Rivian's Q3 2026 Earnings Call

[00:00:00] Good afternoon and thank you for joining us for Rivian's third quarter 2026 Earnings Call. Today I'm joined by RJ Skaring, our founder and CEO, Claire McDonough, our Chief Financial Officer, Javier Varela, our Chief Operations Officer, and Derek Mulvey, our Vice President of Finance who will be named Interim CFO effective tomorrow. Before we begin, matters discussed on this call, including comments and responses to questions, reflect management's views as of today.

[00:00:29] We will also be making statements related to our business, operations, and financial performance that may be considered forward-looking statements under federal securities law. Such statements involve risks and uncertainties that could cause actual results to differ materially. These risks and uncertainties are described in our SEC filings and the presentation we filed with the SEC today.

[00:01:06] Hello everyone and welcome to Kilowatt, a podcast about electric vehicles, renewable energy, autonomous driving, and much, much more. Hello everyone. My name is Bodie and I am your host and today we're going to talk about Rivian's Q3 2026 Earnings Call. This, this, I had yesterday, which was Halloween on a Saturday. I was about 36 minutes into recording this particular episode.

[00:01:33] My monitor, for whatever reason, was glitching, turning off. There were like weird lines on it and I was like, well, this isn't good because I've already spent enough money recently. I don't need to spend more money on a new monitor. And I thought, well, maybe one of these programs is, is, you know, causing some of the problem. So I started closing programs while I was recording the episode.

[00:01:58] And I inadvertently recorded, or I inadvertently closed Logic without saving it. Cause I didn't, I wasn't paying attention cause the screen was doing weird things and I couldn't really see what I was doing, but I was clicking buttons, which is a huge mistake. Anyway, um, I, I lost all my recording, which is, you know, frustrating. And I was frustrated yesterday.

[00:02:25] I recorded a portion, trying to rerecord a portion of this. And, uh, you could, you could really hear my frustration in my voice cause I was mad. Uh, so I, at four 30, which was, you know, uh, my cutoff time for recording. Cause I was going to spend a little time with my wife. My kids went to a friend's for Halloween and my wife and I were going to hang out and I just turned it off. We had a nice dinner. We watched some Ted Lasso. I went and picked up the kids.

[00:02:55] It was good. We had a good time. Uh, so all in all the night turned out to be a positive. And I'm, I'm going to tell you like with twins and, uh, or just kids in general, you know, having roughly three and a half hours of an, interrupted conversation for adults. Crazy. It's a, it's a luxury. We don't get that all that often when they're both gone sometimes, but not, not all that often.

[00:03:23] So anyway, it, uh, it was nice night. Uh, good Halloween. It rained here. First time it's rained in Phoenix on Halloween and like 40 years. And it rained hard, but apparently according to the folks that, uh, my kids, you know, the parents of the folks, my kids were hanging out with the kids had a great time there outside and they got soaked and they had a cool golf cart. That was all dressed up Halloween. Uh, you know, dressed up for Halloween, I guess.

[00:03:52] So anyway, uh, good, good night overall just yesterday about three o'clock in the afternoon. Not a good time. And you know, it's the nutty thing is, is my monitor hasn't done anything since then. And this is an external monitor, not the one on my Mac book, but it hasn't, it's been vined since then. I don't, I don't understand.

[00:04:13] Anyway, uh, as I'm sitting here recording this, I do want to let you know, I did save and I will be saving throughout and I have to look and see if logic has an auto save feature. But anyway, yeah, it was 10 years of podcasting that hasn't happened very often, but man, did it make me angry yesterday.

[00:04:33] Uh, in terms of, before we get into it, the show art for this episode was done by Obi and Obi is the person I've been talking about and I haven't played his segment yet, but he is an EV technician and he gives us some cool tech tips.

[00:04:55] Uh, I'm, I'm, I'm, I'm making some changes in, in my life to cut some things out that I don't necessarily want to, but it's probably best to just kind of, you know, not be so busy. And, uh, maybe I'll make some announcements on that soon. Not this show, the show remains, but yeah, uh, it's, it's been a nutty, nutty couple of months, uh, little FSD update.

[00:05:25] Uh, I, I initially I was quite impressed. There were still some things that it did that were weird, like hanging out in the pocket of a semi truck in their blind spot. I don't like that. It did some things that are weird, but I noticed like sometimes, um, it tries to, like, if I'm transitioning from one freeway to another, it trans, it gets to the right side or the right lane a little later than I feel comfortable with.

[00:05:53] Because in, in the Phoenix area, when you're driving, it's not like LA that's that LA is a, is a totally different beast, but it does get quite busy as you're trying to transition from one freeway to another. And I like to be in the right lane or whatever lane you need to be in to make that transition happen, uh, earlier. And the car likes to do it, what feels like to me at the very last moment. So I'm not, I'm not a big fan of that.

[00:06:20] And there's a couple of times that I've moved over and the car has moved me back into the lane that it wants me to be in. So not a fan of that so much. Um, but in general, I think it works pretty good. Some weird things like it used to park in my driveway, which I thought was amazing. Recently, it parks across the street from my house at my neighbor's house. And it's like, okay, I'm done parked in the driveway. And I don't know why that is.

[00:06:48] Um, one time it actually looked like it was going to park in the driveway. And then it backed into my neighbor's driveway with my neighbor across the street. And I got as far as like the, uh, the, the sidewalk. And I was like, no, no, no, we're not, we're not going to be parking in the neighbor's driveway. So I stopped it and I took over. So that's kind of a weird thing.

[00:07:10] And then yesterday, uh, in the rain, um, cause you know, it rained really hard here yesterday and I was taking my kids home. I had it engaged. Um, I had both of my kids as like, don't be on your phone. There's all sorts of kids out here. There's people out here. We're all going to be paying attention to what may pop out at us. Uh, cause it's dark and it's rainy. So, uh, used FSC to get home. It's at an intersection, not a busy one. Left-hand turn.

[00:07:40] Uh, it was a green light and the car rolled about a foot and then just started freaking out. And I don't even know if it rolled the foot. It might even just bumped forward and the car started freaking out and it's like, take control, take control. There was no danger. Um, but I took control and that's fine. And then I had a hard time getting it back into, to engage into full self-driving after we cleared that intersection. And then it took the next intersection just fine.

[00:08:06] So, uh, and then there was, there was another incident where we're outside my house and, um, coming home, same, same drive coming home. And there was somebody in front of us that had stopped. And I don't know if that was, they were doing a trick or treating because they had their back gate open. So maybe the kids were like walking behind the car with the, with the back latch open so they could be underneath the latch. So they wouldn't get wet or less wet because it was raining hard.

[00:08:36] Um, and my car, you know, kind of stopped and it didn't try to creep through or anything like that. And I think that's fine. And this isn't necessarily a problem with the car, but the person recognized that we were behind them and they pulled up, but they didn't know where my house was. So they just pulled out of the road, but they pulled in front of my house and the car was trying to sneak between them and my driveway. And I have a pretty wide driveway, but there was, I wasn't comfortable with what the car was doing. So I stopped.

[00:09:05] That's not a car problem necessarily. That's more of a me problem. But yeah, if I, if I, I canceled my subscription for full self-driving. So I think I have it until the 19th of November or the 12th of November or something like that.

[00:09:20] Um, I would say my official review for this would be, it's would be a, it went from, I don't need this to it'd be, it would be nice to have in some instances, but it's not even more close to a must have or anything like that. Cause we're going to talk about, uh, their autonomy, um, Rivian's autonomy software package throughout that.

[00:09:49] And I thought, you know, it might be relevant just to kind of see this up at the, at the front. Uh, I will say based on my experience with Tesla and my experience with Rivian, Rivian is nowhere near where Tesla is in terms of full self-driving. Um, and, but we'll talk about that later in the, in the episode, but yeah. So that's kind of, um, that's my update. Uh, I still know, I, I still owe a bunch of people emails.

[00:10:18] So we're, we're getting through those slowly. Um, hopefully today cause it's rainy outside and we got all of our stuff done yesterday. Family stuff like shopping and cleaning the house and stuff. So I'm hoping that today we can just sit down and hang out on the couch and watch a movie and I can just return emails. That's my goal for today and this episode. All right. Uh, anything else? No, let's go ahead and jump into RJ's opening remarks. Good afternoon, everyone. And thank you for joining us for today's call.

[00:10:48] We had a great third quarter. We achieved record production volumes of normal as we continued to ramp R2 manufacturing. We also had record deliveries with R2 delivering much of that gain. In fact, R2 is already our best-selling vehicle by volume, outselling both R1 and EDV in the third quarter. I'm proud of how our team has come together to scale our manufacturing, sales, and service operations. We are also advancing our technology roadmap. And I look forward to showcasing that progress at our autonomy and AI day on December 9th.

[00:11:16] Since its launch in June, we've seen all types of potential customers take R2 for a drive. The feedback on R2 has been outstanding. In the third quarter, we hosted over 103,000 R1 and R2 demo drives, surpassing the record we set in the second quarter. Reservation conversion rates for the launch edition R2 remained higher in the quarter than our expectations. We are really excited for the launch of additional variants in the coming months. R2 continues to generate rave reviews and awards from media.

[00:11:46] And recently won Top Gear's SUV of the Year award for 2027, with more awards to come. Amazon continues to expand its fleet of electric delivery vans across North America. Early this month, we began delivering new variants that are specifically designed to expand route coverage into more rural networks, including an all-wheel drive configuration, as well as a larger battery pack that offers 30% more range. Turning to our manufacturing operations, our team in normal continues to ramp R2 production.

[00:12:15] The second R2 shift has started and we expect our manufacturing run rate to increase over the coming quarters. In Georgia, construction of our next manufacturing site is progressing well. Regarding our technology roadmap, autonomy remains one of the most important areas of investment at Rivian. We continue to see strong momentum in our Autonomy Plus offering, available on every R2 and R1 starting with the 2025 model year, with take rates trending ahead of our expectations.

[00:12:43] Today, every vehicle with Autonomy Plus is capable of hands-free driving on millions of miles of roads. Our next milestone is our point-to-point feature. This means customers can enter an address and their vehicle will follow the route from start to finish, handling city streets, stoplights, highway interchanges, and everything in between with driver supervision. A limited rollout of point-to-point is expected to begin later this year with our invitation-only Autonomy Early Access Program,

[00:13:11] with a general release to all Autonomy Plus subscribers in 2027. We believe point-to-point capabilities are going to be an important purchase criteria for customers and is becoming a driver of market share. So one of the things that an analyst asks in the analyst portion, and I'm going to cut that part out because I can just answer it for you here, will Autonomy Plus work for the delivery vans? And the answer is yes.

[00:13:41] Autonomy Plus is being designed for the passenger cars as well as the delivery vans. All right, let's go ahead and continue on. He's going to talk about the Uber partnership. We continue to make progress on our partnership with Uber. We remain on track and expect to achieve our next milestone by the end of this year, which is expected to unlock an additional $250 million of equity investment from Uber.

[00:14:06] Additionally, last week we announced the acquisition of 3Dimension AI to support our autonomy development and our associated closed-loop simulation efforts. With the Rivian Assistant, we have developed a smarter, more customizable AI-defined vehicle experience for all R1 and R2 owners. In our October OTA, we added Gmail integration to Rivian Assistant, and we look forward to sharing more at our upcoming Autonomy and AI Day.

[00:14:32] Dressing up our vehicles for Halloween is a highlight to our customers every year. This October, we collaborated with Sony Pictures and Bill Murray to bring the Ghostbusters universe to life on Rivian vehicles with Halloween mode. This is a perfect demonstration of how the level of deep vertical integration across hardware and software allows us to release immersive features to our customers at speed. So, as a Gen Xer, I was born in 1974,

[00:15:00] I really appreciate the Rivian. And I don't know how old R.J. is. I'm assuming he's much younger and more successful than me. But I love the Ghostbusters tie-in. That plays to my inner child. I think I was 10 when that movie came out. I think the Tesla Halloween update is also very impressive. However, I think Rivian did it better. One of the things that was disappointing with the rain and Halloween

[00:15:30] is we were planning on putting my car out in the front driveway so it could make all the spooky noises. And we usually, like in my neighborhood, everybody sits in their yard or we go to a neighbor's house and we all sit in that yard or driveway and we hand out candy and it's kind of, I don't know, more like a community event and less like individual trigger-treating. But, you know, because of the rain, nobody did that. So, or not very many people did it.

[00:15:59] So, we didn't put the car out, which was a little disappointing. But anyway, I love that companies are doing this. I think it's so much fun. And it kind of gives you that goodwill, you know, towards a specific company. I don't know. I've talked about this before. Tesla has a lot of whimsy when they do something and they have a lot of fun with some of their updates, their themed updates. And it's nice to see that Rivian and other companies are doing that as well.

[00:16:29] All right. So, Claire McDonough, who is the CFO of Rivian, is leaving. It sounds like she's taking a job on the East Coast. And I think Claire is awesome. So, somebody named Derek, I can't remember Derek's last name, will be interim CFO. So, in this next part, I'll play a little bit of Claire's opening remarks and then Derek will have some opening remarks and then we'll jump right into analyst questions.

[00:16:57] One of the things that, and I keep saying this over and over and over again, but when a, just in case you haven't heard, when a CFO and CEO have short opening remarks, they're excited to talk about how their quarter was. When their opening remarks are long and drawn out and they have, you know, maybe they ask some retail investor questions and they don't give a lot of time for analysts to ask questions,

[00:17:24] that, to me, means they had a quarter they don't really want to talk about because the analysts are going to ask them the hard questions and maybe they don't want to answer those hard questions. This, RJ's opening remarks were short, Claire and Derek's opening remarks were short. So, and I made it through a few of the analyst questions. The first time I recorded this, we'll kind of see what happens this time. I keep saving after every time I talk, I'll stop the recording and I'll save.

[00:17:55] But, yeah, we're going to get some good information, but I'm not going to play all of Claire or Derek's opening remarks. Okay, let's go ahead and start with Claire. In the third quarter, we produced 19,751 vehicles at our plant in Normal, Illinois and delivered 19,248 vehicles. Production and delivery results for the quarter were in line with our expectations, with R2 becoming our best-selling vehicle by volume in the third quarter.

[00:18:25] Our $1.55 billion of automotive revenue, a 36% increase over the same quarter last year, were primarily driven by a 46% increase in vehicle deliveries and $81 million of regulatory credits, partially offset by a decline in average selling prices from a higher mix of R2 and commercial van deliveries, while R1 average selling prices increased due to mix improvements.

[00:18:54] Okay, so they did not break out, as far as I know during the earnings call, because I didn't listen to all of it, but I have listened to some of it. They didn't break out how many R2s were actually delivered versus the delivery vans and R1 vehicles. But in Q3 2025, so last year, they delivered 13,201 vehicles, according to Yahoo Finance.

[00:19:24] And Rivian this year, in Q3 2026, delivered 19,248 vehicles. So they're up 46% year over year. We have to assume that most of those vehicles were the R2. I mean, the R2 starts in the $60,000 price range at the moment because you're getting the early edition.

[00:19:52] But, you know, the R1s starts at like $83,000 and the R1t starts at $80,000. So 84,000 for the R1s, 80,000 for the RT, and at some point in time, the R2 will start at $44,000, but not anytime soon. Right now, I believe, you know, it's $63,000 or $68,000, something like that, in that price range, which is, you know, not nothing.

[00:20:21] That's a lot, but it's cheaper than the current or the lowest R1t or R1s. So, yeah, let's see. The premium R2, which is the middle tier, starts at $54,000. So I would imagine once they start producing these other trims for the R2, we're going to start seeing a much bigger

[00:20:53] increase in deliveries, as long as they can build them. So, and they'll talk about that. RJ's going to talk about, you know, basically we can only build as fast as our suppliers can get us parts, but we're not there yet. Let's continue on with Claire's opening remarks. Our software and services segment reported another strong quarter. During the third quarter, the segment generated $605 million of revenue, a 45% year-over-year increase, primarily due to increases

[00:21:23] in vehicle electrical architecture and software development services by the joint venture, vehicle repair and maintenance services, and Autonomy Plus, offset by lower remarketing sales. $354 million, or approximately 60% of software and services revenue, was attributable to our joint venture with Volkswagen Group. Software and services gross profit was $256 million, a 42% margin,

[00:21:53] due to better than expected mix of revenues from more profitable revenue streams. So I think this is fantastic. You know, Rivian doesn't have all that many vehicles on the road at the moment, but, you know, right now their software is 46% margin. That's not to say that that will be the case all the time because they might run up against when they try to, you know, spin up a new service for software and services.

[00:22:23] It might drop, but can you imagine if they had as many cars on the road as Tesla did? It might be, it would be a very impressive number for Rivian. And when you have a company that is on the verge of profitability, like they've touched it a couple of times and they've been profitable in certain quarters, but for the most part, they haven't made any money. I think that's a big deal. And the R2 and R3 eventually

[00:22:51] will play a big part in that for sure. All right. Next up, we're going to hear from Derek. And you know what? I'm going to put, I got to figure out what Derek's last name is. Derek Rivian CFO, interim CFO. Derek Mulvey. Mulvey. That is Derek. We're going to hear from him. Turning to our liquidity and balance sheet, we ended the third quarter

[00:23:21] with approximately $5.5 billion in cash, cash equivalents, and short-term investments. In addition to this balance, on October 7th, we announced the funding of our $1 billion 10-year term loan facility with Volkswagen Group at a fixed interest rate of 6%. To date, we've received 5.3 of the $5.8 billion in expected capital commitments associated with the joint venture with the remaining $460 million anticipated in late 2027. Additionally, we expect to achieve our second milestone under the Uber partnership

[00:23:51] later this year, which will trigger an additional $250 million equity investment. When factoring in our current liquidity, expected capital from Uber, Volkswagen, and our Department of Energy loan, all of which are subject to certain conditions, our total available liquidity and targeted future capital would be approximately $13 billion. Turning to our outlook, we are improving our full-year delivery guidance from 65,000 to 70,000 units to 67,000 to 70,000 units. In its first full quarter of sales, R2 outsold R1

[00:24:20] and our commercial vans, and in the fourth quarter, we expect R2 to represent the majority of our total delivery volume. I mean, we should hope that R2 is the majority of their delivery volume. I think that it would be nice if Rivian gave us the numbers of what the R1 platform was selling and how the R2 was selling just because, you know, it would kind of give us an idea of how many R2s they've currently built. I mean,

[00:24:50] as of right now, we'll have to wait until there's a massive recall to kind of get a better idea of that. But, I mean, for my selfish reasons, it would be nice if they just separated everything out because then it's just easier to talk about and then we don't have to speculate. But I would imagine that R2 was a pretty significant portion of Q3 deliveries. And, you know, going forward,

[00:25:20] it's going to start becoming a bigger, bigger piece of the pie. So, anyway, we'll see. Hopefully it is. I don't have any reason to believe it's not. Let's go ahead and move on. We're making significant strides to drive down our automotive cost per unit and we're already seeing the benefit of introducing R2 into our normal production facility. While new vehicle launch complexities in addition to rising costs of core components have, and we anticipate will continue to impact our profitability, we expect that R2 will help us achieve a positive automotive

[00:25:50] gross margin exit rate for the year. This would establish a strong foundation for continued margin expansion as R2 ramps through 2027. For full year 2026, we now expect our adjusted EBIT losses to be between $1.85 and $1.75 billion. At the midpoint, this represents a $100 million improvement driven by favorable regulatory credit revenue, an IEPA tariff receivable, and our expected increased delivery volume. As RJ outlined, we are making rapid progress in our autonomy

[00:26:19] roadmap and are excited to launch our point-to-point feature on a limited basis later this year. We anticipate the pace of our R&D investment in the strategic area to accelerate in the coming years as we advance our large driving model and progress advanced autonomy development across our consumer vehicles and robotaxi applications. We believe autonomy is a primary product differentiator, market share driver, and long-term value creator. Finally, we're lowering our 2026 capital expenditure guidance by $300 million at the midpoint due to a shift

[00:26:48] in timing of certain capital spend. This brings a revised 2026 CapEx range to $1.4 to $1.5 billion. Looking ahead to 2027, we expect a meaningful year-over-year step up in CapEx as construction activity ramps in our Georgia olympic manufacturing facility. I don't have anything to add to that. I let his portion go a little bit longer so you can get an idea of kind of, I don't know if you can get an idea of who he is, but kind of how he presents, I guess. And I think the information

[00:27:18] was good, but don't really have anything to add to that. So let's start with our analyst questions. Thank you. Our next question comes from Joseph Spark from UBS. Please unmute yourself and ask your question. First, you know, you mentioned this $120 million of incremental cost of revenues due to the ramp, but that's not really cost of good, right? So I guess what I'm wondering if you could help us

[00:27:49] understand is today's realized pricing and mix, what is the R2 contribution margin before those launch efficiencies and the fixed cost absorption? Because then I think we could get a better sense of if we add back some of those inefficiencies, what, for lack of a better term, a mature gross margin would be. Yeah. Thanks, Joe. So the $120 million we quoted really is comparing where our cost structure is today as we think about our conversion costs,

[00:28:18] depreciation in relation to what our two-shift operation should be performing at. And so that's just really the effect of not having a full rate of production at a two-shift operation today. In addition, that $120 includes some of the things like expedited freight, and some other costs that we expect to wind off as we continue to scale. I think when you look at R2 today, in the second quarter, we saw about a $12,000 per unit step down and cost to get sold per unit delivered. And I think that is the biggest driver of that is introducing R2.

[00:28:49] one, one, one, R2 is a lower cost product, but two, R2 is benefiting from a scale perspective within normal. As we step back and you look at our total automotive gross profit, excluding regulatory credits, on a cash basis, that was positive for the quarter, and we expect that momentum to continue as we scale and ramp R2. He mentioned that the R2 line in normal is up and running and, you know, paraphrasing, doing well,

[00:29:18] figuring things out, but I wonder how that changes when they go down to Georgia when they, because right now, it's planned that R2 will be built at the Georgia plant, which is being built, but it hasn't been completed yet. So I wonder what that looks like. I want to know what their anticipated challenges are of getting that plant and R2 up and running, because I think that would be, I think that's an interesting question, and I think it'll be an even more interesting

[00:29:48] answer. Now, this is about the point in time, there might be one or two questions after this, where I completely borked my recording last time, so I don't know if they actually answer that, so you'll have to forgive me, because I haven't got that far into the earnings call yet, but I do think it's an interesting one. There's a follow-up, it's basically kind of like prices are going up, how are you managing that? So let's go ahead and listen to that one. Since you announced R2

[00:30:17] pricing in March earlier this year, there's been a lot of inflation, whether it's memory, PCB, other electronics, steel, copper, I guess aluminum looks pretty flat. So maybe that matters less today with the launch additions, but I was wondering if you could give us any anecdotes as to how you're looking for or have been able to find engineering or manufacturing efficiencies or other offsets to be able to maintain those

[00:30:47] targeted gross margins for the new vehicle. Well, thanks, Joe. A big part of our engineering team is working on not only ramping production and achieving all the volume that the facility is capable of, but also looking at what further improvements we can make to the vehicle. Some of those will be captured and the vehicle is produced in Stanton Springs in our Georgia facility, but a number of those are going to be flowing into the vehicle over the coming months and quarters.

[00:31:18] And of course, as you said, with some of the commodity pricing being a lot higher than what we expected, I think memory is a really important call out there. We've really been focused to find other mechanisms to offset that and to enable us to still deliver on the various trims that we've talked about, you know, with the base trim starting at $45,000 and the top spec trim being at about $57,000. And so the team is making great progress on that. And it's really, you know, in terms of examples, it's across the board.

[00:31:47] It's how we're, you know, it's details within the plan, how we're operating the plant. It's looking at improvements and packaging for logistics for moving parts from suppliers to our plant. and then it's down to working really close to other supplier partners on identifying further cost optimizations in the component level, really that don't impact the performance or capabilities of the vehicle that are, you know, that often is part consolidation or part elimination through, you know, through

[00:32:17] redesign of the components. But, you know, the team's really done an outstanding job of hunting for and looking for those opportunities that we've got a real full-court press focused on as does every other company that's currently in operation. Let's go ahead and move on to the next question. Our next question comes from Mark Delaney with Goldman Sachs. Please don't meet yourself and ask your question. Good afternoon. Thank you for taking the question. Claire, thanks for all your

[00:32:47] help. Wishing you the best going forward. And Derek, congratulations on the expanded responsibilities. I was hoping to better understand what's going on with the R2 ramp and nice to see the good momentum you just reported and a number of positive comments that you made that you're seeing with that product. Can you share more on what you think are the key factors that will determine the pace of R2 delivery growth in 4Q and 27? And how much is it about converting on those record number of demo drives and positive media reviews into new R2 orders? Or is it more about

[00:33:17] ramping up the supply chain and manufacturing? Of course, launching a vehicle is a lot of moving components. And I think often the focus and attention gets directed at the plant of the manufacturer operations. And of course, that's a huge part of this. But I do want to really call out the importance of also ramping the supply base. And in the case of R2, we have a number of new suppliers. We took an aggressive approach of reducing our supply chain complexity to have a

[00:33:46] smaller set of tier one suppliers to the business. And so we can only ramp as fast as our slowest ramping supplier. And that's not to say there's an acute challenge with a single supplier, but rather the ramp up requires each of the suppliers to ramp and they need to be highly coordinated. And so that's something we're very focused on. I have some comments here as well, but our supply chain team,

[00:34:15] our overall logistics team has been working very closely together to make sure that this ramp is smooth. Yeah, I need that. I've been involved in many launches across all my career. And supply chain is always a complex part of the launch that we already flagged from day one, bringing up hundreds of suppliers and their tier two and their tier three is an immense task. What we are always

[00:34:45] doing is identifying what are the suppliers that need some support and we have special teams to help them. To support our scale. That's the focus area, scaling our supply chain. So, I mean, even in the best of times, this is a challenge. In the current world that we live in right now with everything going on, it's even more of a challenge. So I don't envy

[00:35:15] anybody who has to try and figure out how to bring components that aren't built in the United States into the United States and still keep those components affordable or still keep the overall product affordable because every little, like just the smallest amount of price increase adds so much more that the consumers have to pay. And consumers around the world are already paying way too much for things. So with that, I would imagine

[00:35:45] that it is a very fine balance on the manufacturer side as well as the supplier side to try and figure out how everybody can make money without raising the price to the point where people don't want to buy it anymore. All right, let's move on. The next question is about Autonomy Plus. Thank you both for those comments. My other question was on Autonomy Plus and better understanding the impact it may be having on the business. Maybe you can give a bit more color on how impactful Autonomy Plus was in

[00:36:14] that 45% year-over-year growth in the software services and other segment. And when you talk to people who are buying Rivian vehicles, are they telling you that Autonomy Plus is one of the key reasons that they're making that decision? Thank you. As we said in opening remarks, Autonomy Plus, take-grand Autonomy has exceeded our expectations and we're quite encouraged by it. As it stands to Autonomy Plus, the core feature within it is what we call

[00:36:43] universal hands-free, which is a hands-free driving capability that can be used on millions of miles across the United States. What's coming has us even more excited and that's our point-to-point capability. And that's where, in addition to being hands-free, the vehicle can navigate entirely to a destination so you plug the address in and navigate through four-way stops, through complex interchanges, highway on and off ramps. And we think that will start to really create

[00:37:15] new levels of demand and new levels of interest. And today, in the market, there's really only one other product that has that, of course, with Tesla's FSD. And so this, for us, is an important capability. We think it becomes even more important over the coming quarters and I would say years as more and more customers get exposed to this and really think of it as a core purchase criteria for the vehicle. So I've said this many times, I think Rivian has priced

[00:37:44] self-driving autonomy better than Tesla has in terms of value. On the other side, if I'm going to bash Tesla for charging people to pay for something that isn't quite fully baked yet, Rivian is half the price but even further behind Tesla. So in that same way, if I'm being fair, and sometimes I get accused of not being fair and picking on Tesla,

[00:38:14] even though I spent $50,000 on a car from Tesla and I pay them every month for connectivity, somehow I'm some folks, not very many but there are a few that will accuse me of hating on Tesla and Elon and I've been very clear that I don't. But having said that, I can recognize that what Rivian is charging $50 a month for is probably still not worth $50 a month.

[00:38:44] At some point it might be, but at the moment I don't think it is. I think it's slightly better than what my wife's Kia Carnival comes with for free. And right now Rivian's charging $50. Again, at some point in time, it'll get better. But we've been down this road with Tesla of, well, and Ford and GM for that matter, the promise is the product and the product

[00:39:14] is not the product or the promise is the service. And they still haven't realized that promise yet. And I just have a hard time with people paying for that. I mean, obviously you're all adults and you can do what you want with your money, but I would rather them market their products for what they can actually do rather than what they're capable of someday. But I've said this many times, so I'll get off the subject. Let's move

[00:39:44] on to our next one. Next question. Our next question comes from Dan Levy with Barclays. Please unmute yourself and ask your question. Great. Thank you for taking the questions. Wanted to ask, first of all, Claire, congratulations and Derek, congratulations to both of you on your new roles. Wanted to ask about EDV, yet another quarterly record in terms of

[00:40:14] Amazon revenue. If you could just again help us unpack the upside there, but maybe you could also talk about some of the upside we're seeing potentially with other customers. You've probably seen there's some images that went around of an EDV wrapped with another company out there, Walmart. Maybe you could talk about the potential for uptake with other companies on EDV and if Amazon is

[00:40:44] finally driving this. Thanks, Dan. The EDV product, it's exciting to watch. It's something we've really optimized around enabling and really driving an advantaged cost structure. We've seen Amazon as they've ramped from the early years of this program up through this year where they've now had a large fleet deployed. They have lots of data on how the vehicle is performing. It's creating

[00:41:13] true and very real structural cost advantages that are leading Amazon to double down, to continue to buy more vehicles. As you've heard from us in previous calls, this year we have seen a significant step up in the level of demand from Amazon. That's a direct reflection of the advantages that our EDV platform provides to their commercial operators. With that

[00:41:41] said, we do see other commercial operators as they start to really look at ways to drive more efficiency into the business, start to look at the EDV. We're excited for those potential future customers on this program as well. great. Thank you. As a follow-up, I wanted to ask about the JV with Volkswagen on network architecture and the potential to

[00:42:11] expand that to others. Maybe you could just talk about how that JV is progressing and as the technology goes into your vehicle and their vehicles, what are you potentially going to hear from other automakers that might want to adopt this? The first real output from the joint venture is going to be launching next year. This is the Volkswagen ID.1

[00:42:40] product. This is a roughly 20,000 euro EV that Volkswagen is producing for Europe. We're really excited about that. It's a wonderful way to demonstrate the capabilities of our technology outside of the brand and outside the US market. Importantly, being in Europe, this vehicle is competing directly against European manufacturers but also Chinese manufacturers. We're very confident in the capability of technology

[00:43:10] and the cost efficiency of being able to deliver a broad set and impressive set of features in a vehicle at that price point. I've said this before, but we think of that vehicle as really a billboard for the capability. It really demonstrates what can be done. The technology we've developed, we certainly think about this as having applications not only beyond Rivian, but also beyond this existing joint venture and

[00:43:40] into other applications with other manufacturers. Our focus today has been heads down on both the Rivian programs as well as the Volkswagen group programs, the first of which as I said is the ID1. That's a good update. I don't have much to add to that. So let's go ahead and move on to our next question. Thank you. Our next question comes from Itai Mikhaeli with TD Coven. Please unmute yourself and ask your question.

[00:44:09] Great, thanks. Hi, everybody. Claire, Derek, congrats to you both and best wishes. Maybe first question going back to autonomy plus and it's becoming a driver of demand for you. I'm curious whether you think consumers are coming to purchase the vehicles with the point to point feature in the future in mind or do you think that when you launch point to point could that be another step function improvement in demand and maybe similarly for the Gen 3 hardware

[00:44:39] when that launched as well. I think in a very broad sense to date autonomy has not been a major driver for most customers in the United States. That's sort of evidenced by most of the vehicles that are being sold today do not have very much autonomous capability. I do think that we're at the base of a very start to see a much

[00:45:09] broader set of customers start to really look for advanced capabilities and with that point to point is the unlock for that where it becomes a magical experience where you get into the vehicle and the cognitive load to have to operate the vehicle and navigate the vehicle is dramatically reduced because you simply have to put in your destination and the focus

[00:45:39] of resources both dollars on the R&D side as well as people we've designed our architecture inclusive of the sensor set our computer topology the way we're developing a system around this neural net based foundation model and the whole business to really support both progress around autonomy but specifically progress towards some of these key milestones or key steps with point to point being

[00:46:09] the first of multiple key steps that ultimately lead to the level four capability that we're planning for 2028 so I already talked a lot about this earlier and I hadn't made it quite this far into the earnings call so I didn't know he was going to say this I think this is a in the

[00:46:39] autonomy space if they had the point to point and they were closer to what Tesla has for instance I wonder how that would change the answer it might not change it at all I find RJ Scringe to be a pretty stand up dude and so I don't know that it would change all that much but you know how these things work sometimes the answer you give is the answer that benefits the company the

[00:47:09] most again RJ doesn't seem to be quite that guy but he is the CEO of a company he does need to manage expectations all right let's move on to our next question terrific RJ and a quick follow up maybe touch upon just the acquisition of third dimension does that help you get to level four does it

[00:48:11] to it it obviously proven we've seen that Rivian has done that many other companies use that approach and it'll continue to be used but in addition we want to create closed loop mechanisms whereby we can test the model in real life conditions of simulated conditions and then make lots and lots of iterations on those conditions to do default injection to do unique circumstance injection into simulations and so

[00:48:40] the acquisition third dimension is supporting the simulation work that we've been building on within the company and the ability to have more rapid closed loop simulations that allow us to deploy models more rapidly and then of course make progress in advancing the models more rapidly so third dimension is a 3D it makes 3D models basically like real world type

[00:49:10] environments and it was originally designed for video games and what this will do just to kind of simplify it even further from what RJ said is that it will allow Rivian to create something similar to what Tesla has in sometimes I'm a little confused if they're really doing Tesla Dojo or not because they seem to be kind of all over the place on whether they need it or not but this would allow

[00:49:40] them to run simulations without actually you know putting anybody's life in danger so they can run some kooky simulations just to make sure everybody is okay or make sure the software is working properly or handles each please meet yourself and ask a question I guess I wanted to ask about you know how the

[00:50:10] edge cases that you're trying to solve for here at first you know we've heard about you know pickup drop off being a little bit of an edge case that's tough to solve but love to just get your you know when you're first launching point to point what will the functionality sort of really entail and how do you expect it to progress over time I

[00:50:40] guess when you think about educations there's a broad spectrum of types of educations the pickup drop off is particularly important for road tax or level four applications that's beyond what we're I'd start to look at deployment of our uber partnership in 2028 and I'm sure many have experienced this the challenges of let's say dropping someone off or picking someone up in a highly urban

[00:51:10] environment where there's no place for the vehicle to pull off and so you're sort of stopping in lane on a road those are challenging situations and challenging as we've even undeployed vehicles today as it pertains to consumer vehicles and point to point some of those are solved simply through this being a supervised product so if it's a very complex pick up or drop off situation you have the benefit of someone in the driver's seat and this is where really

[00:51:40] being thoughtful on the UI in that situation is important so what does the vehicle do when it gets to destination and how does it indicate to the UI and thinking about what that interface feels like and experiencing the product is really seamless and easy to use and understand okay so I think his messaging on

[00:52:10] autonomy and needing to be supervised I think that's a good one easily get in and out of a store or restaurant or whatever can help significantly improve their quality of life so I would add that I'm not adding that as a way to say that RJ

[00:52:40] didn't mention it I'm adding it I mean he didn't mention it but I'm not I'm not calling him out on not mentioning it I'm just mentioning it here that there's a value there and I'm taking that into consideration as well when they're building these features in alright let's move on to our next question you know what actually before moving on to our next question I skipped a couple questions that had to do with lowering costs just because they were very long

[00:53:10] answers and I to help lower costs there to keep the product reasonably priced and margins up so now let's move on

[00:53:54] measure whether those efforts are translating into customer acquisition and revenue growth well that's a great question Toby we were really excited with the launch of R2 to have a product now that has a much broader and wider aperture for customers whereas of course R1 was our handshake with the world it was a great product to introduce the Caribbean brand to consumers but by virtue of its price point by virtue

[00:54:23] of being our flagship product price made it not something that many customers would be considering and so with the R2 the price starting at 45 and going up through mid to high 50s puts it right smack sort of overlapping with the average price of a new car in the United States in the most popular segment the mid-sized crossover and SUV segment and so that on its own is going to lead to more vehicles on the road which of course will create more

[00:54:53] awareness but bolstering not just the vehicle and its increased presence on the roads is where we're doing a bunch of creative ways of getting the brand out there maybe the most recent one as a good demonstration this is what we did for Halloween this year of course we've been doing Halloween mode since we launched the company and each year we think of creative ways to do fun things that bring a lot of excitement to customers but this year we partnered with Sony created a Halloween mode where

[00:55:24] we had Ghostbusters integrated to the vehicle of course working close with Bill Murray to do this was a lot of fun but these are ways we can really cut across culture cut across a wide spread of demographics and create awareness for the brand as you noted I think that's a great question I would have liked to have heard more detail in the answer I mean again I've already said that Halloween mode is amazing but I don't know

[00:55:53] like my wife lives with me we talk often and she didn't know about Halloween mode nor did she really care about Halloween mode when I told her it's cool like don't get me wrong but that's something for the person that's driving the car or in the car and if you're not driving the car or in the car or friends with somebody that owns a Rivian and there are very few people in the world that are simply because there's just not very many Rivians out there I don't know that

[00:56:23] it brings brand awareness up in any measurable amount I would like to see them you know I would like to see Rivian more successful people know who Rivian is but how many people outside of the folks who follow EVs and listen to this show and are part of this community know that Rivian has got a vehicle that's going to be $45,000

[00:56:52] at some point in time I don't know if it's that many so I do think they do a better job of letting people know that Rivian does exist they still have the R1 platform but now they have a more affordable platform the R2 does not cost as much as the R1 it's close right now with the launch edition but I don't know I am sure that Rivian is working on getting better brand awareness but I think that

[00:57:22] that's going to be a big deal if they want to move into Tesla like numbers for sure because right now Tesla owns EVs unless you're elsewhere especially in the United States they own EVs in a lot of places especially the US BYD is definitely giving them a run for their money if not beating them in some quarters in years I don't know maybe this is an experience uniquely to me but I'm constantly

[00:57:52] constantly correcting folks or giving better information maybe there's a better way to say correcting is not the right way to say that when it comes to companies like Rivian and like Lucid for instance there's there are assumptions out there that Rivian needs to correct and most of those assumptions include that they're just for rich people alright let's move on

[00:58:22] to our next one our next question comes from Tom Narayan with RBC please unmute yourself and ask your question ah yes thanks for taking the question yeah good luck Claire congrats Derek first question is on the R2 you've been selling the kind of higher end trims but then next year you're going to have the kind of lower end trims with in a lower battery range I'm what you think about

[00:58:52] consumer demand for that for those specs with the lower battery range especially in light of ES1 model wise relative to price and then also the impact on margins for that lower end lower trim R2 and then I'm going to follow up yeah as I said we're excited about all the different trends there's sort of two big variables to think about in the

[00:59:22] different configurations so we have a premium trim and then a standard trim that's the interior appointments the rear drop glass that links to that a few other features within the vehicle and then there's a propulsion variation so we have all wheel drive formats we have all wheel drive base and then we have a rear wheel drive variant we have a larger pack and a smaller pack and so really the reason we create all those variants is

[00:59:53] because we want to make sure we cover the demand curve so cover give customers enough choices across performance range price point content such that we can capture customers from the $45,000 price point all the way up to the $57,000 price point and from a union of companies I think we have to recognize that when we launch as Derek described earlier the lack of volume and the ramp up

[01:00:23] just because of the nature of ramping on a single shift ramping suppliers means that our ability to absorb fixed costs that's depreciation that's the labor cost within the plant is more limited and as we grow volume the actual cost structure of the vehicle comes down quite considerably because those fixed elements of cost get absorbed by a lot more volume and so we've been able to very intentionally sequence the nature of launching with a high priced variant and then bringing in

[01:00:56] these positive gross margin for the R2 business and of course that given its volume that really drives the financial performance of Rivian overall I don't have anything to add to that you know they're going to try to do their highest margin vehicle first until they can scale otherwise if they're doing their lowest margin they're going to be losing money that's what I heard in that and that seems to make

[01:01:25] sense so let's move on to our next question which is another one about autonomy my follow-up is on autonomy I

[01:01:55] current autonomy product Tesla FSD is around $99 a month which suggests that consumers are willing to pay more for autonomy at least at that quality I said this earlier and I do think it's an important call-out we think of point to point as being almost an affliction point in terms of the type of experience you

[01:02:25] any road that has lines any marked road so it's millions of miles of roads today but it's not navigating you off exits onto urban environments through stoplights and through four-way stops and those sorts of things the point to point does do that and with point to point it creates this much easier experience where it takes the cognitive load having to figure out what you're going to do navigating thinking paying

[01:02:56] attention to which road you're supposed to turn all those things sort of fade away and it is a really nice experience I mean it's I'm driving it to an inflection point where more people are exposed

[01:03:26] to what this can do we think it's going to become very important and it's precisely because of that that for the last few years we've been investing heavily in building this capability going back to kicking off an in-house silicon program which ultimately is body in wrap one to verdict integrating the whole platform so that's all the perception platform feeding in and running this what we LDM or large driving

[01:03:55] model so we're extremely excited about this we do think it's a really big driver in the long term for market share for us we think it's going to be important that customers have some choices as I said with FST being out there and we think that's great and we're looking forward to getting it in a take

[01:04:25] rate on autonomy plus okay just to clarify is I mean I guess are you guys not giving us the attach rate for your autonomy product is it close to the tax level or we're not giving the attach rate maybe someday we're not giving it here in the pricing could it be could you raise it for point to point you think what do you think this is an interesting question in the

[01:04:55] fullness of time of course we think this is you know for over the coming years we do see opportunities for this to continue to grow but I think the dynamics around this are going to depend on how the market is behaving overall this is something today that's purchased as a separate subscription you could imagine models where this gets embedded into the price of the vehicle so there's a lot of different ways this is going to be priced I would just

[01:05:25] say a ton represents a big shift in the overall topology of the auto industry I but like any marketplace it's going to be market driven and so

[01:05:54] we're watching it very closely but I'd say if I were to say the guide on one thing it's going to be dynamic it's not going to to me I do think and I've said

[01:06:24] this many times recently even that eventually as it becomes more readily available through different companies it'll just be like you know that Kia and Hyundai are just going to put that in as a value prop to buy their cars once they solve it and that could be years down the road and these companies selling subscriptions to it have all of those years to collect money on that but eventually it's just going to be how the car comes it's not going to be something you have to pay extra

[01:06:54] for or much extra if you have to pay extra for it on the other side the person asking the question said that Tesla has a 75% attach rate when it comes to FSD or take rate when it comes to FSD that is sort of true Tesla has a 75% take rate at purchase when it comes to FSD we don't know what that looks like one month three months five months six

[01:07:24] months and a year in whether or not they're still paying for that and that could be you get a new Tesla that's exciting so you add on FSD for the month that's $100 a month and you're paying we'll say at least $500 a month for your car payment if you have a car payment you didn't pay cash for it so if you're paying for car payment now you're paying $600 a month when you include FSD and insurance into that

[01:07:57] $99 is easy to drop on the other side of that maybe you can afford to pay the $99 and your insurance and your car payment so you got your FSD your car payment and your insurance to clear up my stumbly message that I'm trying to make here or I'm

[01:08:27] it saves $100 a month it's not to say that FSD has no value it's just that when you're prioritizing your budget that $99 might not stay there forever so in the first month you might be very very or even maybe the first three months you're very motivated to pay for that $99 a month subscription for FSD but as the reality

[01:08:57] of paying for things starts to set in that might be the first thing you drop so Tesla did not give us what the retention rate was they only gave us the take rate so I don't think that's necessarily a fair comparison because one month does not equal a continuous customer for life it's just that's a one month picture we're only looking at

[01:09:27] that for a month so anyway having said that let's go ahead and move on to our next question we are very close but I thought that was a good question and

[01:09:57] great thanks so much good evening everyone I'll do

[01:10:27] I R1 and it's clear it's out selling the R1 which I would assume was the intention with the vehicle but I'm curious about you're thinking about positioning the R1 over time and I price point as you start to

[01:10:57] leverage some of the scale and supply chain benefits from the R2 to make the R1 maybe a little bit more in line with some of the other three row SUV we see in just to

[01:11:27] state and make sure it's clear we actually expect the R1 pricing to go up a bit and not the price I should say the average selling price to go up and it's really strategic we removed what we call our think about how it

[01:11:57] sits within the portfolio this is a flagship product so it's the highest spec train it's got over 1000 horsepower it's extremely capable on road extremely capable off road the tri motor is also incredibly capable more than 800 horsepower extremely capable and so by virtue of the quad the tri and the performance dual that we have on that we very thoughtfully moved it up market to really fill that place as a flagship product and so

[01:12:27] that was intentional and we're now seeing the results of that and Derek referenced it in terms of when you look at revenue per unit of the quarter now with that its objective is not to be a high volume product it's not trying to compete in the lower priced segment of two or three row vehicles it's working to be much more of a premium vehicle as I describe it the capabilities and features are set up as such

[01:12:56] ah you know I'm worried that the R1 platform will go the way of the model S and X and I don't want that to happen however as the R2 gets more popular I mean do most people really need a three row SUV especially when it starts at like 80 something thousand dollars my wife and I have a three row minivan that we will only need basically for the next four years until my kids are out of college and then

[01:13:26] after that we don't need that or not out of college but out of high school and then we can go to a more regular size vehicle and the only reason we have three row minivan is because like most parents we share responsibilities driving responsibilities with other parents and that means sometimes we have every single seat in our car filled up you know we had friends in town last week and we had all the seats but one filled up in that minivan so it's really nice to haul people around but it's not necessary all the time

[01:13:56] and when you're looking at I think we paid forty eight something thousand dollars for the for the carnival something to that maybe it was forty four for the carnival it's a lot easier to stomach that although it wasn't easy but it's a lot easier to stomach that than it is to stomach an eighty three thousand dollar purchase like that's a lot of money so anyway I hope the

[01:14:26] r1 and the r1t and the r1s stick around is really what I'm saying but I could see a world where the r2 and r3 are doing really well and whatever they come out with after that it just doesn't make sense to keep those other lines those other platforms around other than nostalgia or sentimental purposes all right everybody that is it if you want to support the show you can go to support kilowatt.com and you can sign up for as little as a dollar you can get rid of the ads if you're interested in such things

[01:14:56] and that's a dollar a month not a dollar a episode and what's the other thing all your money goes back into the show none of the money goes from the patreon goes into my own pocket it pays for all of the stuff that brings you this show such as you know my rivian not my rivian my riverside subscription and my email and stuff like that on the other side of things if you want to email me and you don't want to support the show that's totally

[01:15:26] fine you can do so bodebodee at 918digital.com right now as bad as I am getting episodes out on time I'm worse at returning emails but that will change soon and then yeah you can follow me on linkedin at 918digital getting ready for ces in january looking forward to that and I hope everybody has a fantastic week I hope you had a great Halloween

[01:15:55] and now we're leading into you know if you're in the US Thanksgiving if you're in Canada you've already celebrated but in the US Thanksgiving is coming up and then Christmas and then ces so I'm looking forward to one spending time with more time with family and two getting to ces and spending less time with family and my ces friends anyway all right everybody thank you so much for listening I hope you all have a wonderful week and

[01:16:25] I will talk to you all soon okay well great everybody for joining us on this call and appreciate the time we're and hopefully as you can see we're really excited about what's in front of us we're excited about the

[01:16:54] continued ramp up of R2 you know in looking at the additional volume we'll be building in Q4 and then into next year I think along with that really excited for what's to come with autonomy we spent a lot of time today talking about it I'm encouraged by the level of interest that there is around our point to point capability and looking forward to showing a lot more about that and talking about that as well as other aspects of our technology portfolio

[01:17:24] at our upcoming autonomy and AI day so with that thank you all for joining us and look forward to our next call to our going to see you