up to the applications layer.

[00:11:25] Creating those ourselves without the need to rely on tier one suppliers gives us a lot of gives us a lot of customer facing strength, but also creates opportunities for partnership.

[00:11:35] Certainly, you know, I was looking at Fisker this week and their market cap is right about $29 million a few days before, like at the beginning of the week is that $32 million.

[00:11:49] So, you know, if you wait long enough, you could pick up Fisker as a company for pocket change.

[00:11:55] It'll be really good value is what I'm saying.

[00:11:57] They have good products, good design and it's it would be really cheap to pick up the company.

[00:12:06] So if Apple wanted to dip their toe into the EV space, they could easily just buy Fisker and turn it into what they want it to be.

[00:12:18] And if it fails, it's only $30 million for them.

[00:12:23] It's a relative. It's a rounding error.

[00:12:25] They can they can play with it and decide, you know what?

[00:12:28] This doesn't work.

[00:12:29] You know what? This doesn't work.

[00:12:30] Spend a total of $100 million and then just kind of walk away with it and walk away from it.

[00:12:35] And it wouldn't be a big deal for them, honestly.

[00:12:39] We have a follow up question from Adam and that is about large language models.

[00:12:44] So let's go ahead and listen to that.

[00:12:46] And I should say large language models as it pertains to autonomous driving.

[00:12:51] OK, thanks, RJ.

[00:12:52] Just as a follow up to that, if I focused on your vehicles, ADAS and data collection capabilities,

[00:13:01] driver plus and exterior cameras, 12 ultrasonic sensors, five radars.

[00:13:05] You got compute.

[00:13:06] You mentioned the vertical integrated, the custom ECUs and architecture.

[00:13:10] I think you I think you your fleet drives more in five hours than Apple did in all of last year with their autonomous car program before it was canceled.

[00:13:21] We're hearing from people in that field of ADAS and robotics.

[00:13:25] That has been a real revolution due to LLM and Gen AI on bringing forth end to end learning and neural net training.

[00:13:36] I'm curious if you have also witnessed that you and your your autonomy team can concur with that.

[00:13:42] And if so, does that then change your CapEx profile of how you allocated to super compute either directly through Nvidia GPU clusters as part of your CapEx the way your rival Tesla is doing or otherwise working through partners and hyperscalers

[00:13:58] and Amazon in order to get access to that compute to get closer to achieving autonomy?

[00:14:06] Thanks.

[00:14:07] You know, you just in the nature of the question, you made a point that we've made for a while which I really agree with, which is the key element to deliver

[00:14:20] really strong autonomy platform and something to continue to grow and get better over time is controlling the perception stack.

[00:14:26] And by controlling the perception stacks, that's the cameras and radars in particular.

[00:14:32] It allows us to have early fusion of that information.

[00:14:36] And the early fusion information allows us to not only best perceive the situation around the vehicle, but to create the best response that the best controls for what the vehicle should do next.

[00:14:48] And the challenge with systems that are built through a collection of third party source sensors or third party source software is that that learning loop and the opportunity to leverage the entirety of the sensor set and the perception stack becomes far more limited.

[00:15:06] And so we've we've architected our autonomous platforms and in particular what's to come on our future platforms around really controlling the entirety of all the data coming in.

[00:15:20] And then also really control how we we use a lot of training models to continue to drive progress into the platform.

[00:15:28] As you point out the training models, there's lots of ways to run them, but ultimately it requires a build out over time of a large, very large clusters of CPUs to help train and build the robustness into our into our driving models.

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[00:18:10] Now I don't know where Rivian is in their autonomous driving efforts but I would imagine they're not very far along compared to some of these other companies like Ford GM cruise and Tesla.

[00:18:27] But that doesn't mean that they're out we're actually going to talk with Rod Simmons if you remember Rod he is one of the members of the SMR podcast podcast that I'm constantly recommending and if you're not listening to it you should because they talk about EVs on there in tech.

[00:18:43] And all sorts of other fun stuff but anyway Rod is actually going to come on next month and discuss his new Rivian R1T and just kind of talk about his thoughts in Rod is a Tesla owner he owns a Model X and a Model 3 performance I believe.

[00:19:00] So it'll be interesting to get his take on what Rivian is doing in terms of driver assist technology.

[00:19:07] Alright let's go ahead and move on to our next clip which is more information on that vertical integration that RJ talked about.

[00:19:17] Maybe just a follow up on vertical integration and so I understand that the move to put R2 into normal instead of Georgia was one of capital efficiency but just amid this pivot in strategy maybe you can give us a sense of if you're thinking any differently about your level of vertical integration.

[00:19:41] I understand vertical integration is obviously still very key to the strategy but are you thinking any differently about the level of vertical integration that you're pursuing maybe relying on partners a bit more versus what you maybe would have done in house.

[00:19:58] Thank you.

[00:20:01] Sure.

[00:20:02] I just referenced it a bit Dan but one of the really key areas for us is controlling the electrical architecture in the vehicle, the network architecture and the associated software that's running across all those platforms.

[00:20:18] And what that versus what the vast vast majority of vehicle manufacturers pursue essentially the exception of one other manufacturer which is a tier one heavy approach for tier one suppliers provide a variety of controllers that they control a function within the vehicle.

[00:20:37] By controlling all those computers all those ECUs, it allows us to much more easily consolidate functions, not by the domain but rather across zones, so we can set up what we call a zonal controller that's in an area of the vehicle that controls all functions across that area.

[00:20:56] And the amount of savings that's possible by doing this is not measured in hundreds of dollars but measured in thousands of dollars. And the simplification of the vehicle harness that results from that is also quite significant.

[00:21:10] And that's all you know Rivian facing advantages in terms of cost simplification, simplified the build process. But it also creates a lot of advantages for customers we've already seen this, you know from the launch of our one where the control of those.

[00:21:24] And the control of those, all those platforms allow us to do deep over the air updates I say deep I mean real over the updates we're not just changing a color on the screen but rather introducing real features changing the way the vehicle drives improving the battery performance, improving

[00:21:40] thermal performance.

[00:21:42] You know things that are meaningful to the ownership experience of the vehicle.

[00:21:47] And that we remain very convicted on. And in fact the benefits of the heavy investment necessary to build up all that capability will really be realized with our to where are two will leverage the network architecture the ECU topology.

[00:22:04] Of course the software stack that's been developed in our one and the changes that we've just made as part of the cost down process with our one that architecture will be going into our two so we can look at this also as a de risking of the launch of our two.

[00:22:19] And in what I've talked about software electronics it's important to note that this also extends to the way we've approached a high voltage systems. So, our batteries are battery packs battery modules drive units inverters.

[00:22:33] These are all areas that we've developed in house technology around. And of course at the scale of our one. It's, you know, has a high fixed costs associated with it.

[00:22:42] But with our two coming online we really see significant structural cost advantages by owning these areas and by building these areas in house.

[00:22:53] So there were a lot of questions asked and obviously I don't include all of them because some of them just don't even make sense to add to this show because they're about financial stuff or something that's so businessy that there's really no value for this show.

[00:23:07] There's probably value somewhere else but not for this specific show. Anyway, out of most of the questions that were asked that I did not include there were elements of what RJ just said.

[00:23:21] So I can't remember where exactly this clip would be in the timeline of the earnings call but it's pretty late.

[00:23:28] I did not include many clips from early many of the early analyst questions just because they just weren't that interesting but there were little elements in there that were interesting.

[00:23:39] And I was thinking to myself how am I going to add these really interesting elements into this and piece it together so that it makes sense. But I'm not wasting your time.

[00:23:47] And actually that clip that you just listened to did a really good job of summing up all of those things that I thought were interesting.

[00:23:54] And obviously RJ did it in a way that made sense so it made my job a whole lot easier. So that's why we got that clip.

[00:24:00] Next up we're going to get an update on Rivian's latest production line upgrades and we're going to hear a little bit about their supplier contracts because Rivian renegotiated a bunch of contracts and they also got new suppliers with better terms.

[00:24:15] So let's listen to that clip.

[00:24:17] Our next question comes from George Gianarichus with Canaccord Genuity. Your line is open.

[00:24:24] Hi, good afternoon and thank you for taking my questions.

[00:24:28] I think you mentioned in your prepared remarks that you're bringing the lines back up.

[00:24:34] Curious as to what you can share in terms of the experience there and also how the new supply relationships have gone.

[00:24:42] I know you decided to switch out some suppliers and any detail there would be appreciated. Thank you.

[00:24:48] Thanks, George.

[00:24:52] You know it was interesting. We at the start of the month, or start of April, we stopped production of our launch vehicle.

[00:25:04] And walking through the plant and seeing it without a single vehicle on the line was a unique feeling. We hadn't seen that since we started production.

[00:25:12] And sort of gave you a bit of a feeling in your stomach as you walked through.

[00:25:17] And the precision in the execution of integrating so much new equipment, new process design, as you saw in the letter, hundreds of new robots and hundreds of updated or modified robots into the plant

[00:25:30] to allow the plant to run at a 30% higher line rate.

[00:25:34] And to have the orchestra of all those activities both in the plant and then across our supply base to have a very large number of new suppliers come on board

[00:25:45] and a significant portion of the bill of materials change over to these new suppliers and updated part designs

[00:25:52] to have executed that full effort with the intensity and the focus to drive that efficiency into the plant and into our overall cog structure.

[00:26:02] It was really an exciting April to say the least.

[00:26:06] And it's amazing to see the plant running again, to see the changes we put in place, solving some of the challenges that existed in the line before,

[00:26:18] solving some of the areas where we felt the costs were not appropriate at the vehicle level.

[00:26:24] And we're excited to see those changes manifest in the improvements in our cost of goods sold and, of course, in the roadmap to our positive growth margin.

[00:26:35] You know, I was curious as to how much cash on hand Rivian has.

[00:26:39] And I don't know what the most updated number is, but as of December, the end of December 2023, they had about $9 billion on hand.

[00:26:48] So I would imagine they have pretty close to $9 billion on hand currently.

[00:26:52] That puts them in a really good position for a EV startup company to ramp up and start production for the R2.

[00:27:02] And that leads me to our next question, which is can we pull the R2 production and deliveries forward?

[00:27:10] Can we make that happen sooner? So let's go ahead and listen to that.

[00:27:15] Great. And maybe as a follow up, I know you'd mentioned the R2 is coming in the first half of 26.

[00:27:21] What are the opportunities to potentially pull that forward in terms of timing? Thank you.

[00:27:25] The decision to launch R2 out of normal was to, there's many things that drove it.

[00:27:35] Claire talked before about the $2.25 billion in capital savings associated with it.

[00:27:40] But beyond that, what's harder to measure in the numbers was just the ability to leverage the existing teams and the operations that we have in normal.

[00:27:50] And those teams, it's taken us a lot of time. We've built strong teams, strong leadership at the shop level.

[00:27:59] I spend a lot of time at the plant, a lot of time on the floor with our team members.

[00:28:03] And that buildup of training capabilities, learning capabilities, leadership at the team leader, group leader, manager and director level across the plant is something we'll now be able to leverage.

[00:28:16] And it takes not only risk out of the R2 timing, but allowed us to pull R2 into the first half of 2026.

[00:28:25] Now there's not a single person within Rivian that isn't trying to find ways to pull R2 forward, but we would love to see R2 sooner.

[00:28:34] The amount of excitement for the product is palpable, notwithstanding the excitement that we all have on our own.

[00:28:41] But we also want to ensure that the product, when it hits the market, is exceptional.

[00:28:47] And making sure our supply base is robust, making sure there aren't supply issues as we launch is really important to ensure we have as smooth of a launch as possible.

[00:28:58] Of course, learning from the R1T launch, the R1S launch, the EDV launch, the relaunch of EDV with post-cost downs and now the relaunch of R1 post-cost downs.

[00:29:07] We've gone through a number of launch events with each one getting better and stronger.

[00:29:11] And the clarity we have on the importance of robustness of the supply chain, both from a quality point of view, but also from a ramp efficacy point of view,

[00:29:20] is driving us to make sure that as we think about that 2026 launch, it's not just what we can control in our plant, but it's through all the many relationships across our supply base

[00:29:31] to ensure we're ready to step from not producing R2 at scale to producing at scale very quickly.

[00:29:38] I'm curious as to what your thoughts are if Rivian was to accelerate the production plans for R2.

[00:29:49] Do you think that's a good idea or a bad idea? Because I'm going to tell you my thoughts right now. I think it's a terrible idea.

[00:29:55] In the time that I've been doing this podcast, every company who's tried to rush a product to market has had problems.

[00:30:06] And in some cases they were business ending problems. Now I said that Rivian has $9 billion in the bank and that's a lot of money.

[00:30:14] Don't get me wrong, ton of money. But when you're ramping up production on something and you're losing money on all of the other vehicles that you sell,

[00:30:20] it's not that much money. Like Rivian is going to need all the money they can get to get R2 off the ground.

[00:30:28] And if they were to risk pulling that, in this guy's words, pulling forward production,

[00:30:36] if they were to risk that, they could risk causing more problems and end up costing the company more money.

[00:30:45] I don't think Rivian would go out of business because they're pretty well established at this point.

[00:30:48] Somebody would come in with a bigger investment. But it would hurt the company and I think it would hurt the reputation of the company more than anything.

[00:31:00] Like Tesla with the Model 3, they couldn't get production right. With the Model X, they couldn't get production right.

[00:31:06] We kind of gave them a little slack with the Model S and Model X. Model X had a ton of problems with those Falcon Wing doors.

[00:31:13] And then you have Lordstown that was pushing production and that didn't work out.

[00:31:19] Fisker, I don't know if Fisker really pushed production so much.

[00:31:23] I think they were probably okay with the production on the ocean, but they definitely didn't have the delivery mechanisms in place.

[00:31:32] And then we heard about Fisker losing checks where people were buying whole cars and Fisker didn't know where their check went.

[00:31:39] So that kind of thing causes problems. If you don't have the systems in place, maybe you can build the car.

[00:31:47] Maybe they can build 10,000 R2s a week if they don't have the systems in place to deliver them, to actually cash the checks and to make sure that the cars are clean.

[00:32:02] If they don't have all of the important systems in place along that pathway, then it's not going to be a successful launch.

[00:32:13] Everybody is going to nitpick the R2. Even if it's great, even if everything goes off without a hitch, there's going to be people who nitpick this thing.

[00:32:23] But if you are failing on the basic levels of what people expect, then good luck. They're going to tear you apart.

[00:32:34] And we've seen this over and over and over again. Like again, I think the Fisker Ocean is a great car.

[00:32:41] Production doesn't seem to be an issue for them. MagnaStar seems to have done a great job.

[00:32:46] Software seems to be an issue. Delivery, having that pipeline in place to deliver vehicles, that's an issue for Fisker.

[00:32:58] And I don't think Rivian wants that. Very early on when Rivian was setting up their distribution network, they partnered with companies that do this kind of thing for a living.

[00:33:10] I can't remember all the people that they partner with, but they partner with a ton of different companies to get their products from the factory to the customer.

[00:33:23] And that's really smart. Rivian is a really smart company.

[00:33:28] And if they push production up because they want to get these cars out, but they don't have all of these other things in place, I think that's going to be bad for their brand.

[00:33:36] Will it be bad for their brand forever? Probably not. But I think it'll be bad for their brand and I think it'll be really hard for them to recover.

[00:33:46] And what they want to do is they want the R2 to be a success right out of the gate.

[00:33:51] And they also want it to be profitable. They would love to make some money.

[00:33:57] All right, let's move on to our next clip, which is what does the next three to six months look like for Rivian?

[00:34:02] Our next question comes from Alex Potter with Piper Sandler. Your line is open.

[00:34:09] Perfect. Thanks, guys. So I'm wondering if you could talk about what the next three to six months in normal will look like now that you've gone through a lot of the heavy lifting with the retooling.

[00:34:21] To what extent is there any remaining execution or ramp risk with the plant as it exists right now?

[00:34:28] Thanks, Alex. You know, coming out of a launch and I was just on the line with the team going through how things are running post relaunch.

[00:34:44] The energy within the plant is palpable. The excitement to deliver on improved quality and improved cycle time is real.

[00:34:53] And with the changes we made around the overall efficiency, the layout, the efficiency material flow,

[00:35:00] we're really excited to see that pull forward into reduction in cost of goods sold.

[00:35:09] Now with that, it's not as if the plant turns back on immediately at full rate. So there is a ramp associated with it.

[00:35:16] We're following a prescribed and planned ramp of the facility.

[00:35:21] And that, as I said in my previous discussion, that ties to the suppliers.

[00:35:29] So we also need to make sure our suppliers are ramping at the same rate.

[00:35:32] And given the number of changes we've made with our supply base, those suppliers, in many cases new suppliers, are ramping along with us.

[00:35:41] And so as that's all happening, we're also really remain focused on ensuring that the plant and normal is also getting ready to ingest R2.

[00:35:54] And so there's a number of investments we're making into normal to ensure the R2 ramp is seamless and as capital efficient as possible as well.

[00:36:02] I thought I would end the podcast on a positive note, and I think that's pretty positive.

[00:36:07] There's a lot of hope, a lot of excitement and anticipation for what's to come for Rivian.

[00:36:14] So I think this is a good place to end it.

[00:36:16] Before I let you go though, I do want to recommend a podcast by our friend Bart Bouchat.

[00:36:23] So Bart has several podcasts. He does Security Bits with Alice and Sheridan on the Nosilicast.

[00:36:30] He has Let's Talk Apple and he has another podcast called Let's Talk Photography.

[00:36:35] One of the cool things Bart does with his podcasts, the ones that he produces on his own, is he releases them once a month.

[00:36:44] So Let's Talk Apple is a complete rundown of what happened with Apple in the previous month.

[00:36:50] And Let's Talk Photography, he talks about very easy photography tips, things that you can do with your phone.

[00:36:57] And on the latest episode, he sat down with Jill from the Northwoods.

[00:37:03] And if you don't know who Jill is, you should definitely take a moment and check this podcast out because Jill has so many different podcasts.

[00:37:11] Her latest podcast is called Buzz, Blossom and Squeak, which is a podcast about going outside and discovering nature, which is a weird concept.

[00:37:20] But Jill has other podcasts as well, which is Start with Small Steps, Small Steps with God and The Bible in Small Steps.

[00:37:28] And I just want to encourage everybody to go and listen to these shows, listen to Bart's shows, listen to Jill's shows because I get value out of their shows and they're both really nice people.

[00:37:40] So check the show notes for Bart and Jill's links and go support what Bart and Jill are doing and listen to that episode of Let's Talk Photography.

[00:37:49] I'm going to be 100% honest with you.

[00:37:51] I have not listened to that episode yet because I just discovered it right, right before I started recording this episode.

[00:37:57] But since I already listen to Bart and Jill's podcasts separately, it's almost like those Reese's Peanut Butter Cup commercials back in the 80s where somebody put somebody's chocolate in their peanut butter and two great things became one really great thing.

[00:38:13] I'm positive that's what this episode is going to be.

[00:38:15] Alright, that's enough of me.

[00:38:17] Let's go ahead and end this podcast so you can go listen to Bart and Jill.

[00:38:21] If you want to email me it's Bodie, B-O-D-I-E at 918digital.com.

[00:38:26] You can also find me on X at 918digital.

[00:38:30] I'll probably be other places as well, but I don't have the energy to post anywhere else.

[00:38:35] So email or X.

[00:38:37] That's where you can find me.

[00:38:38] I hope you all have a wonderful weekend and on Tuesday's episode we're going to talk to the founders of Telo Trucks.

[00:38:46] And I think you're going to really enjoy that episode.

[00:38:49] I did.

[00:39:09] Well, thanks everyone for joining us on the call today.

[00:39:11] You know, we've talked Claire and I for the last few quarters about the shutdown that we just we've just completed in our now re-ramping R1 production, you know, following that.

[00:39:22] This is a really important step for us.

[00:39:24] It was a critical step in order to achieve the long-term gross margin potential of the R1 platform and of course therefore the normal site.

[00:39:34] The execution that went into that from our teams and the precision through which that was pulled off, we're proud of and we look forward to starting to see the numbers from that body of work flow into financials and be able to talk about it in the context of these calls.

[00:39:51] But with that we're also happy to now have a physical and visual representation of our future products when we talk about R2.

[00:40:00] So it's not just an esoteric idea of a future product, but actually you can see very specifically how we see, you know, Rivian expanding to more addressable markets and lower price point vehicles.

[00:40:12] And the team is incredibly focused on driving efficiency and driving cost effectiveness into the business across every aspect of what we do.

[00:40:23] What we'll see the most of is the improvements we're making in cogs and that's building materials, that's conversion costs.

[00:40:31] As Claire talked about that also ties to even starting to realize some of the benefits of our accelerated depreciation of equipment.

[00:40:38] But we'll see that heavy focus continue. It's a cultural drive within the entire business and we are excited about going through the rest of this year and the path to demonstrating that through the gross margin probability of R1.

[00:40:55] And then of course as that translates to R2 launching in early 2026.

[00:41:00] So thank you, thank you everybody for joining and look forward to our next call.

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[00:41:57] Hey, welcome to the next wave podcast.

[00:42:00] Consider us your chief AI officer in your business.

[00:42:03] My name is Matt Wolf.

[00:42:05] I have the number one YouTube channel in the AI space.

[00:42:09] I also run futuretools.com and I'm joined by my co-host Nathan Lanz, founder of lore.com.

[00:42:15] We want to bring you the latest AI news and trends, show you how you can use AI in your business and personal life and help make it super easy for you to understand and execute.

[00:42:23] Thank you. We're going to equip you with the knowledge to thrive in this upcoming wave of change.