Q3 2021 Rivian Automotive Inc Earnings Presentation

December 16, 2021

Ladies and gentlemen, please stand by. Your conference call will begin momentarily. Once again, please stand by. Your conference call will begin momentarily. Thank you for your patience and please continue to hold.

[music].

Thank you for standing by and welcome to the Rivian third-quarter fiscal 2021 earnings conference call. At this time all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session you will need to press star one on your telephone. As a reminder, today's program may be recorded. And now I'd like to introduce your host for today's program, [inaudible], Senior Manager of Investor Relations. Please go ahead.

To introduce your host for today's program, Eric Murphy Senior manager of Investor Relations. Please go ahead.

Good afternoon, and thank you for joining us for Rivian third quarter 2021 earnings call. Joining us on today's call, we have RJ Scaring, our founder Chairman and Chief Executive Officer, [inaudible], our chief growth Officer, and Claire Mcdonough, our Chief Financial Officer. A copy of today's shareholder letter is available on our Investor Relations website.

On today's call, we have <unk>, our founder Chairman and Chief Executive Officer.

Now, our chief growth Officer, and Claire Mcdonough, our Chief Financial Officer.

Today's shareholder letter is available on our Investor Relations website.

Before we begin, I would like to remind you during the course of this conference call our comments and responses to your questions reflect management's views as of today only. And will include statements related to our business that are forward-looking statements under federal Securities law, including without limitation statements regarding our market opportunity, industry churn, business operations, strategy and goals, our second domestic manufacturing facility, and our expectations regarding vehicle deliveries. Actual results may differ materially from those contained in or implied by these forward-looking statements due to risks and uncertainties associated with their business.

Will include statements related to our business that are forward looking statements under federal Securities law, including without limitation statements regarding our market opportunity industry churn business operations strategy and goals, our second domestic manufacturing facility and our expectations regarding vehicle deliveries actual results may differ materially from those contained in.

Or implied by these forward looking statements due to risks and uncertainties associated with their business.

Except as may be required by law, Rivian does not have any obligation to update or revise such statements if circumstances change. For a discussion of the material risks and other important factors that could impact actual results. Please refer to the cautionary statements and risk factors contained in our third quarter 10-Q filed with the SEC and today's shareholder letter.

Both of which can be found at our Investor Relations website at <unk> Dot Com slash investors. During this call, we will discuss both GAAP and non-GAAP financial measures. A reconciliation of GAAP and non-GAAP financial measures is provided in today's shareholder letter. With that, I'll turn the call over to RJ, who will begin with opening remarks.

Hello, everyone and thank you for joining us this afternoon for our first earnings call. As Derek mentioned, just before this call we published a shareholder letter, which includes an overview of the progress we've made over the recent months. And I encourage you all to read it for additional details around some of the items, we will cover on today's call.

This call is.

As Derek mentioned just before this call we published a shareholder letter, which includes an overview of the progress we've made over the recent months.

Courage you all to read it for additional details around some of the items, we will cover on today's call.

Before I dive into some of our recent milestones, I want to provide a quick overview of our business and mission for those who are new to Rivian. Our generation will have a profound impact on the planet and the world our kids' kids' kids will inherit. We can spend a lot of time on the specifics of climate change, but the reality is we as a society are rapidly changing the composition of our atmosphere.

Power generation will have profound impact on the planet and the World are kids Kids Kids will inherit.

We can spend a lot of time on the specifics of climate change, but the reality is we as a society are rapidly changing the composition of our atmosphere.

If we want life as we know it to thrive for many generations from now, we must change this. This is what inspired me to start Rivian and it's what drives the decisions we make as an organization. including the decision to become a public company. The challenge of shifting all fossil fuels is as big as they come. And it's going to require people companies in the entire industry has to come together in ways we never had before. From day one our focus has always been to maximize impact. To keep the world is interest forever. The word forever is a humbling word. It's very easy for us to think about the world in the context of our lives, but when you think about the world in the context of the many generations to come.

This is what inspired me to start review and it's what drives the decisions we make as an organization.

The decision to become.

To become a public company.

The challenge of shifting all fossil fuels is as big as they come.

And it's going to require people companies in the entire industry has to come together in ways, we never had before.

From day, one our focus has always been to maximize impact.

To keep the world is interest forever.

Word forever is a humbling word it's very easy for us to think about the world in the context of airlines, but when you think about the world in the context of the many generations to come.

It requires we do not simply inspire people to buy our vehicles, we must inspire shifts in behavior and a new relationship with the world around us. The transportation industry is at the very start of a transformation. Bigger in scale than the shifts from the horse to the automobile. The business model, value chain, customer model, and technology will be completely remap is to redefine how we move people and goods on our planet. Repeat exist to create products and services that help our abundant transition to a carbon neutral energy and transportation. Our business encompasses both the consumer and commercial markets.

Transportation industry is at the very start of a transformation.

Bigger in scale than the shifts from the horse to the automobile.

The business model value chain customer model and technology will be completely remap is to redefine how we move people and goods on them on our planet.

Repeat exist to create products and services that help our abundant transition to a carbon neutral energy and transportation.

Our business encompasses both the consumer and commercial markets.

In the consumer space, we launched our [R1] platform with our first vehicles, R1T and R1S, a handshake with the world and our first step in building our relationship with our customers. Engineered for all of life's adventures, our vehicles uniquely combined performance capability utility and deficiency.

Engineered for all of life's debentures are vehicles uniquely combined performance capability utility and deficiency.

As of yesterday, we had 71000 filters per our R1 vehicles. In the commercial market, we are bringing to market the Rivian commercial van platform. Our first vehicle on this platform will be our 700 cubic foot electric delivery van or EDB 700.

In the commercial market, we are bringing to market the remaining commercial van platform.

Our first vehicle on this platform will be our 700 cubic foot electric delivery van or ETB 700.

We designED these vehicles working closely with Amazon. Placed an initial order of 100000 EDBs. Our commercial vehicles are designed with a focus on safety comfort and ease of operation. They offer a step-change in driver experience, while also delivering a lower total cost of ownership. Every commercial vehicles sold to Amazon is complemented by fleet alone. Our proprietary and in Central and fleet management platform with recurring monthly subscription fee. The 700 cubic foot EDB has achieved a range of 201 miles based on internal testing. Using official EPA test procedures.

Placed an initial order of 100000.

Our commercial vehicles are designed with a focus on safety comfort and ease of operation.

Now for a step change in driver experience, while also delivering a lower total cost of ownership.

Every commercial vehicles sold to Amazon is complemented by fleet alone.

Our proprietary and in Central and fleet management platform with recurring monthly subscription fee.

The 700 cubic foot ETB hedge has achieved a range of 201 miles based on internal testing.

Using official EPA test procedures.

We have successfully received their certifications to sell these vehicles and we plan to deliver our first available vehicles to Amazon this month. Both our consumer and commercial products are supported by a full suite of value-added services that address the entire vehicle lifecycle and deepen our customer relationships. Starting with a clean sheet rebuilt the vertically integrated ecosystem comprised of our vehicle technology platform cloud architecture product development and operational capabilities products and services.

Both our consumer and commercial products are supported by a full suite of value added services that address the entire vehicle lifecycle and deepen our customer relationships.

Starting with a clean sheet rebuilt the vertically integrated ecosystem comprised of our vehicle technology platform cloud architecture product development and operational capabilities products and services.

Our ecosystem is designed to deliver rapid development cycles, structural cost advantages, and exceptional customer experiences. After 12 year journey of getting our strategy and offerings ready for customer deliveries, it has been incredibly rewarding to see the excitement and enthusiasm for what we're building. Over the past few weeks, we've received many recognitions and acknowledgments from editorial and news outlets, including Newsweek, Forbes electric and Edmunds. To add to this list earlier this week the R1T was selected as motor trends 2022 truck of the year after an exhaustive testing program.

After 12 year journey of getting our strategy and offerings ready for customer deliveries and has been incredibly rewarding to see the excitement and enthusiasm for what we're building over.

Over the past few weeks, we've received many recognitions and acknowledgments from editorial and news outlets, including Newsweek, Forbes electric and Edmunds.

Add to this list earlier this week the <unk> was selected as motor trends 2022 truck of the year after an exhaustive testing program.

This award recognizes the truck that pushes boundaries across all aspects, including safety, efficiency, value, advancement in design, engineering excellence, and performance. We are honored by this recognition and the opportunity to illustrate how a clean sheet technology-focused vehicle could eliminate laundry accepted topline. After years of meticulous attention to detail, it was rewarding to her motor trend state that this may have been the most significant recognition they have given since the start of the award in 1949.

We are honored by this recognition and the opportunity to illustrate how a clean sheet technology focused vehicle could eliminate laundry accepted topline.

After years of meticulous attention to detail it was rewarding to her motor trend state that this may have been the most significant recognition they have given since the start of the award and $19 49.

Additionally earlier this year, we completed a world-first. Historically, our all-electric crossing of the US and northern tier on the Trans America Trail. From a production perspective, I wanted to highlight a significant milestone for our team. The production and delivery of our first vehicles. As the first available or when T drove off the production line in December and it was joined by my family and thousands of colleagues to celebrate this exciting and emotional moment for our organization. And earlier this week, [Claire] and I purchased the first two scalable RNs vehicles.

Historically, our all electric crossing of the U S and northern tier on the Trans America Trail.

From a production perspective, I wanted to highlight a significant milestone for our team the production and delivery of our first vehicles.

The first available or when T drove off the production line in December and it was joined by my family and thousands of colleagues to celebrate this exciting and emotional moment for our organization.

And earlier this week <unk> purchased the first two scalable our warehouse vehicles.

We're at a steep part of our clients, but I couldn't be more grateful to be alongside such a dedicated and passionate team for their energy and soul into bringing these vehicles to life. I'll stop on this point for a second and speak to our manufacturing progress. Launching and ramping production of three different vehicles within a few months is an incredibly tough challenge. This production ramp requires the simultaneous ramp of our supply chain hiring and training of our production workforce equipment bring up. And rapid iteration through production quality loops.

I'll stop on this point for a second and speak to our manufacturing progress.

Launching and ramping production of three different vehicles within a few months is an incredibly tough challenge.

This production ramp requires the simultaneous ramp of our supply chain hiring and training of our production workforce equipment bring up in.

And rapid iteration through production quality loops.

These challenges have been exacerbated given the state of our global supply chain, tight labor market, and of course, the complications from COVID. As of yesterday, we have produced 652 R1 vehicles and delivered 386 of these including the production sale of our first two recently certified RNs vehicles earlier this week. With 13 working days left at our normal facility. Our dedicated teams are working as hard as possible to get as many customers are vehicles by year-end. For 2021, we expect to produce a few hundred vehicles short of our initial 1200 vehicle production targets. Following the start of production for the R1T, we made the decision to begin introducing R1S [inaudible] production line. Ultimately ramping up the <unk> in November while also ramping production of the R1T was more challenging than expected.

As of yesterday, we have produced 652 or one vehicles and delivered 386 of these including the production sale.

Our first two recently certified our warehouse vehicles earlier this week.

With 13 working days left at our normal facility. Our dedicate teams are working as hard as possible to get as many customers are vehicles by year end.

For 2021, we expect to produce a few hundred vehicles short of our initial 1200 vehicle production targets.

Following the start of production for the <unk>, we made the decision to begin introducing Erwin S&P hormone production line.

Ultimately ramping up the <unk> in November while also ramping production of the <unk> team was more challenging than expected.

We produced enough R1Ss to support validation and certification. Which are critical for our R1S production ramp in early 2022. Given the importance of R1S. This was a strategic approach that we felt optimize long term value for the business. We are encouraged by the progress and learnings our team continues to incorporate into our operations. And we have achieved our primary objective of certifying the R1T, R1S and EDP 700 for sale this year.

Which are critical for our <unk> production ramp in early 2022.

Given the importance of our warehouse. This was this was a strategic approach that we felt optimize long term value for the business.

We are encouraged by the progress and learnings our team continues to incorporate into our operations.

And we have achieved our primary objective of certifying the <unk> are with us and Edp 700 for sale this year.

In early 2022, we plan to complete certification of the EDP 500, which is both narrower and shorter than the 700. Our production ramp of the R1T, R1S, EDP 700, and EDP 500 will continue into next year. And we remain confident in our long long term manufacturing trajectory. Just as we are scaling our manufacturing facility.

Our production ramp of the <unk> T. R. One as <unk> 700, and Edp 500 will continue into next year.

And we remain confident in our long long term manufacturing trajectory.

Just as we are scaling our manufacturing facility.

Hundreds of our suppliers are also scaling their production to match our vehicle ramp rate. Our procurement team has remained nimble and continues to work with our supplier partners across all tiers to mitigate issues stemming from our supply chain, the labor market and the COVID pandemic.

Given the uncertainty within the supply chain, we have decided to carry higher inventory levels than previously assumed to help ensure we consistently have parts to build. The good news is we do not believe any of our supply chain challenges represent long term systemic issues. While our product development and manufacturing teams have been focused on ramping our normal production facility, our real estate and facilities teams have been working diligently to ensure we remain well-positioned to capture and drive the accelerated large scale adoption of sustainable transportation.

The good news is we do not believe any of our supply chain challenges represent long term systemic issues.

While our product development and manufacturing teams have been focused on ramping our normal production facility, our real estate and facilities teams have been working diligently to ensure we remain well positioned to capture and drive the accelerated large scale adoption of sustainable transportation.

We are excited to announce today, our partnership with the state of Georgia. Which will be the home of our second US manufacturing facility. The site selection was the culmination of a comprehensive process in which the Arabian team evaluated a variety of sites across the country looking for the right combination of site location and logistics access to talent and proximity to suppliers.

Which will be the home of our second U S manufacturing facility.

The site selection was the culmination of a comprehensive process in which the Arabian team evaluated a variety of sites across the country looking for the right combination of site location and logistics access to talent and proximity to suppliers.

This project represents the largest economic development deal in Georgia history, the facility will be east of Atlanta, and Morgan and Walton counties and will employ more than 7500 employees at peak production. From a construction perspective, we plan to break ground this coming summer with the intention of having facilities start producing salable vehicles by 2024. The facility will produce our next generation of [urban] vehicles with an eventual target capacity of 400000 annual units. I want to thank the entire state of Georgia, We're excited to make Georgia another home for us.

From a construction perspective, we plan to break ground this coming summer with the intention of having facilities start producing salable vehicles by 2024.

The facility will produce our next generation of <unk> vehicles with an eventual target capacity of 400000 annual units.

I want to thank the entire state of Georgia, We're excited to make Georgia another home for us.

The last major milestone I wanted to highlight was the completion of our initial public offering in November in which we raised $13.7 billion of gross proceeds. We're extremely appreciative of the excitement and receptivity that our existing and new shareholders have shown. These funds enable us to execute on our near term objectives, including the growth of our manufacturing capabilities. Further investment into a vertically integrated technologies and continued infrastructure and capabilities to support customer experience and engagement.

We're extremely appreciative of the excitement and receptivity that our existing and new shareholders have shown.

These funds enable us to execute on our near term objectives, including the growth of our manufacturing capabilities further investment into a vertically integrated technologies and continued infrastructure and capabilities to support customer experience and engagement as.

As part of our IPO, we established forever by Rivian to extend our impact beyond the proximity and the associated competition they'll hopefully inspire. Forever's mission is dedicated to addressing our planet's climate crisis and preserving the critical biodiversity needed for our planets long term survival. With this, we donated 1% of Rivian's pre IPO outstanding equity to forever, making the natural rolled a stakeholder in our success.

<unk> mission is dedicated to addressing our planet's climate crisis and preserving the critical biodiversity needed for our planets long term survival.

With this we donated 1% of <unk> pre IPO outstanding equity to forever, making the natural rolled a stakeholder in our success.

Forever will be focused on land conservation sustainable consumption initiatives, preserving biodiversity and research and educational stewardship. The value of Forever's equity is nearly 1 billion today and I am excited by the impacted on issue can have in preserving our planet for future generations. Now I'll hand, it over to [inaudible] who will touch on the customer engagement side of the business.

Oh forever as equity is nearly 1 billion today and I am excited by the impacted on issue can have in preserving our planet for future generations.

Now I'll hand, it over to Japan will touch on the customer engagement side of the business.

Thanks, RJ, we continue to observe strong affinity for our brand as evidenced by the acceleration we have seen in our backlog of pre-orders. At Rivian, a pre-order reflect the fundable housing dollar deposit and our configured vehicle, including everything from[inaudible]. As of end of third quarter, we had approximately 48000 R1 orders from customers across the United States and Canada. Then we have added another 28, however, the order taking our backlog as of yesterday was 71.

In a pre orders reflect the Fundable housing dollar deposit and our COO.

Configured vehicle, including everything from bank and vehicles to an existing.

As of end of third quarter, we had approximately 48000 <unk> orders from customers across the United States and Canada.

Then we have added another 28, however, the order taking our backlog as of yesterday was 71.

Before I jump into a few additional customer experience milestones, I wanted to spend a few minutes walking through our go-to market strategy. The Rivian go to market strategy is rooted in three foundations and spooks all designed to efficiently solve it. Shifting customer pain points. First, we go direct to the customer. By doing that we are able to ensure the quality of each interaction.

Driven go to market strategy is rooted in three foundations and spooks all designed to efficiently solve it.

Shifting customer pain points.

We go direct to the customer by doing that we are able to ensure the quality of each interaction.

Secondly, we had digital codes, which means we have invested heavily in the robust cloud-based digital backbone that enables enhances each interaction. We expect this will provide deep learning the most are experiencing and scalability as we grow.

We expect this will provide deep learning the most are experiencing and scalability as we grow.

As an example, our intuitive digital purchase [budget] replaces what other and acquired several other dealership with a self paced spreads experience you can manage in minutes from [your coach].

And third, we maintain end to end control of the entire customer journey. This means every interaction is stiched together into one seamless experience to a set of vertically integrated digital and physical capabilities.

These key foundational principles allow us to put the customer at the center of each touchpoint. Over the past few months, yields of half book concept and design have been put into action. You will find further details in our shareholder letter, but I'll just touch on a few.

Over the past few months yields of half book concept and design halfway and put into action blue.

You will find further details in our shareholder letter, but I'll just touch on a few.

In September we kicked off our [inaudible] program. This program provides a variety of ways for consumers to experience that again vehicles including at home demo rides and event-based experiences in [inaudible]. Since launch, we have hosted over 10000 guests in our vehicles. Hedge rather than a handful of locations, including New York, [inaudible, Seattle, and California.

This program provides a variety of ways for consumers to experience that again vehicles.

<unk> at home demonstrate an event based experiences in China.

Since launch we have hosted over 10000 guests in our vehicles.

Hedge rather than a handful of locations, including New York normal.

And California.

Additionally, as we cycled those acres in September our delivery team began to ramp up. As one of many interactions we have with our customers, we put a tremendous amount of code into our delivery experience. Delivery's happening primarily at our customers' homes. So that they can experience a moment comfortably with family, friends and the whole community if they so choose.

Put a tremendous amount of code into our delivery experience.

It's happening primarily at our customers' homes.

So that they can experience a moment comfortably with family and.

And the whole community if they so choose.

During this delivery, a dedicated especially this is there to walk the customer to everything they need to know about the vehicle and tailor the delivery experience to the consumer and the friend. As you moved into October, we opened our first Rivian hub in Venice, California. If you're unfamiliar with us against spaces, There places for a government plan and the local community to come together connect and share ideas.

As you moved into October we opened our first Vivien hub in Venice, California.

If you're unfamiliar with us against spaces, There places for a government plan and the local community to come together connect and shared ideas.

Our [inaudible] portfolio will consist of hub like a location invented these. These new spaces, which will be temporary and targeted location. Outputs and more adventurous location and lastly, large track of protected lands that are accessible to customers. On the service side, we are prioritizing the rollout of our service centers, targeting the highest concentrations of pre order customers.

These new spaces, which will be temporary and targeted location outputs and more adventurous location and lastly lost track of predictive land that are accessible to customers.

On the service side, we are prioritizing the rollout of our service centers targeting the highest concentrations of reorder customers.

The service centers are complemented by our fleet of mobile service plans which will perform the vast majority of [inaudible] at a customer's home while expanding the service coverage area. Our delivery cadence is synchronized with the service infrastructure to ensure a worry-free and highly responsive service support experience. Our 24/7 service support and predictive diagnostic capability will further enhanced the service model. Next, let me pass the call along to Claire who will provide an update on our financials.

Our delivery cadence is synchronized with the service infrastructure to ensure a worry free and highly responsive service support experience.

Our 27 service support and predictive diagnostic capability, we further enhanced the service model.

Next, let me pass the call along to Claire who will provide an update on our financials.

Thanks. I wanted to echo RJ and [inaudible] excitement and talking to you all on our first earnings call as a public company. We'll start with a review of our third-quarter results. In September, we delivered our first R1Ts to customers generating $1 million in revenue. As RJ mentioned, given that we just started production in September, the third-quarter volumes on our manufacturing line are a small fraction of our expected long term production.

Start with a review of our third quarter results.

Timber we delivered our first 11, <unk> customers generating $1 million in revenue as Archie mentioned given that we just started production in September 5th third quarter volumes on our manufacturing line or a <unk>.

Small fraction of our expected long term production.

Sure.

In the near term, we expect that this dynamic of high fixed costs associated with operating and running our large scale highly vertically integrated plan amortize over a small but growing number of vehicles produced across R1 and RCD platforms will continue to have a negative drag on gross profit. As a result in the third quarter, we generated a negative gross profit of 82 million.

Quarter, we generated a negative gross profit of 82 million.

Additionally, we recorded a lower cost or net realizable value LC and RV adjustment to write down the value of certain inventory in that we anticipate receiving upon vehicle sale after considering future necessary to ready the vehicle for sale. This expense negatively impacts gross profit in the third quarter and we expect it to also impact upcoming quarters in the near future.

Expense negatively impacts gross profit in the third quarter and we expect it to also impact upcoming quarters in the near future.

For example, in the fourth quarter, we have continued to build up our inventory balance to help mitigate the supply chain challenges we've experienced to date. We immediately recorded the LC and RV adjustment, which adds to the concentration of fixed costs we recognize as part of our cost of goods sold.

Part of our cost of goods sold.

As a result of these accounting dynamics, the marginal vehicle we produced in Q4 will have a limited impact on our cost of goods sold and given the inflationary market backdrop. We also continue to evaluate the pricing for our vehicles. Turning to our operating expenses. Research and development expense for the quarter with 441 million as compared to $220 million in the third quarter of 2020.

Turning to our operating expenses.

Research and development expense for the quarter with 441 million as compared to $220 million in the third quarter of 2020 are.

The higher expense was due to increased efforts related to our R1 consumer vehicle program as well as our EDB commercial van program. We also experienced increased expenses related to other advanced product development activities that are critical for our future products.

We also experienced increased expenses related to other advanced product development activity that are critical for our future products.

SG&A expense for the third quarter of 2021 was $253 million as compared to $68 million for the third quarter of 2020. The primary drivers of this increase are related to scaling our sales and service operation, commercial office location, customer-facing facilities, and corporate functions to support future business growth.

<unk> future business Brown.

During the third quarter, we recognized a $458 million non-operating expense related to the loss on our convertible notes. This was the result of the issuance and subsequent mark to market valuation of our 2021 convertible note. This was a non-cash expense.

This was the result at the issuance and subsequent mark to market valuation of our 2021 convertible note.

This was a noncash expense.

Our capital expenditures for the third quarter were $469 million driven by our continued strategic investments in infrastructure. It was primarily due to the expansion of our normal factory as well as investments in corporate facilities, service operations, and experience spaces.

It was primarily due to the expansion of our normal factory as well as investments in corporate facilities service operations and experienced spaces now.

Now turning to our cash balance we ended September with $5.2 billion of cash on our balance sheet. Since then we completed our IPO raising $13.5 billion in net proceeds and also raised $1.2 billion of net fund two senior secured notes. Adjusting our cash balance for these two fundraising events, we would have ended the third quarter with approximately $20 billion of cash on the balance sheet.

Since then we completed our IPO raising $13 5 billion in net protein and also raised $1 2 billion of net fund two senior secured notes.

Adjusting our cash balance Brittany two fundraising events.

<unk> ended the third quarter with approximately $20 billion of cash on the balance sheet.

As RJ highlighted, there is the tremendous opportunity in front of us to help drive this feature of the nine trillion dollars transportation and services market. However, building out our organization and infrastructure to support our growth requires significant investment. The funds we have raised throughout 2021 offer us the opportunity to execute on our near term objective.

We're building out our organization and infrastructure to support our growth requires significant investment.

We have raised throughout 2021 offer us the opportunity to execute on our near term objective.

However, we will continue to look for opportunities to pull forward investments to further accelerate our strategy. As we look a few weeks ahead, we remain focused on ramping our R1 production and delivery. In addition with the finalization of our <unk> certification, we expect to start making deliveries of the EDB 700 Amazon before the year-end. We plan to provide full-year 2022 guidance during our fourth quarter and fiscal year 2021 earnings call. With that, let me turn the call back to RJ before opening up the lines for Q&A.

As we look a few weeks ahead, we remain focused on ramping our wind production and delivery. In addition, with the Finalization of our <unk> certification, we expect to start making deliveries of the edd $700 Amazon before the year end.

We plan to provide full-year 2022 guidance during our fourth quarter and fiscal year 2021 earnings call. With that, let me turn the call back to RJ before opening up the lines for Q&A.

With that let me turn the call back to RJ before opening up the lines for Q&A.

Thanks, Claire. As I mentioned, delivering our first R1T, R1S, [EDB] vehicles is our primary goal for 2021. I appreciate our team for their focus and dedication to make this goal a reality, despite the unprecedented backdrop of COVID-19 in a challenging supply chain environment.

As I mentioned, delivering our first <unk> rns Edd Edd vehicles is our primary goal for 2021.

I appreciate our team for their focus and dedication to make this golar reality, despite the unprecedented backdrop of COVID-19 in a challenging supply chain environment.

With the growing backlog of 71000 [pre-oders] and our 100000 unit order from Amazon. We are excited to begin to satisfy the tremendous demand for our products and services. Our team has rallied around our shared values and continued to demonstrate a tireless work ethic as we continue scaling our production volumes. Thanks again to everyone for being with us today. And with that, let me turn it over to the operator for questions.

Thanks, again to everyone for being with us today and with that let me turn it over to the operator for questions.

Certainly, ladies and gentlemen, if you have a question at this time. Please press star then one on your Touchtone telephone. If your question has been answered and you'd like to remove yourself from the queue please press the pound key. First question comes from the line of Adam Jonas from Morgan Stanley. Your question please.

First question comes from the line of Adam Jonas from Morgan Stanley. Your question. Please.

Thanks, Good afternoon, everybody. One question and one follow up please on the capacity expansion. I thought the idea was to ramp up to normal first. See everything that works and what doesn't work and then use those learnings to optimize the selection and the architecture of our second plant. So kind of why expand so soon and how can you still get those learnings out?

I thought the idea was to ramp up to normal first.

Everything that works and what doesn't work and then use those learnings to optimize the selection and the architecture of our second plant so kind of why it why expand so soon and how can you still get those learnings.

Thanks, Adam. This is a really key element of how we've thought about cascading the programs and how we've architected the product development organization to be capable of not only running more than one program and launching more than one program at once. But also to have those fast feedback loops between the different programs. With that, the commercial van is actually learned a lot from the R1 platform in R1 platform launch.

This is a really key element of how we've thought about cascading the programs and how we've architected the product development organization to be capable of not only running more than one program and launching more than one program at once but also to have those fast feedback loops between the different programs.

With that the the commercial van is actually learned a lot from the <unk> one platform in the Ireland platform launch.

And as we look at our next generation of vehicles, we'll certainly learn from what we're doing now on the R1 platform and what we're doing on the [RCD] platform. And recognizing that those programs will fully develop and then launch. What you see in terms of the second facility, the facility in Georgia. This is really this is key for us, the expansion point of view. Timescales associated bringing that plant online really require us to start that work as you've heard early next year.

And recognizing that those programs.

To fully develop and then launch.

What you see in terms of the second facility, the facility in Georgia. This is really this is key for us, the expansion point of view. Timescales associated bringing that plant online really require us to start that work as you've heard early next year.

Timescales associated bringing that plant online really require us to start that work as you've heard.

Early next year.

Thanks, RJ. And just as a follow up would love any feedback on the early builds that you've been delivering. What's going right, where there's issues. And how you're addressing them and on your last, I think early in 20, sorry early in November there was a comment that you expected that the orders at the time, which were 55400 to have them delivered to consumers, this is the R1 I'm referring to. By the end of fiscal '23. And just curious if you can reiterate that today based on everything that you are seeing through the lens of our supply chain. Thanks, RJ.

Been delivering whats going right, where there were those issues.

And how you're addressing them and on your last.

S. One I think early in 'twenty sorry early in November there was a comment that you expected that the orders at the time, which were 55400 <unk>.

delivered to consumers, this is the R1 I'm referring to. By the end of fiscal '23. And just curious if you can reiterate that today based on everything that you are seeing through the lens of our supply chain. Thanks, RJ.

Sure. I guess first. Just to touch on how we're seeing the vehicles in terms of quality and what's being delivered. There's a tremendous amount of excitement what we're finding is early customers are excited. Friends and families to take rides. And we think that's part of what's driving the increased rate of greater accumulation.

I guess first.

Just to touch on the.

Now how we're seeing the vehicles in terms of quality and what's being delivered.

A tremendous amount of excitement what we're finding is.

Early customers are excited.

Friends and families to take rides and we think that's part of what's driving the increase increased rate of greater accumulation.

And from a quality point of view. This has been a really key element for us where we're focused on making sure what we're delivering maintains and really delivers on quality in terms of how the vehicles are built. How they are put together. And what's exciting is watching us add additional features so through software over their updates, we're able to not only enhance and improve the software capabilities and the vehicle, but to add features and to respond to some of the early feedback that we're getting.

They put together and.

And what's exciting is watching us add additional features so through software over their updates, we're able to not only enhance and improve the software capabilities and the vehicle, but to add features and to respond to some of the early feedback that we're getting.

Oh gosh.

And then with regards to. I'm sorry, Adam. Yeah. The second part of the question I will now reiterate. The delivery target by end of 2023. Yes, so we're working as hard as we can to ramp recognizing the rate at which parameters are coming and exceeds the current rate of production. We absolutely need to work to sort of have supply so to speak catch up with demand. So we do plan to have that. The existing partners make those deliveries by 2023. But it will, if you place a printer today and if you were delivered in that order, it wouldn't be until 2023 for that delivery.

I'm sorry, Adam.

Yeah. The second part of the question I will now read reiterating.

Delivery target by end of 2023.

Yes, so we're working as hard as we can to ramp recognizing the rate at which parameters are coming and exceeds the current rate of production. We have absolutely we absolutely need to work too.

To sort of have supply so to speak catch up with demand. So we do plan to have that.

The existing partners make those deliveries by 2023.

But it will, if you place a printer today and if you were delivered in that order, it wouldn't be until 2023 for that delivery.

Delivered in that order it wouldn't be until 2023 for that delivery.

Thanks, RJ. Thank you. Our next question comes from the line of Rod Lache from Wolfe Research. Your question, please. Hi, everybody. Congrats on what you accomplished in their response to their first product.

Thank you. Our next question comes from the line of Rod Lache from Wolfe Research. Your question. Please.

Hi, everybody.

Congrats on what you accomplished in their response to their first product.

I wanted to ask you a little bit more about production first of all obviously a lot coming together. Where are the biggest bottlenecks at this point in the ramp? Where are you focusing operationally? Can you give us some sense of where your daily production rate is now and what you expect to exit at the year-end? Ramping something like this is really. It's almost like an orchestra, we have to simultaneously be ramping the supply chain, simultaneously training the workforce sampled. Simultaneously working through any equipment issues and equipment bring up.

Where are the biggest bottlenecks at this point in the ramp.

Where are you focusing operationally can you give us some sense of.

Where your daily production rate is now and what you expect to exit the year at.

Ramping something like this is really.

It's almost like an orchestra, we have we have to.

Simultaneously be ramping the supply chain simultaneously training the workforce sampled.

Simultaneously working through any any equipment issues and equipment bring up.

And then of course working through quality loops. We said or as I said to Adam, just given the importance of making sure what we're delivering to customers is truly achieving the quality levels that we're committed to. So as we look at that each of those represents its own set of challenges and really the what makes this situation in this timeframe such unique time to launch is just the supply chain constraints and supply chain challenges.

We said or as I said to Adam just given the importance of making sure what we're delivering to customers is truly achieving the quality levels that we're committed to.

So as we look at that each of those represents its own set of challenges and.

Really the what makes this situation in this timeframe such unique time to launch is just the supply chain constraints in supply chain challenges.

What makes it challenging and in the case of the vehicle is even if you have 99.9% of the components in the vehicle ramping so of the roughly 2000 parts that come in and go into a vehicle. If 99.9% of those have ramped at the same rate of the rest of the production, the small number of suppliers or some smaller number of components, maybe ramping a little slower can create constraints or bottlenecks. And so we've had to respond to that and we've been very focused on making sure. We now are effectively ramping what's in our plants, but also effectively ramping across all of our suppliers.

What makes it challenging and in the case of the vehicle.

Even even if you have 99, 9% of the components in the vehicle ramping so of the roughly 2000 parts that would come in and go into a vehicle.

If 99, 9% of those have ramped at the same rate of the rest of the production the small number of suppliers or some smaller number of components, maybe ramping a little slower.

<unk> constraints or bottlenecks and so we've had to respond to that and we've been very focused on making sure. We now are effectively ramping whats in our plants, but also effectively ramping across all of our suppliers.

Now with that said. Those challenges have been really a focal point for us over the last 2.5-3 months. And as you heard, we don't see any long term systemic challenges associated with ramping that supply chain. A number of these issues are short term in nature and they're solvable problems.

Those challenges have been really a focal point for us over the last 253 months.

And as you heard we don't see any long term systemic challenges associated with ramping that supply chain.

A number of these issues are short term in nature and they're solvable problems.

As we look inside our facility and the things that we directly control in terms of ramping our equipment and working through those quality [loopes,] one of the areas that's been a constraint for us thus far has been building our battery modules. And in the case of the vehicles are producing today, each battery pack has nine battery modules and in each battery module has 864, 2170 cylindrical cells.

And in the case of the vehicles are producing today each battery pack has nine battery modules and in each battery module has $864 21 70 cylindrical cells.

And the process of assembling modules and those models into packs. It takes quite a bit of assembly work and it's a highly automated process. And what we've done to ensure this isn't a long term risk is we actually have three separate lines that had been brought up so well. What we call essentially like a development line, that's been running for a number of years now. We then have a larger scale line of fully automated line, that's producing a vast majority of what we will be put into the road thus far.

It takes quite a bit of quite a bit of assembly work and it's a highly automated process.

And what we've done to ensure this isn't a long term risk is we actually have three separate lines that had been brought up so well.

What we call essentially like a development line, that's been running for a number of years now. We then have a larger scale line of fully automated line, that's producing a vast majority of what we will be put into the road thus far.

We then have a larger scale line of fully automated line, that's producing a vast majority of what we will be put into the road thus far.

And then we have what we call line too with the line zero, line one line too which is coming up as we speak and that is, last line is significantly higher volume. And we, fortunately, took the decision early last year to commission this line recognizing we didn't want to have battery modules to the long term constraint. And we see this while this has been a constraint to this point, we do not see this as a long term constraint given that we've added so much capacity over the last couple of months.

Early last year to commission. This line recognizing we didn't want to have battery modules to the long term constraint.

And we see this while this has been a constraint to this point, we do not see this as a long term constraint given that we've added so much capacity over the last.

Over the last couple of months.

Thanks for that. And also related to production. As your backlog grows you're going to get to a point where people won't get delivery until 2024. It's a great problem to have. Claire mentioned that you're looking at opportunities to accelerate your strategy or are there things that you can do to maybe accelerate the ramp that you had originally envisioned for the R1 platform just given the response to the product? Or are you, I think Claire alluded to inflation and looking at pricing. Are you looking at opportunities to adjust pricing based on what the demand is for that for the product?

Also related to production.

Is your backlog grow as youre going to get to a point where people won't get delivery until 2024.

It's a great problem to have.

Claire mentioned that Youre looking at opportunities to accelerate your strategy or are there things that you can do to maybe accelerate the ramp.

You had originally envisioned for the <unk> platform just given the response to the product.

Or are you.

Claire alluded to inflation and looking at pricing. Are you looking at opportunities to adjust pricing based on what the demand is for that for the product?

With regards to production, we're certainly looking at how we can accelerate the ramp given the really strong demand that we have for the products. One of the things that we built into the way we've designed not only the plant but also the organization is. We've made sure that as we set things up, we are capable of exercising the discipline to ramp two lines in parallel. So we have our R1 line and we also have our commercial vehicle line.

One of the things that we built into the way we've designed not only the plant but also the organization is.

We've made sure that as we as we set things up we are capable of exercising the discipline.

To ramp two lines in parallel so we have our our one line and we also have our commercial vehicle line.

And not only are those separate assembly lines, but those are also separate teams that are working on those activities. And what that allows us to do is to be really intentional around how we deploy resources. And that ability to be very intentional also allows us to look at increases in capacity. That the plan has been for the plant near normal two to grow capacity from 150,000 units between those two lines to 200,000 units.

And what that allows us to do is to be really intentional around how we deploy resources.

And that ability to be very intense also allows us to look at increases.

Increases in capacity.

The plan has been for the plant near normal two to grow capacity from 150000 units between those two lines to 200000 units.

And it's part of the long term plan for the plant and we're looking at how we can accelerate that capacity increase. Leveraging the disciplined teams that we've built. With regards to pricing and certainly the backdrop of inflation that we're seeing and the very strong demand for products, not just within our product set but I'd say broadly within the electrified space. Has caused us to look at our pricing and really I'd say recognizing the set of product features that we've been able to put together into the vehicles and the vehicles are incredible. You've had a chance to drive them, they're incredibly fun to drive, very capable over 800 horsepower zero to 60 in three seconds, great on-road, great off-road. But also a great everyday vehicle. So in terms of the competitive set, we recognize they're very aggressively priced. So that is something that we've certainly considered and talked about quite a bit as a management team.

Leveraging the disciplined teams that we've built.

With regards to pricing and certainly the backdrop of inflation that we're seeing and the very strong demand for products not just within our product set but I'd say broadly within the electrified space.

Has caused us to look at our pricing and really I'd say recognizing the set of product features that we've been able to put together.

Into the vehicles and the vehicles are incredibly.

You've had a chance to drive them, they're incredibly fun to drive very capable over 800 horsepower zero 16, three seconds, great Andre Great off road.

But also a great everyday vehicle so in terms of the competitive set we recognize there very aggressively priced.

So that is something that we've certainly considered and talked about quite a bit as a management team.

Great. Thank you. Thank you. Our next question comes from the line of Ryan Brinkman from JPMorgan. Your question, please. Alright, thanks for taking my question. Wanted to ask about the pace of the orders have been received and I think that that may be increased in the lead up to the IPO given the increased attention to product. It was getting after the first media reviews with the R1T et cetera. Also maybe you could just because of the increased attention the company was getting around the IPO. So it'd be great to get an update what the pace of weekly orders has been looking like if that took another big leg up after the IPO. With the company's name in the news for maybe some of the margin events you've done in California or elsewhere. I'd be interested if there's been any and maybe increased inbound interest and the RCD platform from potential non-Amazon fleet customers. Thank you.

Thank you. Our next question comes from the line of Ryan Brinkman from Jpmorgan. Your question. Please.

Alright, Thanks for taking my question.

Wanted to ask about the pace of the orders have been received and I think that that may be increased in the lead up to the IPO given the increased attention to product. It was getting after the first media reviews with <unk> et cetera. Also maybe you could just because of the increased attention. The company was getting around the IPO. So it'd be great to get an update what the pace of weekly orders has been looking like if that took another big leg up after the IPO.

With the company's name in the news for maybe some of the margin events you've done in California or elsewhere. I'd be interested if there's been any and maybe increased inbound interest and the RCD platform from potential non-Amazon fleet customers. Thank you.

I'd be interested if theres been any and maybe increased inbound interest and the RCD platform from potential non Amazon fleet customers. Thank you.

And then I think that you said it well over the last few weeks you definitely had increased attention coming through all the covenants in the media. Equally importantly, with the launch of our first [mile] program and getting the bakers to the customers having them experience those vehicles. Our first deliveries to, which started out predominantly to our employees, but then now happening to non-employees and end customers. That resulted in an increase in interest demand. And what we're seeing in terms of the heat map of our demand is that it is getting more and more intense.

You said it well over the last few weeks.

Definitely had an increase.

Attention coming through all the covenants in the media.

Equally importantly, with the launch of our first <unk> program and getting the bakers.

Do the customers having them experienced those vehicles.

First deliveries to bid.

<unk> started out predominantly to our employees, but then now happening to non employees and end customers.

Al did in <unk>.

<unk> an increase in interest demand.

And what we're seeing in terms of the heat map of our demand.

Is that it is getting more and more intense.

We are seeing there demand grow in all the big market that even have always present. The intensity of demand is growing both in the major markets and then also in the greater metropolitan areas around those major markets. So we are, I'd say more than anticipated definitely but the demands and needs to be robust. On the RTV platform. We have, as you know we have an exclusive arrangement with Amazon in the last mile space. And Amazon being the biggest player in the last mile delivery space and having them as an anchor customer while the strategic decision that we made allows us to learn box allows us to scale. And how to deploy a large mega fleet, but outside the last-mile delivery space, there is a huge market out there and we are seeing a lot of interest, inbound interest. We are actively engaged with players in this space.

Demand grow in all the big market that even have always present.

The intensity of demand is growing both in the major markets and then also in the greater metropolitan areas around those major markets.

So we are.

I'd say more than anticipated definitely but the demands and needs to be robust.

On the TV platform.

We have.

As you know we have.

An exclusive arrangement with Amazon in the last mile space.

And.

Amazon being the biggest player in the last mile delivery space and having them as an anchor customer while the strategic.

Decision that we made allows us to learn box allows us to scale.

And how to deploy.

Large mega fleet, but outside the last mile delivery space.

a huge market out there and we are seeing a lot of interest, inbound interest. We are actively engaged with players in this space.

Looking at different formats or configurations that could solve their specific use cases. So we are actually quite excited about the size of this opportunity. Outside the last mile delivery space and what is even more interesting is the fleet [OS]. This fleet management platform that we are launching with post vehicles that will be delivered with Amazon and it's going to be present with every vehicle that we sell as a monthly recurring fee. It also applies to other use cases. And the scalability of this fleet management platform, the flexibility, the modularity of this provides us a lot of opportunities to grow the services side of the business on the commercial side. So that's another unlock of value long term value that we've launched.

So we are actually quite excited about the size.

Size of this opportunity.

Yeah.

Outside the the last mile delivery space and what is even more interesting is the fleet.

Fleet management platform that we are launching with post vehicles that will be delivered with Amazon and it's going to be present with every vehicle that we sell as a monthly recurring fee. It also applies to other use cases and the <unk>.

The scalability of this fleet management platform the flexibility the modularity of this provides us a lot of.

Opportunities to grow the services side of the business on the commercial side. So that's another.

Of value long term value that we have.

We've launched.

Okay. That's very encouraging. Thank you and then just lastly on the ask a question on I guess battery sourcing strategy. How would you describe the relationship with Samsung at what point does it make sense to have it may be more custom designed battery pack or maybe to in source or partner with a battery company to vertically integrate manufacturing of the pack is there. I don't know unit volume threshold or maybe a date in mind by which you would like to bring batteries in house, how are you thinking about that. Yeah. Ryan This is a great question in fact, I think it's probably one of the most important questions in the context of electrification.

I don't know unit volume threshold or maybe a date in mind by which you would like to bring batteries in house, how are you thinking about that.

Yeah. Ryan This is a great question in fact, I think it's probably one of the most important questions in the context of electrification.

And really it stems from the sheer scale of increase that we're going to need to see as an industry.

To produce all the batteries necessary to electrify into 90 to 100 million vehicles, a year and eventually in the aggregate.

Around one 5 million cars on the planet.

We've.

Thought about this we developed a strategy that really has.

Three what I would call parallel approaches and and truly parallel meaning these are not mutually exclusive.

And in the first first category. The first element of it is is sourcing and existing cell and that's what we've done with Samsung SDI for launch vehicles.

And it's a cylindrical 21 70 cell.

High nickel content cell.

And we've sourced them from existing capacity capacity that already existed in the world.

That type of deal, we see as really being.

Don't see a lot more deals like that happening across the industry essentially as the demand for cells starts decline.

We need to be building, new capacity and what we see is the second category our second approach.

Again happening in parallel is the need to create.

Capacity or co invest in capacity with our suppliers and we're certainly doing that and we haven't announced any of those relationships yet but for us to continue scaling our 2023 and beyond that co investment and capacity is going to be critical for us.

And then really the last parallel paths lost last arm of the strategy for US is taking an even more vertically integrated approach we completely control the design of the cell and the sourcing the raw materials that go into the cell.

And that third approach is core to our strategy, we've been working on that for quite some time and in fact, we'll be producing cells in pilot form starting late next year.

And that vertical integration of the cell doesn't mean, the first two categories don't remains super importance. It just simply is.

As in response to our intended growth and when one looks at the amount of cells will need as a company all three of those approaches meaning sourced capacity that was already existing in the world newly created capacity that we co invest and with our supplier partners and newly credit capacity that we entirely invest in control.

All three of those pathways are going to be critical for us as we start to look out and into the second half of 2000 Twenty's.

And scaling as a business.

Very helpful. Thank you.

Thank you. Our next question comes from the line of John Murphy from Bank of America. Your question. Please.

Hey, everybody just a first question on the ramp of the preorders, because there's certainly a bit faster than maybe we were expecting and you thought you'd have to have it.

More of these trucks out on the road to really build this momentum, but it's coming fast and furious here. So I'm just curious relative to your expectations. How the preorders are rolling in and if you have any early read sort of on the demographics.

And the vehicles that are.

Im certainly not being traded indirectly here, but where these buyers are coming from any any sort of specifics around.

These folks COVID-19.

A lot and it's pretty quick.

Yes, it's certainly exciting the their response to the vehicle has been outstanding and.

What we're seeing a lot of over the last.

Really over the last couple of months is heightened awareness of the company certainly the IPO contributed to that.

But a lot of it is also just the broad coverage that we've seen from a variety of different outlets in media sources as I mentioned earlier motor trend selection of us as their 2022 truck of the year.

Their comments.

Yeah.

So sort of excitement around the vehicle.

Is emblematic of what we've seen from a number of different different publications.

Coupling that with just more awareness of the vehicles. So some of our drive events that we've done and then the early deliveries were doing we often joke every early customer it turns into a <unk>.

Sales representative for the company because there is just so much excitement for the vehicle and so much excitement for the product.

With that said, we do expect that to continue we expect to as awareness continues to go up.

That will lead to continued increase in period of demand.

And some of the earlier questions. It certainly has us focused on how do we make sure we continue to ramp production and as we talked about we'll look for opportunities to pull ahead on our volume ramp.

I'm sorry are there any early read on who these folks are they pre buys that are stepping up into trucks or the truck buyers that are staying in trucks I mean, what's the what's your early read on sort of the.

Folks that are placing these preorders.

Yeah, absolutely I think this has been one of the instead of has validated the strategy and the hypothesis that we had in terms of positioning of the <unk>.

We had always intended this vehicle to be in this white space and by definition.

The white space should be attracting share from a lot of it Jason.

Market and segment and you're absolutely right.

What we're finding is a true validation of that hypothesis, where a vast majority of our customers are coming from one never having on electric vehicles.

<unk> for the <unk>.

We have close to 90% of customers that have never owned and owned a truck.

And.

That has been.

One of the factors, where this vacant is attracting.

So many shoppers and so much of a cross buying actor.

Activity that is resulting.

Invest in the product.

With that I will add this is al.

Due to the due to the coverage and the experience that our customers are having with the <unk>.

We are expecting this to actually only get.

Even bigger once the Iran.

Hits the market people are able to experience that outflow than cloth partner unable to drive in it. So we are definitely.

It is more than we anticipated absolutely.

Very encouraging as Ajay mentioned it has also opens up opportunities on what we could do.

The quantity of earnings from a pricing point of view. So we are looking at all these options.

Right now.

We felt that you have a real high class problem on your hands, just lastly on the Georgia facility.

7500 jobs use a multiplier on that you could certainly argue for Georgia. This is going to be 50000 to 100000 net incremental jobs all in when you go through the.

The value chain I am just curious.

You worked out this deal with Georgia.

What the terms are and.

Clear I mean, if you were talking about this on our gross capex versus net Capex I mean, how big of a benefit is it going to be to have worked with Georgia versus what you would have spent otherwise.

Sure so relative to our original plan of record as we thought about the overall cost for our second facility.

I would say that it is certainly an advantage position to what we had originally anticipated in terms of growth Capex Knapp track.

<unk> that we would put out there in the market and so.

We've worked really closely with <unk>.

The state of Georgia, Frosty incentive package here, it's a very attractive one Caribbean.

And we're really excited about not just the incentive package, but as you mentioned the true talent pool at a depth within that market.

We think will be really optimal and we want to scale production and build out I think significant facility in the U S market.

It could you quantify that at all.

I think it's a good really good thing for Georgia.

This should be pitching in and Im just curious what maybe relative to your base case expectations versus what you're able to work out here. If you can give us an idea of what you got on the capital side or NPV. It.

I would say, we'll have more to come on that in future announcements.

Right now.

We're just saying that it's certainly a great deal for Arabian and great deal for <unk> as well.

Okay, great. Thank you very much.

Thank you. Our next question comes the line of Brian Johnson from Barclays. Your question. Please.

Yes. Thank you I just wanted to drill a little bit more down on the production ramp.

We kind of think through you and storage constraints, which of course brings to mind that classic theory of constraints could you maybe describe that a little bit more detail, where do you think the key constraint is now you did mention perhaps the welding of the battery packs and how do investors get confidence that that the constraints can be knocked off versus.

Their worst case, something fundamental about the design of the vehicle or the battery packs that would complicate anyway.

With in ramping up production system like this it's it is as I said before a really complex orchestra. So you have.

Hundreds of suppliers, providing thousands of parts.

Thousands of robots within the production facility.

Operating to prescribed movements and then thousands of team members assembling and working.

To put the vehicles together so as we go through that process. We we have multiple meetings throughout every day tracking how we're managing all of those different constraints and as the lines.

Each aspect of the plant, whether it's stamping her body shopper paint shop or battery Assembly are driving an assembly or general assembly of the full vehicle, whether theres any constraints within those and how we continue to progress the hourly and daily output and.

And with that said.

We're ramping up largely as expected the battery constraint is really an artifact.

Of just bringing up a highly automated line as I said that that doesn't represent any long term challenges for us we have a second line that's coming on that will.

But the battery module production way out in front in terms of capacity of the other areas of the plant.

So as we as we work through these quality lubes as we work through training.

Training our workforce and this is this is part of the challenge and I would say.

We just need to recognize that the plant is designed to run at significantly higher output and what we're seeing today in terms of output just represents.

The front end of an S curve, which is which is typical for this type of a ramp up.

And just a follow up.

In terms of having to go back to the drawing board and either the configuration of the pack particular parts or things that would be longer cycle fixes as opposed suggests ironing out the kinks and attacking bottlenecks on a daily basis.

Come up.

No we don't see any long term systemic.

Challenges with either the supply chain or with the way that the vehicle has been design or the manufacturing plant has been designed.

Okay. Thanks.

Thank you. Our next question comes from the line of Mark Delaney from Goldman Sachs. Your question. Please.

Yes, good afternoon, and thank you very much for taking the questions. So I wanted to start on the commercial side of the business. The 201 miles of estimated range that youre seeing its very attractive I think would cover a number of routes and so I'm, hoping to better understand what it may take to build upon that initial 100000 order from Amazon as it executing on some of the <unk>.

Technical milestones as you seem to be doing or would be more around having to hit a certain percentage of that order in terms of delivering vehicles before there maybe upside to that 100000.

And Mark it's a good question as we think about the commercial space in Japan spoke to this earlier.

Amazon represents such and such a large customer for our such a large pool of demand for us.

And as a result, we're very focused on making sure that we deliver to their needs.

Theyre not only the largest player within the within the last mile space, but they're also the most rapidly electrifying. So it's really critical that we do not starve them or vehicles.

Now, saying that the vehicle platform. The <unk> platform was architected and designed fully contemplating vehicles beyond last mile sets in the cargo space that's in the workspace.

So there's a whole host of opportunities that exist.

And large volumes, but also across a very long spread out tale of commercial applications.

And so for us to bring up those those non edd versions of the vehicle is something that we are focused on and the design team and engineering teams are working towards that but we're balancing that with just managing how much complexity, we're introducing into the plan and wanting to do that at the right rate and at the right time as you heard me talk about earlier.

Over the course of the next quarter, we'll be ramping up not just our warranty or went up and the <unk> 700, but we're introducing the edp 500, which is a narrower and shorter variant of the Edp then.

Adding additional variance on top of that will come but we're balancing balancing the desire to minimize complexity.

We are ramping up production.

That's helpful and for my second question I was hoping you could comment on the supply environment in terms of semiconductors and other components. It's been tight for a long long, while now and a few auto companies are starting to see a little bit of easing.

As we move through the fourth quarter of reopening some previously closed factories at the same time you know unfortunately have the omicron variant.

<unk> complicate things I'm going to give you a bit more specific on any changes that the company may be seen.

It's a supply chain environment. Thank you.

The supply chain environment has been incredibly challenging.

Unprecedented and the number of issues that we've seen as an industry across a variety of different commodities and components.

Semiconductors is one of those.

Very very focused on that.

Week doesn't go by where I'm not speaking to heads of some of our major semiconductor suppliers.

With that said we've.

I'd say the element of this it's really worked in a positive way as we've taken a very transparent approach with our suppliers.

Both communicate to them, our ramp and to be very clear on expectations.

In return, we also have a clear picture of what their ability to supply is and how that translates to our ramp and we're managing that very thoughtfully.

In semiconductors, certainly gets the most attention, but I'd say thats true across the rest of the supply chain and.

And a lot of cases, the areas, where the constraints have been challenging for us.

Over the last three plus months had been in areas that might not be expected. These are smaller suppliers that have been unable to hire second shift or smaller suppliers that are having.

Having issues with Covid. So we're seeing a lot of those types of challenges in bringing up.

Our supply base of several hundred suppliers.

We've got a team that's very hands on with all these different suppliers working with them closely in many cases working with them and their production facilities.

We have both very good visibility and we're also working very collaboratively to make sure that they achieve their ramp.

Thank you. Our next question comes from the line of Emmanuel Rosner from Deutsche Bank. Your question. Please.

Yes. Thank you very much my first question is around.

Software and subscription.

On what timeline would you expect to stocks.

Essentially saying some of these revenues both on the commercial side with Amazon is that going to be from day, one and then on the consumer side and then any sort of initial views on the consumer side in terms of <unk>.

Take rates or sort of like average.

Subscription revenue per vehicle.

Yes, Hi, Matt.

Two parts of that so on the commercial side.

Just to confirm the fleet OE.

So it goes live at launch in other words as we start deliveries to Amazon This month.

Each vehicle comes with regarding monthly subscription of fleet Okay.

And the and the set of features that are included we consider them as are we one of our feature set and as these makers are deployed and operational we expect to grow this feature set by creating more value on the TCR level for Amazon. So so that.

Subscription gross lives basically now on commercial side on the consumer side.

The software side or the services side of our business has different flavors.

The primary flavor is membership, which every vehicle owner today get the complementary.

Membership.

And our goal is that.

At the end of that period.

We would actually start charging our customers a monthly fee.

And that would represent again a basket of features which will include but not be limited to charging roadside and connectivity there will be other.

Element into that membership offering that we are working on and Curating and designing it.

Diligently.

To use this time this fee this time, where the members get the theme membership to build that basket.

Apart from that there are other flavors.

Software subscription, which would be on an individual software basis.

Our other bundle that we put together, we expect to work on those and announced those in the coming months.

But yet it's early for US as we have just started doing deliveries, which comes with a free membership during the period.

The only other point that I would just add on that from a services perspective, as we have seen strong uptake in regards to our insurance and financing as well for the vehicle given.

Given the really seamless experience you can go to our transaction and delivery process as a matter of minutes Andre at twice myself.

Literally less than 10 minutes and so the ease of use case.

And that process has really shown material from a take rate perspective, especially on the two leading edge features that are part of that initial transaction as well.

Okay, that's great color and then.

My second question.

Coming back to the desktop.

The topic of ramping up production, so RJ I understand your points around it's not being structurally obviously.

Can be expected I guess with this kind of challenge and environments.

But based on what Youre seeing so far as sort of a going through these issues are you generally call for them.

You should you will ramp up should again target should be able to deliver some of the 2022 targets to where we see some.

Reports earlier can we expect around Timothy SUV delivery timeline things sort of like pushed out and so overall are you confident that you are.

This is mostly in the rearview mirror and going forward.

In line with some of your delivery targets.

Yes.

Yes, we are.

Quite confident in the path ahead, I guess, it's worth just commenting a little bit on what the activities have been over the last three months.

And I said at the start of the call, but it's important to reiterate.

We're launching three vehicles. This year. So we had the first <unk> drive off the line in September.

We just sold the first two and delivered the first two rns as this week actually declare an eye as the first two customers.

And we will be making deliveries on the 700.

Very soon here before the end of the year.

And when you look at those three different launches. There's also a corresponding three different certifications. So all three of those vehicles have been certified for sale.

And Theyre being produced on two different production lines. So there is a line that's producing the <unk> products. There is a line that is producing the commercial vehicle products and as well.

We've discussed before and this is such a critical element of what we're building.

We wanted to we wanted to make sure the company and the organization was Architected.

To facilitate running and operating multiple programs at the same time.

One of the challenges that we've seen over the last two months has been bringing up <unk> on the <unk> line and recognizing that because it's a shared line. We were we just just started production of several units on <unk> September.

And then within.

Within a few weeks, we were putting our <unk> into the line as well.

And that proved to be more challenging than we had anticipated before but fortunately we managed through it.

And we were able to produce enough vehicles to certify in the rns and put that through the validation process.

And it was a decision we took and we took the decision to rapidly integrate the <unk> into the line. While we are while we are still ramping our win T.

Given really our long term focus and what we see as being critical long term for the for our brand and for our customers of having both of those products in the market as quickly as possible.

And so as we now look at what the ramp will look like for both <unk> and Darwin us into next year, having having done those activities. This past fall and having certified both the <unk> as well as the commercial van to EBIT.

It really positions us to rapidly growth through that through the course of 2022.

Great. Thank you.

Thank you. Our next question comes from the line of Alex Potter from Piper Sandler Your question. Please.

Yes.

Perfect. Thanks, guys.

First question is on in house cell capacity in Georgia, you alluded in the Investor letter.

You'll have in house cell capacity contemplated to be co located with that facility in Georgia.

I'm interested is that.

Going to be the case from day, one in 2024 or is that something that youre working into the plans to eventually have in Georgia.

As we think about the Georgia site and this was one of the key considerations for us as we looked at different sites around the country.

This is a this is a platform for us to grow from.

Well.

As we introduced the first product the plant when immediately started 400000 units of annualized capacity will grow to that and in much the same way we've sized the site and.

And the site selection process, we've made the selection contemplating a significant amount of battery cell production, but that will come in over phases.

So when we first launched the site it will be just vehicles and then shortly thereafter, we will add our in house cell production and then in house cell production will grow quite dramatically over the course of.

The following years and given the criticality of that from a cost structure and from a scaling point of view, it's something that we've placed a lot of emphasis on and selecting the site.

Okay, Great and then the <unk>.

Question just on <unk>.

D C fast Chargers I, if I recall, you were working on a target of 600 or so DC fast Chargers in the network.

Just curious to hear if you're if that still is the target what the timeline is behind that.

And then the opportunities to accelerate maybe also regions of initial focus.

Q3 2021 Rivian Automotive Inc Earnings Presentation

Request a DemoDemo

RIVN

Rivian

Earnings