Rivian's Q4 2023 Earnings Call

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[00:00:27] Go to Bluehost. These risks and uncertainties are described in our SEC filings in today's shareholder letter. During this call, we will discuss both gap

[00:01:40] and non-gap financial measures.

[00:01:42] A reconciliation of gap to non-gap financial measures

[00:01:46] is provided in our shareholder letter. because I had a really busy day and some of the things that I planned on doing today took longer than I thought. So we're going to go through this together. Don't worry, I'm going to cut out the parts that are not interesting to folks who listen to the show. And as always, these clips are edited by me in a way that I think makes them more presentable for the show. If you want to listen to the full unedited version, I will put a link in the show notes

[00:03:04] for you.

[00:03:05] All right, let's go ahead and jump into R.J.

[00:03:07] Scringe's opening remarks. by Consumer Reports showed Rivian as the number one automotive brand with the highest likelihood for customers to purchase again. We intend to harness this brand strength as we launch R2, which will be unveiling on March 7th. R2 represents the essence of our brand while targeting this significant mid-sized SUV segment, a massive market with limited compelling EV options beyond Tesla.

[00:04:23] R2 has been developed with vertically integrated propulsion platforms, electronics, and software multiple vehicle platforms has presented challenges, but importantly, our team has gained significant learnings in a compressed timeframe. This experience will be foundational as we execute against our 2024 plan. We took significant steps towards driving greater efficiency in 2023. Gross profit per vehicle improved by approximately $81,000 when comparing the fourth quarter

[00:05:41] of 2023 to the, and customer readiness. Our order bank has notably reduced over time and deliveries have more than doubled in 2023 versus 2022, along with the impact of cancellations due to both the macro environment

[00:07:01] and the customer factors I just referenced.

[00:07:04] For 2024, we expect our total deliveries to be derived

[00:07:07] from our existing backlog as well as newer We've also expended the lineup of our vehicles and recently introduced our standard range variant, which provides an accessible price point for more potential Rivian customers. We are encouraged by the early results. The steps we're taking in 2024 will be foundational in positioning Rivian as a leader in the transition to electrification. The opportunity ahead is significant.

[00:08:20] We're taking deliberate action to drive additional cost efficiency as we continue building our

[00:08:24] go-to-market capabilities concentrate on the R2 platform before upgrading the R1 platform, which is that shutdown in the second quarter that they are, is to translate the brand strength that we've demonstrated for Rivian with R1 into the R2 product and into a much lower price segment, which has a very large just market. I think the key thing, though, to come back to your question on R1 is just recognizing how much of the content that's

[00:11:03] going into the shutdown in Q updates associated with it in our pillow materials and along with the line really is part one

[00:12:21] to the major focus for us as a business, which is the successful launch and rapid ramp-up

[00:12:26] of the R2 production. IPO and in a lot of ways in a more moderated demand and competitiveness and pretty uncertain economic environment to boot. So I'm just wondering how the board and the management team, are you still fully committed to that vertical integrated, you know, go to Georgia 400,000

[00:13:40] units, $5 billion on your own strategy, or at the board consider any alternative

[00:14:46] $55,000 price range, recognizing the average price of a new vehicle transaction in the United States last year was around $48,000.

[00:14:49] And so when we look at the competition that exists, we often get immediately drawn into

[00:14:56] competing, what's the competition look like directly with Tesla?

[00:15:00] But we need to recognize only 7% of the market has electrified, meaning really we're talking Introducing WonderSuite from Bluehost.com. Website creation is hard. But now with Bluehost, you can answer a few simple questions about your business and get a unique WordPress website or store right away. From there, you can customize your design, colors, and content. And Bluehost automatically helps you get found in search engines like Google and Vang.

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[00:17:41] I understand that.

[00:17:43] But it's not just Tesla and Rivian.

[00:17:46] Oh, and there is the Ford Mach-E. One of the most important parts of the shutdown is actually what's happening within our supply chain. So we're making a number of supplier changes vans being spotted with different logos on the side. But as we've said in the past, for these large fleets and the complexities associated with transitioning to an electric vehicle fleet, we expect these to start as pilots.

[00:20:23] And then over the course of this road, a lot of data collection. What has that data collection informed you about product performance and maybe what you're going to put into the R2?

[00:21:42] Thank you. easier and more seamless. And the way we build our software roadmap, there's a strategic, let's call it long form element that looks at how everything puzzles together in terms of partnerships, in terms of some of the capability that goes in. But then there's also a very active dialogue with customers where we're not only active on forums, but we have user groups that send us feedback points

[00:23:03] and we address those.

[00:23:04] And I get a lot of joy out of our release notes

[00:23:06] that go out every three, four weeks needs to be in the vehicle to deliver on that riviness, if you will, while at the same time recognizing that certain trade-offs seem to be made to achieve the lower price point. Okay, I thought this was a good supplier side I thought this was a really interesting answer. So let's go ahead and Play the clip trying to understand how fixed the input cost environment might be for 2024 at this point

[00:25:43] You spoke about some changes and things like lithium and battery pricing and that that can move around a little bit

[00:26:41] just over $20 a kilogram today. So that has a very significant impact

[00:26:45] on our overall cost structure.

[00:26:48] But getting into just thinking about the overall

[00:26:52] supply chain sort of health for us

[00:26:56] and overall material costs,

[00:26:58] we're just seeing a dramatically different environment

[00:27:01] for sourcing than what we had previously.

[00:27:04] And when we think about when we sourced R1

[00:27:06] and a lot of the building cases, we've been able to negotiate with our existing suppliers meaningful cost reductions that remove any of the price premium that we would have been paying before, especially with us of number of suppliers and number of components with the shutdown that we're planning here in the second quarter of this year. So, I'm not going to take a long time and break this clip down. I think it's pretty self-explanatory. But RJ has mentioned in past earnings calls how poorly they negotiated with these suppliers

[00:29:44] because they were an unknown startup and they were want to have to pay any more than absolutely necessary for a car. And number two, I want these companies to stick around. So the next time I buy a car, I have more options. So I bought a Model Y this time. Maybe I'll buy something off the R2 platform next time

[00:31:00] or Fisker Ocean or any of these other cars

[00:31:02] that are doing really cool things.

[00:31:04] And yes, I did say Fisker Ocean

[00:31:06] because I still think it's a really good earnings call. We didn't get any like bombshell information, just kind of slow and steady wins the race type stuff. In the past, these earnings calls were very different

[00:32:21] because Rivian was new and they were still trying

[00:32:23] to figure things out and they, you know,

[00:32:25] we had a pandemic and there was supplier issues people don't like their vehicles or whatever. And we're gonna have one of those earnings calls on February 29th. We won't cover it on the 29th, but we're gonna cover the Fisker earnings call, which is on the 29th. We'll get one of those earnings calls in, but Heinrich Fisker and Gita Gupta Fisker, they both of them and their team do a great job

[00:33:42] of explaining and owning up to the problems

[00:33:46] that they've had.

[00:33:47] And yeah, they put a little bit of spin on it,