Q1 2024 Rivian Automotive Inc Earnings Call

May 7, 2024

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Operator: Good day, and thank you for standing by. Welcome to the Rivian First Quarter 2024 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, you will need to press star 1 1.

Good day, and thank you for standing by.

Speaker Change: Welcome to the Arabian first quarter 2024 earnings conference call. At this time, all participants are in listen only mode. After the speaker's presentation there'll be a question answer session to ask a question you will need to press star one one.

Operator: Please be advised that today's conference is being recorded. I would now like to hand the conference over to your host, Tim Bey, Vice President of Investor Relations. You may begin.

Speaker Change: Please be advised that today's conference is being recorded.

Speaker Change: Nice to hand, the conference over to your host.

Speaker Change: Jim <unk>, Vice President Investor Relations you may begin.

Timothy Francis Bei: Before we begin, matters discussed on this call, including comments and responses to questions, reflect management's views as of today. We will also be making statements related to our business operations and financial performance that may be considered forward-looking statements under federal security law. Such statements involve risks and uncertainties that could cause actual results to differ materially.

Jim: Good afternoon, and thank you for joining us for radians first quarter 2024 earnings call before we begin matters discussed on this call, including comments and responses to questions reflect managements views as of today. We will also be making statements related to our business operations and financial performance that may be.

Timothy Francis Bei: These risks and uncertainties are described in our SEC filings and today's shareholder letter. During this call, we will discuss both GAAP and non-GAAP financial measures. A reconciliation of GAAP to non-GAAP financial measures is provided in our shareholder letter. Just before the call, we published our shareholder letter, which includes an overview of our progress over the recent months. I encourage you to read it for additional details on some of the items we'll cover on today's call. With that, I'll turn the call over to RJ, who will begin with a few opening remarks. Thanks, Tim. Hello, everyone, and thanks for joining us today.

Jim: Be considered forward looking statements under federal Securities laws.

Jim: Such statements involve risks and uncertainties that could cause actual results to differ materially. These risks and uncertainties are described in our SEC filings and today's shareholder letter. During this call. We will discuss both GAAP and non-GAAP financial measures a reconciliation of GAAP to non-GAAP financial measures is provided in our shareholder letter.

Jim: Just before the call we published our shareholder letter, which includes an overview of our progress over the recent months I encourage you to read it for additional details around some of the items, we'll cover on today's call with that I'll turn the call over to RJ, who will begin with a few opening remarks.

Robert Joseph Scaringe: During our call, I will highlight key developments in the first quarter and provide an update on the expected progress we're making against our value drivers. First quarter results exceeded our outlook and set a strong foundation for the remainder of the year as we focus on continued demand generation, delivering cost and plant efficiency improvements, advancing R2 development, and driving towards profitability. We continue to make strong progress across each of these goals.

RJ: Thank you, Tim Hello, everyone and thanks for joining us today during our call I will highlight key developments in the first quarter and provide an update from the expected progress, we're making against our value drivers first quarter results exceeded our outlook and set a strong foundation for the remainder of the year as we focus on continued demand generation delivering cost and plant efficiency improvements.

RJ: Advancing our two development and driving towards profitability, we continue to make strong progress across each of these goals.

Robert Joseph Scaringe: Before discussing key developments during the quarter, I want to congratulate the team on producing our 100,000th vehicle at our plant in Normal and successfully navigating our plant retooling upgrade. While we focus on the work ahead, it's incredible to see what our team has accomplished across our consumer and commercial vehicle platform. I also want to highlight the uniqueness of what we're building at Rivian.

RJ: Before discussing key developments during the quarter I want to congratulate the team on producing our 100000 vehicles at our plant at normal and successfully navigating our plant retooling upgrade while we focus on the work ahead, it's incredible to see what our team has accomplished across our consumer and commercial vehicle platforms.

RJ: I also want to highlight the uniqueness of what we're building at Radian, we have developed a technology platform and brand that are truly differentiated our vertically integrated hardware and software capabilities enable continuous enhancements to the product our ability to improve and add features across autonomy battery management digital experience body control vehicle dynamics in telematics helped deliver an elevated ownership.

Robert Joseph Scaringe: We have developed a technology platform and brand that are truly differentiated. Our vertically integrated hardware and software capabilities enable continuous enhancements to the product. Our ability to improve and add features across autonomy, battery management, digital experience, body control, vehicle dynamics, and telematics helps deliver an elevated ownership experience for both our consumer and commercial offerings. We also recently transitioned to a new zone network architecture, which reduced the number of electronic control units in our vehicle by approximately 60%, taking substantial costs out of our vehicle.

RJ: Experience for both our consumer and commercial offerings.

RJ: We also recently transitioned to a new zone network architecture, which reduced the number of electronic control units in our vehicle by approximately 60% taking substantial cost out of our vehicles.

Robert Joseph Scaringe: The feedback on our products has been incredible. Since the start of production, we've introduced approximately 30 over-the-air updates, and in an owner satisfaction survey conducted by Consumer Reports, Rivian was recognized as the number one automotive brand with the highest likelihood for customers to purchase again.

RJ: The feedback on our products have been incredible since the start of production. We've introduced approximately 30 over the air updates.

RJ: And through an owner satisfaction survey conducted by consumer reports reviewing was recognized as the number one automotive brand with the highest likelihood for customers to purchase again.

Robert Joseph Scaringe: In launching the R1 platform, our goal is to create a brand that deeply resonates with customers. In the first quarter of 2024, Rivian was the fifth best selling EV maker in the United States with a market share of 5.1%. Our vehicles have driven more than 900 million cumulative miles, and our brand awareness and market position continue to grow. Additionally, the R1T is the only pickup in the United States to receive the Top Safety Pick Plus Award from the Insurance Institute for Highway Safety.

RJ: And launching Darwin platform. Our goal is to create a brand that deeply resonates with customers. During the first quarter of 2020 for ribbon was the fifth best selling EV maker in the United States with a market share of five 1%.

RJ: Our vehicles are driven more than 900 million cumulative miles and our brand awareness and market position continues to grow.

RJ: Additionally, the <unk> is the only pick up in the United States to receive the top safety pick plus award from the Insurance Institute for Highway safety.

Robert Joseph Scaringe: Building on this, the results of our recently implemented demand generation and brand awareness strategies have been encouraging. We hosted over 28,000 demo drivers in the first quarter of 2024, an increase of 90% versus the fourth quarter of 2023. We recently launched R1S Leasing and grew the number of states with this offer. While the broader vehicle market is still experiencing challenges, we are encouraged by the early results of our initiatives and have confidence in our 2024 delivery outlook.

RJ: Building on this the results of our recently implemented demand generation and brand awareness strategies have been encouraging we hosted over 28000 demo drivers in the first quarter of 2024, an increase of 90% versus the fourth quarter of 2023.

RJ: We recently launched our when its leasing and grew the number of states with this offering.

RJ: While the broader vehicle market is still experiencing challenges. We are encouraged by the early results of our initiatives and have confidence in our 2020 forward delivery outlook in.

Robert Joseph Scaringe: In March, we unveiled our new mid-sized platform, which underpins the R2, R3, and R3X products, is grateful for the outstanding support for our brand and upcoming products. R2 is our versatile new mid-size SUV with room for five people. It captures the essence of Rivian.

RJ: In March we unveiled our new mid size platform, which underpins the two or three in archery X products is great to see the outstanding support for our brand and upcoming products are.

RJ: <unk> is our versatile new midsize SUV with room for five people that captures the essence Arabian it's built for adventures as well as everyday use with its exceptional utility performance and capability.

Robert Joseph Scaringe: It's built for adventures as well as everyday use with its exceptional utility, performance, and capability. We expect the price to start at $45,000, with deliveries slated to begin in the first half of 2026. R3 is our midsize crossover. This unique vehicle is tidy in dimensions but delivers big in terms of performance, passenger comfort, and storage. R3X is a performance variant of R3, offering even more dynamic abilities both on and off-road. R3 demonstrates the scalability of Rivian across different form factors and segments.

RJ: We expect the prices start at $45000 with delivery slated to begin in the first half of 2026, our threes or mid sized crossover this unique vehicles tidy and dimensions, but delivers big in terms of performance passenger comfort and storage.

RJ: We exited the performance version of our three offering even more dynamic abilities, both on and off road.

RJ: Our three demonstrates the scalability of riveting across different form factors and segments that will be priced below our two and deliveries will start after our two to ensure smooth launch and rapid ramp.

Robert Joseph Scaringe: It'll be priced below R2, and deliveries will start after R2 to ensure a smooth launch and rapid ramp. With these new products, our goal is to take the desirability and brand strength we've established for our R1 products, with the R1S remaining the best-selling EV over $70,000 in the United States, and translate this strength to a much larger addressable market. Our mid-sized platform leverages key technologies developed for R1, including our in-house software, in-vehicle electronics, propulsion, and battery technology, and our high-voltage platforms, with a goal to deliver dramatically simplified and lower-cost vehicles relative to R1.

RJ: With these new products our goal is to take the desirability and brand strength, we've established for our own products.

RJ: With the rns remaining the best selling EV over $70000, United States and translate this strength to a much larger addressable market or.

RJ: Our mid size platform Leverages key technologies developed for our one including our in house software in vehicle electronics propulsion in battery technology, and our high voltage platforms with a goal to deliver dramatically simplified and lower cost vehicles relative to <unk> or.

Robert Joseph Scaringe: Our massive focus on cost and efficient manufacturing for R2 and R3 is achieved by deeply analyzing every system and associated component and asking if it can be simplified or if there are opportunities for part consolidation or elimination. The use of large, high-pressure die castings in the body structure, a structural battery pack whereby the top of the battery is the floor of the vehicle, further simplification of the electrical system, and associated wiring harness through a focus on electronic control unit design topology are just a few examples of how we are using innovation to drive down cost.

RJ: Our massive focus on cost and efficient manufacturing for our two or three is achieved by deeply analyzing every system and associated component and asking if it can be simplified or through opportunities for park consolidation or elimination.

RJ: A large high pressure die castings, and the body structure structural battery pack, whereby the top of the batteries for the vehicle further simplification of the electrical system and associated wiring harness through a focus on electronic control unit designed to apology are just a few examples of how we're using innovation to drive down cost.

Robert Joseph Scaringe: Beyond engineering opportunities, when compared to R1, R2, also has significant cost opportunities through competitive sources. At the unveiling of R2, we announced accelerating the start of production in the first half of 2026 and reducing our capital needs for the launch of R2 by starting production of R2 in our normal plan. This will provide flexibility to manufacture an estimated 215,000 total annual units per year, which includes up to 155,000 units of R2.

RJ: Beyond engineering opportunities when compared to our one or two also has significant cost opportunities through competitive sourcing.

RJ: At the unveil of our too we announced accelerating to start production in the first half of 2026 and reducing our capital needs for the launch of our two by starting production of our too and our normal plant.

RJ: This will provide flexibility to manufacturing estimated 215000 total annual units per year, which includes up to 155000 units of our two star.

Robert Joseph Scaringe: Starting R2 production normally is expected to save over 2.25 billion dollars between now and the start of production as compared to the original plan of launching the first line of R2 production at Rivian's Georgia site. Incremental to the $2.25 billion in expected savings, we recently announced an incentive package from the state of Illinois with a value of up to $827 million.

RJ: Starting our two production and normal is expected to save over $2 5 billion.

RJ: Between now and the start production as compared to the original plan of launching the first line of our two production and revenues, Georgia site.

RJ: Incremental to the $2 5 billion and expected savings, we recently announced an incentive package from the state of Illinois, with a value of up to $827 million.

Robert Joseph Scaringe: We are excited to grow our community in Normal and continue our partnership with the state of Illinois. Turning to our recent tooling upgrades in our normal facility, the team made meaningful progress, and we are now back to producing R1 vehicles on our production line. The upgrade introduced new technologies and cost-focused material changes into the R1 vehicle platform. The plant retooling upgrade also provided the opportunity to improve manufacturing processes that enabled the R1 line to run at approximately 30% higher line rates. In addition, we improved the flow of materials and inventory in the plant.

RJ: To grow our community of normal and continue our partnership with the state of Illinois.

RJ: Turning to our recent tooling upgrades in our normal facility. The team made meaningful progress and we are now back to producing our own vehicles on a production line.

RJ: The upgrade introduced new technologies and cost focus material changes into the <unk> vehicle platform.

RJ: Retooling upgrade also provided the opportunity to improve manufacturing processes.

RJ: Enable the Arlo line to run at approximately 30% higher line rate.

RJ: In addition, we improved the flow materials and inventory and the plan. These.

Robert Joseph Scaringe: These changes are expected to improve cycle time, utilization, and cost. The opportunity ahead is significant. We hold the deep conviction that the entire automotive industry will electrify over the long term, and we continue to take the necessary steps to best position Rivian as a leader in this transition. We look forward to sharing more details about our strategy, progress, and outlook in late June when we host our Investor Day. I'd like to thank all those who continue to support our vision, including employees, customers, partners, suppliers, communities, and shareholders. With that, I'll pass the call to Claire.

RJ: These changes are expected to improve cycle time utilization and cost.

RJ: The opportunity ahead is significant we hope a deep conviction that the entire automotive industry will electrify over the long term and we continue to take the necessary steps to best position <unk> as a leader in this transition with.

RJ: We look forward to sharing more details around our strategy progress and outlook in late June when we host our Investor day.

RJ: I would like to thank all those who continue to support our vision, including employees customers partners suppliers communities and shareholders.

Clear: With that I'll pass the call to clear.

Clear: Thanks, RJ I wanted to start by reiterating the significant progress and strong results achieved during the first quarter.

Claire McDonough: Thanks, RJ. I want to start by reiterating the significant progress and strong results achieved during the first quarter. We exceeded our first quarter delivery outlook, successfully completed our plant retooling upgrade, and are making progress on our path to profitability. During the first quarter, we produced 13,980 vehicles and delivered 13,588 vehicles, which represented the primary driver of the $1.2 billion of revenue we generated. Our first quarter results did not include any meaningful regulatory credit.

Clear: We exceeded our first quarter delivery outlook successfully completed our plant retooling upgrade and are making progress on our path to profitability.

Clear: During the first quarter, we produced 13980 vehicles and delivered 13588 vehicles, which represented the primary driver at the $1 $2 billion of revenue we generated.

Clear: Our first quarter results did not include any meaningful regulatory credit sales based on discussions with potential customers and executed contracts. We expect the sale of regulatory credits to increase in the second half of the year.

Claire McDonough: Based on discussions with potential customers and executed contracts, we expect the sale of regulatory credits to increase in the second half of the year. Total gross profit for the quarter was negative $527 million. Our gross profit loss per vehicle delivered was approximately $39,000, which includes $15,500 of depreciation and $1,700 of stock-based compensation expenses. Our results were negatively impacted by approximately $9,300 per vehicle delivered as part of our cost of revenue efficiency initiatives, which we don't anticipate to be part of our long-term cost structure.

Clear: Total gross profit for the quarter was negative $527 million.

Clear: Our gross profit loss per vehicle delivered was approximately $39000, which includes $15500 and depreciation and $1700 of stock based compensation expense our.

Clear: Our results were negatively impacted by approximately $9300 per vehicle delivered as part of our cost of revenue efficiency initiatives, which we don't anticipate to be part of our long term cost structure.

Claire McDonough: We continue to move closer to making money on every vehicle we sell. We expect to see meaningful improvement in our gross profit during the second half of this year and believe we will reach a positive gross profit for the fourth quarter. Our confidence is underpinned by the actions we have taken that are within our control.

Clear: We continue to move closer to making money on every vehicle we sell.

Clear: We expect to see meaningful improvement in our gross profit during the second half of this year and believe we will reach a positive gross profit for the fourth quarter.

Clear: Our confidence is underpinned by the actions we have taken within our control specifically, we expect the recent completion of the tooling upgrade and normal result in meaningful cost improvements and are one and the manufacturing line.

Claire McDonough: Specifically, we expect the recent completion of the tooling upgrade to result in meaningful cost improvements in R1 and the manufacturing line. The upgrade includes the integration of R1 engineering design changes and newly negotiated supplier components that will drive significant cost reductions in our bill of materials. Additionally, fixed costs will benefit from improved manufacturing efficiencies, a reduction in our loss reserve, as well as a reduction in our depreciation expense as we fully depreciate our original tooling for R1 and RCD. Our adjusted EBITDA for the quarter was negative $798 million, which was in line with our expectations.

Clear: The upgrades include the integration of <unk> engineering design changes and newly negotiated supplier components that will drive significant cost reductions in our bill of materials.

Clear: Additionally, fixed costs will benefit from improved manufacturing efficiencies reduction in our loss reserve as well as a reduction in our depreciation expense as we fully depreciate, our original tooling for our wine and RCB.

Clear: Our adjusted EBITDA for the quarter was negative $798 million, which was in line with our expectations.

Claire McDonough: During the first quarter, we experienced elevated cash usage, in part due to increased accounts receivable and inventory balance. Consistent with our commentary on our fourth-quarter 2023 earnings call, at the end of the first quarter, we had a few thousand vehicles which were built but not yet counted towards our production since they were awaiting parts. These work-in-progress vehicles impacted our first quarter inventory; however, they are now complete and will be counted in second quarter production.

Clear: During the first quarter, we experienced elevated cash usage in part due to increased accounts receivable and inventory balances.

Clear: Consistent with our commentary on our fourth quarter 2023 earnings call at the end of the first quarter. We had a few thousand vehicles, which were built but not yet counted towards our production since they were awaiting part.

Clear: These work in progress vehicles impacted our first quarter inventory. However, they are now complete and will be counted in the second quarter production.

Claire McDonough: Between this dynamic and our efforts to reduce our raw material inventory balances, we expect to generate a slight cash benefit from working capital for the year. Additionally, over the next 18 months, we plan to reduce our growth inventory balance by more than 25%, providing a significant working capital benefit. I want to take a moment to emphasize the significant steps being taken to drive greater capital efficiency throughout the business. These actions include starting production of R2 in normal mode, driving material costs down, increasing manufacturing and production efficiency, reducing operating and capital expenditures, and optimizing working capital.

Clear: Between this dynamic in our efforts to reduce our raw material inventory balances, we expect to generate a slight cash benefit from working capital for the year over.

Clear: Over the next 18 months, we plan to reduce our gross inventory balance by more than 25%, providing a significant working capital benefit.

Clear: I wanted to take a moment to emphasize the significant steps being taken to drive greater capital efficiency throughout the business.

Clear: These actions include starting production of <unk> in normal driving material costs down increasing manufacturing and production efficiency, reducing operating and capital expenditures and optimizing working capital.

Claire McDonough: These actions are expected to extend our existing cash balance to fund operations through the launch of R2 in the first half of 2026. As RJ mentioned, our decision to launch R2 and Normal provides the plant with more flexibility and is expected to reduce our cash usage by over two and a quarter billion dollars through its launch in the first half of 2026. We anticipate that most of the work to integrate R2 into our normal facility will happen in 2025, and as a result, the plant will be down for a few weeks next year. We recently completed the plant retooling upgrade in Normal.

Clear: These actions are expected to extend our existing cash balance to fund operations through the launch of <unk> in the first half of 2026.

Clear: As already mentioned our decision to launch our two in normal provides the plant with more flexibility and is expected to reduce our cash usage by over two and a quarter $1 billion.

Clear: Through its launch in the first half of 2026.

Clear: We anticipate that most of the work to integrate <unk> into our normal facility will happen in 2025 and as a result, the plant will be down for a few weeks next year.

Clear: We recently completed the plant retooling upgrade than normal.

Claire McDonough: This is a pivotal step in driving greater efficiency in R1 through a reduction in variable and semi-fixed costs. We expect lower variable costs to be the largest driver of gross profit improvement in 2024. We are also beginning to see some of the benefits of R2 sourcing on R1 and EDV cost downs with strategic suppliers. We are making progress driving greater fixed cost efficiencies by transitioning to two shifts from three shifts on the R1 line. This is made possible by a planned 30% increase in line rates.

Clear: This is a pivotal step in driving greater efficiency in our one through a reduction in variable and semi fixed costs.

Clear: We expect lower variable cost to be the largest driver of gross profit improvement in 2024.

Clear: We are also beginning to see some of the benefits from our Q sourcing on our one and ETB cost downs with strategic suppliers.

Clear: We are making progress driving greater fixed cost efficiencies by transitioning to two shifts from three shifts on the <unk> line.

Clear: This is made possible by our planned 30% increase in line right.

Claire McDonough: On a two-shift operation, annual R1 capacity will be approximately 56,000 units. While we don't expect to fully realize these benefits until the second half of 2024, we believe these changes position Rivian to exit 2024 with a much improved margin profile. In addition, since the beginning of the year, we've made meaningful progress optimizing operating expenses. We expect our adjusted operating expenses for the year to be down slightly as compared to 2023, with the second half operating expenses expected to be significantly below the first half.

Clear: On a two shift operation annual <unk> capacity will be approximately 56000 units.

Clear: While we don't expect to fully realize these benefits until the second half of 2024, we believe these changes position Remy and to exit 2024 with a much improved margin profile.

Clear: In addition, since the beginning of the year, we've made meaningful progress optimizing operating expenses, we expect our adjusted operating expenses for the year to be down slightly as compared to 2023 with the second half operating expenses expected to be significantly below the first half.

Claire McDonough: We believe this enables Rivian to start 2025 with a more efficient baseline cost structure. We are confident these changes best position Rivian to extend its cash runway, improve long-term profitability, and gain market share. We believe that operating normal at 215,000 units of annual production, while executing against our cost efficiency roadmap, will allow the business to generate positive free cash flow, excluding growth capital investments in new production capacity.

Clear: We believe this enables <unk> to start 2025 with a more efficient baseline cost structure.

Clear: We are confident these changes best position <unk> to extend its cash runway improve long term profitability and gain market share. We believe that operating normal at 215000 units of annual production, while executing against our cost efficiency roadmap will allow the business to generate positive free cash flow excluding <unk>.

Clear: Capital investments in new production capacity turning to our guidance. We are reiterating our 2024 production guidance of 57000 vehicles as RJ mentioned, we're encouraged by the early results of our go to market and brand awareness activities, which the team has put in place over the past quarter comp.

Claire McDonough: Turning to our guidance, we are reiterating our 2024 production guidance of 57,000 vehicles. As RJ mentioned, we're encouraged by the early results of our go-to-market and brand awareness activities, which the team put in place over the past quarter, and I have confidence that total deliveries for the year will grow by low single digits for both R1 as well as our commercial vans as compared to 2023. We are also reiterating our 2024 adjusted EBITDA guidance of negative $2.7 billion.

Clear: Confidence that total deliveries for the year will grow by low single digits for both our one as well as our commercial vans as compared to 2023.

Clear: Also reiterating our 2024 adjusted EBITDA guidance of negative $2 7 billion.

Claire McDonough: We continue to look for ways to rationalize our capital expenditures, and due to the decision to move the first line of R2 production to normal, we are reducing our 2024 CapEx guidance by $550 million to $1.2 billion. We expect the savings from this decision will also impact 2025 CapEx, which we expect to be approximately $1.5 billion. Additionally, we plan to receive approximately $100 million in cash from the state of Illinois this year to help fund our normal plant expansion.

Clear: We continue to look for ways to rationalize our capital expenditures in Q2, the decision to move their first line of our two production to normal we are reducing our 2020 for capex guidance by $550 million to $1 2 billion.

Clear: We expect the savings from this decision will also impact 2025, Capex, which we expect to be approximately $1 5 billion.

Clear: Additionally, we plan to receive approximately $100 million in cash proceeds from the state of Illinois. This year to help fund our normal plant expansion.

Operator: Over the long term, we continue to see a clear path to our approximately 25% gross margin target, high teens adjusted EBITDA margin target, and approximately 10% free cash flow margin target. I want to again thank our team, partners, customers, suppliers, and shareholders for their tremendous support. With that, let me turn the call back over to the operator to open the line for Q&A. Thank you. If you'd like to ask a question, please press star 1 1. If your question has been answered and you'd like to remove yourself from the queue, please press star 11 again.

Clear: Over the long term, we continue to see a clear path to our approximately 25% gross margin target high teens, adjusted EBITDA margin target and approximately 10% free cash flow margin target.

Speaker Change: I want to again, thank our team partners customers suppliers and shareholders for their tremendous support.

Speaker Change: With that let me turn the call back to over to the operator to open the line for Q&A.

Speaker Change: Thank you if you'd like to ask a question. Please press star one one.

Speaker Change: If your question has been answered and you'd like to remove yourself from the queue. Please press star one again, we ask that you. Please limit yourself to one question and one follow up.

Operator: We ask that you please limit yourself to one question and one follow-up. Our first question comes from Mark Delaney with Goldman Sachs. Your line is open. Yes, good afternoon.

Speaker Change: Our first question comes from Mark Delaney with Goldman Sachs. Your line is open.

Claire McDonough: Thanks very much for taking the questions. Claire, you said you had confidence that there could be some growth in deliveries this year, and you talked about some good traction that you've seen from some of the initiatives, including rolling out leasing to more states and also the new variants like Standard Pack that have become available. I'm wondering if you could elaborate a bit more on some of those items and share what's giving you the confidence to guide for some modest delivery volume growth. Q1 was the first quarter that we introduced leasing for R1F, and we've now been able to expand the number of states that we offer leasing up to 32, and we'll be adding that to north of 40 over the coming quarters as well.

Mark Delaney: Yes. Good afternoon, thanks, very much for taking the questions clear you said you have confidence that there could be some growth in deliveries this year and you talked about.

Mark Delaney: Good traction that you've seen from some of the initiatives, including rolling out leasing to more states and also the new variants like standard pack that it become available.

Mark Delaney: Elaborate a bit more on some of those.

Speaker Change: Some of those items and share what's giving you the confidence to guide for some modest delivery volume growth this year.

Speaker Change: Thanks, Mark as we think about our broader confidence around demand, it's really driven by some of the early results that we've seen from our go to market initiatives, including the launch of leasing Q1 was the first quarter that we introduced leasing for rns and we've now.

Mark: <unk> been able to expand the number of states that we offer leasing up to 32, and we will be adding that to north of 40 over the coming quarters as well.

Claire McDonough: As evidenced by some of the inclusions in the 20,000 test drives that we've had over the course of this quarter, getting more customers into the driver's seat has certainly been a compelling tactic for us as well.

Mark: As evidenced by some of the inclusion on the 20000 test drives that we've had over the course of this quarter getting more customers into the driver's seat has certainly been a compelling tactic for us as well and then as you noted the introduction of the standard package our ability to stretch.

Claire McDonough: And then, as you noted, the introduction of the standard pack and our ability to stretch the bottom end of the entry price point of the R1 product itself was another key initiative that we launched over the course of Q1. And I think the last but certainly not least was the opportunity that we had to grow broad-based brand awareness through the launch of the R2 reveal and the R3 and R3X as well, which generated significant interest in Rivian as a whole. That's helpful. Thank you for that.

Mark: The bottom end of the entry price point of the <unk> product itself.

Mark: Another key initiative that we launched over the course of Q1 and I think the last but certainly not least was the opportunity that we had to grow broad based brand awareness through the launch of <unk> reveal and archery and our three axis as well that generated significant interest in Libyan.

Mark: As a whole.

Claire McDonough: My next question was around the target to reach a positive gross profit in the fourth quarter of this year, which you reiterated today. Can you share a bit more on how the path is tracking in order to get to that level, and to what extent? It's changed everything in terms of some of the key inputs needed to reach that relative to what you put in your 4Q23 shareholder letter. The largest driver for us in our path to positive gross profit remains the improvements in variable cost reduction. And within this category, it's predominantly driven by material cost reduction.

Speaker Change: That's helpful. Thank you for that my next question was around the target to reach a positive gross profit in the fourth quarter of this year, which you reiterated today can you share a bit more on how the past is tracking in order to get to that level and to the extent.

Mark: It has changed at all in terms of some of the key inputs needed to reach that relative to what you put in your four <unk> 23 shareholder letter. Thank you.

Mark: The largest driver for us in our path to positive gross profit remains the improvements in variable cost reduction and within this category. It's predominantly driven by material cost reductions in Q1, we saw material cost improvements for each of our vehicles, the <unk> and <unk>.

Claire McDonough: In Q1, we saw material cost improvements for each of our vehicles, the R1T, the R1S, and EDV, and we expect to see a step change in our R1 material costs, driven by the introduction of engineering-driven design changes, as well as cost-focused material changes that we've already negotiated with suppliers. We also expect to see commodity tailwinds in the second half of 2024, as well as the added benefit from R2 sourcing on our ongoing commercial cost downs.

Mark: And we expect to see a step change in our material costs driven by the introduction of engineering driven design changes as well as cost focused material changes that we've already negotiated with suppliers. We also expect to see commodity tailwind in the second half of 2024 as well as the added.

Mark: Benefit from our two sourcing on our ongoing commercial cost Downs next.

Claire McDonough: Next, turning to our semi-fixed costs, there are two key drivers for the improvement. The tooling upgrades we made in the normal plant enable us the ability to increase our line rate by roughly 30 percent, which reduces our per unit labor and overhead costs. And we also expect to see depreciation expense decline by Q4 as we fully depreciate some of our original tooling and move past the accelerated depreciation we incurred in Q1.

Mark: Next turning to our semi fixed costs. There are two key drivers for the improvement the tooling upgrades, we made in the normal plant enable us the ability to increase our line rate by.

Mark: Roughly 30%, which reduces our per unit labor and overhead costs and we also expect to see depreciation expense declined by Q4 as we fully depreciate some of our original tooling and move past the accelerated depreciation we incurred in Q1.

Claire McDonough: The final lever, as we've talked about in the past, is an increase in our revenue per delivered unit due to the increased sales of regulatory credits, software, and services revenue, as well as remarketing sales. So in summary, we have a detailed roadmap that we're executing against, and we continue to feel confident in our plan and our path to achieve positive gross profit in Q4 of this year. Thank you. The next question comes from Adam Jonas with Morgan Stanley.

Mark: The final lever as you've talked about in the past as an increase in our revenue per delivered unit due to the increased sales of regulatory credits software and services revenue as well as re marketing sales in.

Mark: In summary, we have a detailed roadmap that we're executing against and continue to feel confident in our plan and our path to achieve positive gross profit in Q4 of this year.

Speaker Change: Thank you.

Speaker Change: Thank you. Our next question comes from Adam Jonas with Morgan Stanley. Your line is open.

Claire McDonough: Your line is open. Hi, thanks. Good afternoon, everybody. So, RJ, I'm gonna assume you're not going to comment on the widespread story today of a large maker of phones potentially collaborating with an electric vehicle startup unless you want to, but what would be in it for a player of that ilk to work with you or what would be worthwhile to Rivian?

Adam Michael Jonas: Alright, Thanks, good afternoon everybody.

Adam Michael Jonas: So RJ I'm going to assume you're not going to comment on the widespread story today of a large.

Adam Michael Jonas: Maker of our phones.

Adam Michael Jonas: Bonds potentially collaborating with an electric vehicle startup.

Adam Michael Jonas: Unless you want to but what would what.

Adam Michael Jonas: What would be in it for a player of that ilk.

Adam Michael Jonas: Work with you or.

Adam Michael Jonas: What would be worthwhile to reveal the benefits of a player like that that Amazon doesn't already.

Adam Michael Jonas: <unk> and technically provide support to you already I have a follow up thanks.

Robert Joseph Scaringe: The benefit from a player like that is that Amazon doesn't already strategically and technically provide support to you already. I have a follow-up. Thanks. Thanks, Adam. Yeah, you know, we don't comment on mark rumors or speculation, but, As you alluded to, we have We have a history of partnership. And of course, Amazon is our largest shareholder today and a very close partner across a variety of avenues has been really a foundational element of the business that they were quarter-launching the commercial arm of the business and today represent the vast, vast majority of our commercial vehicle sales.

Speaker Change: Thanks, Adam.

Speaker Change: We don't comment on Martin rumors or speculation but is.

Speaker Change: As you alluded to we have.

Speaker Change: We have a history of.

Speaker Change: Partnership and of course Amazon.

Speaker Change: As our largest shareholder today in a very close partner across a variety of avenues as Ben.

Speaker Change: <unk>.

Speaker Change: Conditional element of the business.

Speaker Change: They were quarter launching the commercial arm of the business today represent the vast vast majority of our commercial vehicle sales.

Robert Joseph Scaringe: But you know, as we think about what we built as a company, one of the core, core elements that makes us unique is just the level of vertical integration around our software and associated electronics platforms. So the ECUs in the vehicle, and the essentially the various computers across the vehicle, and then the base software, you know, the base operating system all the way up to the applications layer. Creating those ourselves without the need to rely on tier one suppliers gives us a lot of customer facing strength but also creates opportunities for partnership, certainly.

Speaker Change: But as.

Speaker Change: As we think about what we've built as a company one of the core.

Speaker Change: Four elements that makes us unique is just the level of vertical integration around our software and associated electronics platforms. So the issues in the vehicle and the essentially the various computers across the vehicle and then the based software based operating system, all the way up to the applications layer.

Speaker Change: Creating those ourselves without the need to rely on tier one suppliers gives us a lot of.

Speaker Change: It gives us a lot of customer facing strength, but also creates opportunities for partnership certainly.

Robert Joseph Scaringe: Okay, thanks, RJ. Just as a follow-up to that, if I focused on your vehicles' ADAS and data collection capabilities, driver plus 10 exterior cameras, 12 ultrasonic sensors, five radars, you got compute, you mentioned the vertical integration, your custom ECUs and architecture. I think you, I think your fleet drives more in five hours than Apple did all of last year with their autonomous car program before it was canceled. We're hearing from people in the field of ADAS and robotics that there's been a real revolution due to LLM and Gen AI in bringing forth end-to-end learning and neural net training.

Speaker Change: Okay. Thanks RJ.

Speaker Change: As a follow up to that.

Speaker Change: If I focus on.

Speaker Change: Your vehicles are a depth and data collection capabilities driver plus than exterior cameras 12 ultrasonic sensors five radars you got confused you mentioned the vertical integrated the customers to use an architecture I think you've I think you your fleet.

Speaker Change: Drives more in flight hours and Apple did in all of last year, where their autonomous car program before it was canceled.

Speaker Change: We are hearing from people in that field of Adas and robotics that theres been a real revolution due to <unk> and <unk>.

Speaker Change: On bringing forth end to end.

Speaker Change: Learning and neural net training.

Robert Joseph Scaringe: I'm curious if you have also witnessed that, and if your autonomy team can concur with that. Does that then change your CapEx profile of how you allocate it to supercomputing either directly through NVIDIA GPU clusters as part of your CapEx the way your rival Tesla is doing, or otherwise working through partners and hyperscalers and Amazon in order to get access to that compute to get closer to achieving autonomy? Thanks.

Speaker Change: I'm curious if you have also witnessed that you and your autonomy Tina can concur with that and if so does that then change your capex profile of how you allocated to supercomputer either directly through.

Speaker Change: Nvidia GPU clusters as part of your Capex the way your rivals Tesla is doing or otherwise working through partners and hyperscale or as an Amazon in order to get access to that compute.

Speaker Change: To get closer to achieving autonomy.

Speaker Change: Yes.

Robert Joseph Scaringe: Just in the nature of the question, you made a point that we've made for a while, which I really agree with, which is a key element to deliver a really strong autonomy platform and something to continue to grow and get better over time: controlling the perception stack. And by controlling the perception stack, so it's the cameras and radars in particular, it allows us to have early fusion of that information. And the early fusion information allows us to not only best perceive the situation around the vehicle but also to create the best response that the best controls for what the vehicle should do next.

Speaker Change: Just in the nature of the question you made a point that we've made for a while which really agree with which is the <unk>.

Speaker Change: A key element to deliver.

Speaker Change: Uh huh.

Speaker Change: Really strong autonomy platform and something we'll continue to grow and get better over time as controlling the perception stack and by controlling the perceptions to access the cameras.

Speaker Change: And radars in particular.

Speaker Change: It allows us to have early fusion of that information.

Speaker Change: And the early fusion that information allows us to then all my best perceive the situation around the vehicle, but to create the best response to the best controls for what the vehicles should do next and the challenge with systems that are built through a collection of third party sourced sensors or third party source software is that that <unk>.

Robert Joseph Scaringe: The challenge with systems that are built through a collection of third-party sourced sensors or third-party sourced software is that the learning loop and the opportunity to leverage the entirety of the sensor set and the perception stack becomes far more limited.

Speaker Change: Turning loop.

Speaker Change: And the opportunity to leverage the entirety of the sensor set in our perception stock becomes far more limited.

Robert Joseph Scaringe: And so we've architected our autonomous platforms and, in particular, what will be common on our future platforms around really controlling the entirety of all of the data coming in, and then also really controlling how we use a lot of training models to continue to drive progress in the platform. Now, as you point out, the training models, there are lots of ways to run them, but ultimately, it requires a build out over time of a large, very large clusters of CPUs to help train and build the robustness into our driving models.

Speaker Change: So we've we've architected, our autonomous platforms and in particular, what's to comment on our future platforms.

Speaker Change: Around really controlling the entirety of of all of the data coming in and then also really control. How we we use a lot of training models to continue to drive progress into the platform as you pointed out the training models, there's lots of ways to run them, but ultimately requires.

Speaker Change: The build out over time of a large very large clusters of of.

Speaker Change: Cpus to help train and build the robustness into our into our driving models.

Operator: Thanks, everyone. Thank you. Our next question comes from John Murphy with Bank of America. Your line is open.

Speaker Change: Thanks Roger.

Speaker Change: Thank you. Our next question comes from John Murphy with Bank of America. Your line is open.

Operator: Good afternoon, guys. Just a first question, RJ. Now that we've got the two and the three unveiled and the 3X, we're kind of at a point where we're looking at a four to five, arguably, maybe six vehicle portfolio. I'm just curious, as we get through the ramp of the two and then the three and the 3X, how do you think you're going to manage this portfolio?

John Joseph Murphy: Good afternoon, good afternoon guys.

John Joseph Murphy: Just a first question RJ now that we've got two of the three unveiled in the <unk>.

John Joseph Murphy: At a point, where we're looking at.

John Joseph Murphy: Four to five R&D, maybe six vehicle.

John Joseph Murphy: Portfolio.

John Joseph Murphy: I'm just curious as we get through the ramp.

John Joseph Murphy: Two and then the three three X.

John Joseph Murphy: Youre going to manage this portfolio just kind of a portfolio of churns over time and as reinvestment in or is it going to be something thats sort of a continuous improvement software defined vehicles.

Operator: Is this going to be a portfolio that churns over time and is reinvested in, or is it going to be something that's a continuous improvement? Software-defined vehicles, and there won't be these refreshes over time. I'm just curious, how are you going to manage what's becoming a pretty robust and complete portfolio? Yeah, thanks, John.

John Joseph Murphy: We're not going to be these refreshes all the time I'm just curious how you see managing of what's to come.

Speaker Change: We are pretty robust.

Speaker Change: Jose.

Robert Joseph Scaringe: The R1 platform really represents the flagship product for us as a company and was our handshake with the world, in terms of introducing Rivian as a brand to customers. But importantly, because of its position as a flagship product, its price point is such that it doesn't allow us to access the largest part of the market.

Jose: Yeah. Thanks, Sean our one platform really represents the flagship product for us as a company.

John Joseph Murphy: Was there a handshake with the world is as.

John Joseph Murphy: In terms of introducing Vivien as a brand to customers.

John Joseph Murphy: But importantly, because of its positioning as a flagship product.

Speaker Change: It's it's price point is such that it doesn't allow us to access the largest part of the market.

Robert Joseph Scaringe: And so our midsize platform, which underpins the R2 and R3 products, is really important for us as a company. The launch of that platform with the R2 in the first half of 2026. It represents a step change in the scale of the adjustment market we can go after as a business. And what we've demonstrated so far and what you'll continue to see from us for our products, whether that be R1, R2, or R3, is a really heavy focus on using software to continue to make the vehicles better and better over time.

Speaker Change: And so our mid size platform, which underpins the art INR three products is really important for us as a company.

Speaker Change: The launch of that platform with our two in the first half of 2026.

Speaker Change: Presents a step change in the scale of the addressable market. We can go after us as a business.

Speaker Change: And what we've demonstrated so far and what Youll continue to see from us for our products, whether that be our one or two or three.

Speaker Change: Is a really heavy focus on using software to continue to make the vehicles better and better over time and so as I noted in my opening remarks, we've had over 30 over their updates on the <unk> platform. Since we launch the vehicle and this has led to a really vibrant.

Robert Joseph Scaringe: And so, as I noted in my opening remarks, we've had over 30 over-the-air updates on the R1 platform since we launched the vehicle. And this has led to a really vibrant customer community. There are a number of folks online following these releases that track every detail, and it creates a moment of excitement for our owners when they see the vehicle get better every couple of weeks. And so this is something we're absolutely going to maintain and is foundational and core to us as a business and, we think, creates a very different type of ownership experience relative to what we've historically known as owning a car. And maybe we can just follow up on that. I mean, there's folks that make, you know, poems that are basically black bricks that change form factor.

Speaker Change: Customer community that there is.

Speaker Change: Number of folks online. Following these releases that track every detail and it creates a moment of excitement for our owners when they see the vehicle get better.

Speaker Change: Every couple of weeks and so this is something we are absolutely going to maintain and is foundational and core to us as a business.

Speaker Change: We think creates a very different type of ownership experience relative to what we've historically known.

Speaker Change: As owning a car.

Speaker Change: Maybe you could just follow up on that I mean, theres folks made.

Speaker Change: So long as there is with black Brexit change on track there.

Speaker Change: And look on a product cycle basis, its one or two years.

Speaker Change: Do you think that the vehicles.

Speaker Change: Really stay somewhat status in physical form and not be updated sort of amount of four to five year cycle.

Speaker Change: And that's kind of working across the globe.

Speaker Change: Third product portfolio.

Speaker Change: Insurance or churn.

Speaker Change: Six years do you believe that is very good for us overall.

Speaker Change: Also seamless installs that are black bricks that they realize that actually.

Speaker Change: Yes.

Robert Joseph Scaringe: [inaudible] Asimov, A. D. S. Allen, A. M. R. K. O. S. I. O. M. R. K. O. S. I. O. M. R. K. O. M. R. K. O. M. R. K. O. M. R. K. O. M. When we think about a product life cycle, a product would launch, and it really wouldn't change much. Until the update came out, you know, which would be, as you said, often four or five years between your product, its launch, and its update coming out.

Speaker Change: Bye bye.

Speaker Change: It's early days for you Johnny product portfolio <unk>.

Speaker Change: I'm just curious about your philosophy there.

Speaker Change: I think this is a nuanced element here, but.

Speaker Change: Historically.

Speaker Change: When we thought about our product lifecycle.

Speaker Change: The product with launch and it really wouldn't change much until the update came out which would be as you said often four or five years between new product by product launching in its update coming out.

Robert Joseph Scaringe: And what we believe is the product needs to get better over time. I talked a moment ago about software, but there's also going to be hardware improvements that happen over time. So that's compute, that sensor set, and also, of course, improvements in how we build the vehicles, so cost and efficiency improvements. It's already realizing that today, we don't think of the vehicles as a static product, but rather something that continues to get better, and continues to improve in cost structure.

Speaker Change: And what we believe is the product needs to get better over time, and I talked a moment ago about software, but theres also going to be hardware improvements that occur over time, so it's compute that sensor set.

Speaker Change: And also of course improvements in how we build the vehicles the cost and efficiency improvements.

Speaker Change: We're already realizing that today, we don't think of the vehicles as a static product, but rather something that continues to get better continues to improve on cost structure.

Speaker Change: And.

Robert Joseph Scaringe: And, really, the nature of what the vehicle looks like has a lot to do with just the approach of the company and the brand. And for us, you know, we've really emphasized building a timeless design. That's not something that's of the moment or something that feels old, you know, six months after it's released.

Speaker Change: Really the nature of what the vehicle looks like has a lot to do with just the approach of the company and the brand and for us.

Speaker Change: We've really emphasized building a timeless design and thats not something thats of the moment or something that feels old six months afterwards after it's released.

Robert Joseph Scaringe: And we think that the timeless element of the design actually provides us with the opportunity to make less significant exterior design changes while we continue to make progress with what's under the skin. And if I could just ask one follow-up question on that 827 from Illinois, Claire, the $2.25 billion lower capital for the normal plant versus the Georgia plant, it doesn't sound like you're changing that, even though you're getting $827 from Illinois just yet.

Speaker Change: And we think that timeless element of the design actually provides us the opportunity to make less significant exterior design changes, while we continue to make progress with what's under the skin.

Speaker Change: Okay, and if I can just ask one follow up on that <unk> 27 from Illinois.

Robert Joseph Scaringe: But if you were to pro forma, how much lower capital, you know, performing for that, what would you roughly think it would be? I mean, it sounds like there are other things where that capital is not going just directly to the plant, but it goes to other infrastructure. But how much do you think, Mark, do you think could lower that capital? John, I think the most direct comparison is, as I mentioned in my prepared remarks, the upfront cash that we'll receive from the state of Illinois, which is roughly 100 million dollars this year. Both Georgia's incentive package, as well as Illinois', had payroll incentives and tax incentives associated with each of them.

Speaker Change: <unk> two <unk>, two 5 billion lower capital for normal plant versus the Georgia plant.

Speaker Change: It doesn't sound like you're changing that even though you're getting <unk> 27 from Illinois, just yet, but if you were to pro forma how much lower capital pro forma for that what would you roughly think it would be I mean, some of those other things with that capital cycle, just directly to the plant, but it goes to other infrastructure, but how much do you think you can get more of that capital.

Speaker Change: Sure John I think the most direct comparison as I mentioned in my prepared remarks is the upfront cash that we'll receive from the state of Illinois, which is roughly $100 million this year.

Speaker Change: George as incentive package as well as Illinois had payroll and attendance tax incentives associated with each of them, but in the near term I would.

Claire McDonough: But in the near term, I would pinpoint that as being incremental to the two and a quarter billion dollars of savings that we communicated when we revealed R2. Thank you very much, guys. Thank you. Our next question comes from Dan Levy with Barclays. Your line is open. Hi, good evening.

Speaker Change: Pinpoint that as being incremental to the two in a quarter billion dollars of.

Speaker Change: Savings that we communicated when we reveal darko.

John Joseph Murphy: Okay. Thank you very much guys.

John Joseph Murphy: Thank you. Our next question comes from Dan Levy with Barclays. Your line is open.

Operator: Thanks for taking the question. Wanted to start with a question on COGS trajectory and specifically, if you're doing, if you're planning on doing, call it a mid $40,000 base price. [inaudible] You just did, call it like, mid-120s, so we're talking about, you know, almost $100,000, a little less of an improvement in cogs per unit. So maybe you can just help us conceptually or directionally understand how we bridge from cogs per unit today down to where you need to be on R2.

Dan Meir Levy: Hi, good evening, thanks for taking the questions.

Dan Meir Levy: Wanted to.

Dan Meir Levy: Start with a question on Cogs trajectory and specifically.

Dan Meir Levy: If you're doing if you're planning on doing call. It a mid 40000 dollar based price.

Dan Meir Levy: For our two it means that to get any sort of a <unk>.

Dan Meir Levy: Recent gross margin you need to get probably Cogs per unit and the <unk>.

Dan Meir Levy: High $30000 range.

Dan Meir Levy: You just did call it like mid 100, <unk>. So we're talking about.

Dan Meir Levy: Almost $100000 a little less of an improvement.

Dan Meir Levy: In Cogs per unit. So maybe you can just help us conceptually or directionally understand how we bridge from Cogs per unit today.

Dan Meir Levy: Down to where you need to be on our to understand it.

Operator: Partially decontenting, you know, partially it's a smaller form factor, there's scale, but maybe you could just walk through the pieces, how much is in your control, what's easier, what's a bit trickier. Any sort of a framework would be helpful.

Dan Meir Levy: Partially decon tenting, partially smaller form factor there is scale, but maybe you could just walk through the pieces how much is in your control what's easier.

Dan Meir Levy: What's a bit trickier.

Dan Meir Levy: Any sort of framework.

Speaker Change: Framework would be helpful. Thanks.

Operator: Thanks, Dan. First, I just want to reiterate what Claire said before, which is that for the R1 product, we're on a life cycle to materially improve its cost of goods sold. And so we're going to see that play out over the course of the year. The reason for the shutdown that we just went through was to implement not only changes in the plant to improve process flow and increase the production rate by 30% but also to integrate a very large number of changes into the vehicle that are focused on cost.

Speaker Change: Thanks, Tim first I just want to.

Speaker Change: Reiterate what Claire said before which is on the <unk> product we are on a.

Tim: Lifecycle to.

Tim: Materially improve.

Tim: Cost of goods sold and so we're going to see that play out over the course of the year.

Tim: The reason for the shutdown that we just went through was to implement not only changes in the plant to improve process flow and increase the production rate by 30%, but also to integrate.

Operator: So those are new suppliers with updated part designs or designs that have been optimized around cost; areas of the vehicle where we've actually consolidated parts or eliminated parts. And, you know, without going through all the examples, even on this changeover, there are areas of the body structure, for example, where the cost reduction was well in excess of 50%. And that's through part consolidation, or part elimination, or redesigning of parts using different materials or different processes. So as we wind that forward into R2, R2 is a fundamentally different architecture. It's built to a different set of requirements.

Tim: Very large number of changes into the vehicle that are focused on costs. So those are new suppliers.

Dan Meir Levy: With.

Dan Meir Levy: Updated part designs or.

Dan Meir Levy: Designs that have been optimized around cost.

Dan Meir Levy: Areas of vehicle, we've actually consolidated parts or eliminated parts.

Dan Meir Levy: And without going through all the examples even on this changeover there are areas of the body structure for example.

Dan Meir Levy: Where the cost reduction was well in excess of 50%.

Dan Meir Levy: And that's through park consolidation.

Dan Meir Levy: Or part elimination or redesigning of parts using different materials are different processes. So.

Dan Meir Levy: As we wind that forward into our two or choose a fundamentally different architecture.

Dan Meir Levy: Built to a different set of requirements are one is a very extreme set of requirements in terms of on and off road capability.

Robert Joseph Scaringe: R1 is, is, has a very extreme set of requirements in terms of on and off road capability, whereas the R2 product will still be very capable on and off road, but not to the True Xtreme that the flagship product has. And every decision we take, that is, every part, every system, every component, it goes through the lens of, is the part needed? Can the part be consolidated? Can the function of that part or system be performed by another part or system?

Dan Meir Levy: Whereas the <unk> two product will still be very people, both on and off road, but not to the.

Dan Meir Levy: Through extreme that the flagship product has.

Dan Meir Levy: And every decision we take.

Dan Meir Levy: That's every part every system every component it goes through the lens of is the part needed tender part be consolidated kind of a function of that partner system be performed by another partner system.

Dan Meir Levy: And it is leading to a materially different vehicle architecture from a body structure point of view and vehicle integration point of view.

Robert Joseph Scaringe: And it's leading to a materially different vehicle architecture from a body structure point of view and from a vehicle integration point of view. But it's also complemented by a very different supplier relationship, their set of supplier relationships than what we had when we negotiated costs on our one years ago. And so we remain very bullish on our ability to deliver on the R2 cost structure. It, of course, requires us to execute as we pull the full program together and complete the sourcing on the vehicle.

Dan Meir Levy: But it's also.

Dan Meir Levy: Supplemented by <unk>.

Dan Meir Levy: Very different supplier relationship.

Dan Meir Levy: Set of supplier relationships and what we had when we negotiated cost on our one.

Dan Meir Levy: Years ago.

Dan Meir Levy: And so we remain very bullish on our ability to deliver on the <unk> cost structure of.

Dan Meir Levy: Of course requires us to execute as we pull the full program together and complete the sourcing on the vehicle, but but.

Robert Joseph Scaringe: But it is a significant set of improvements, and I called out a few of the examples, but just to reiterate those. Part consolidation can come in many forms. The use of high-pressure die castings is one way to achieve it.

Dan Meir Levy: But it is a significant set of improvements and I called out a few of the examples but just to reiterate those.

Dan Meir Levy: Park consolidation if you can come in many forms use of high pressure die casting is one way to achieve it.

Robert Joseph Scaringe: Another is to have parts do more than one thing. So the use of the top of the battery pack as the floor of the vehicle is an example. We have massively simplified closure systems in the doors for R2 versus R1. And then, not often appreciated but really significant, is just the opportunity, from an electrical point of view, in the vehicle, to minimize the number of ECUs and optimize the location of those ECUs as well as whatever they're actuating or sensing to minimize the harness design.

Dan Meir Levy: Another is to have parts do more than one thing. So the use of the top of the battery pack is the floor of the vehicle.

Dan Meir Levy: As an example, we have massively simplified closure systems and the doors for our two versus our one.

Dan Meir Levy: And then.

Dan Meir Levy: Not often appreciated but really significant is just the opportunity from an electrical point of view in the vehicle to minimize the number of <unk>.

Dan Meir Levy: And optimize the location of those issues as well as whatever their actuating are sensing.

Dan Meir Levy: To minimize the harness design.

Dan Meir Levy: And so across the board Holistically, we're making all of those types of changes leveraging the learnings from <unk> and in the most recent shutdown, which is leading to the significant cost reductions in our one as we roll those into the <unk> program to make sure. We can achieve as you said.

Dan Meir Levy: <unk>, but necessary Cogs targets.

Robert Joseph Scaringe: Maybe just a follow-up on vertical integration. And so I understand that the move to put R2 into normal instead of Georgia was one of capital efficiency, but, amid this pivot in strategy, maybe you can give us a sense of if you're thinking any differently about your level of vertical integration. I understand vertical integration is obviously still very key to the strategy, but are you thinking any differently about the level of vertical integration that you're pursuing, or maybe relying on?

Speaker Change: Thank you that's helpful.

Speaker Change: Maybe just a follow up.

Dan Meir Levy: On vertical integration and so I understand that and move to put our two.

Dan Meir Levy: Into normal instead of Georgia was one of capital efficiency, but just.

Dan Meir Levy: Amid this pivot in strategy, maybe you can.

Dan Meir Levy: Give us a sense of if youre thinking any differently about your level of vertical integration I understand vertical integration is obviously still very key to the strategy, but are you thinking any differently about the level of vertical integration that you're pursuing.

Dan Meir Levy: To be relying on <unk>.

Dan Meir Levy: Partners a bit more versus what you maybe would have done in house in the past.

Speaker Change: Thank you.

Dan Meir Levy: Sure.

Robert Joseph Scaringe: [inaudible] I've just referenced it a bit Dan, but one of the really key areas for us is control. The electrical architecture in the vehicle, the network architecture, and then the associated software that's running across all those platforms. And what that allows, versus what the vast, vast majority of vehicle manufacturers pursue, essentially, with the exception of one other manufacturer, which is a Tier 1 heavy approach where Tier 1 suppliers provide a variety of controllers that then control a function within the vehicle. By controlling all those computers, all those ECUs, it allows us to much more easily consolidate functions, not by the domain, but rather across zones.

Dan Meir Levy: I just referenced it a bit in but one of the really key areas for us is controlling.

Dan Meir Levy: The electrical architecture in the vehicle.

Dan Meir Levy: The network architecture, and then the associated software that's running across all those platforms.

Dan Meir Levy: And what that versus what.

Dan Meir Levy: The vast vast majority of vehicle manufacturers pursue essentially.

Dan Meir Levy: Exceptional one other manufacturer, which is a tier one heavy approach for tier one suppliers provide a variety of controllers that the controller function within the vehicle by controlling all the all of those computers. All those use it allows us to much more easily consolidate functions not by the domain, but rather.

Dan Meir Levy: Across zones, so we can set up.

Robert Joseph Scaringe: So we can set up what we call a zonal controller that's in an area of the vehicle that controls all functions across that area. And the amount of savings that are possible by doing this is not measured in hundreds of dollars but in thousands of dollars. And the simplification of the vehicle harness that results from that is also quite significant. And that's all, you know, Rivian facing advantages in terms of cost simplification, you know, and simplifying the build process.

Dan Meir Levy: When we call it Dano controller, that's in an area of the vehicle that controls all functions across that area.

Dan Meir Levy: And <unk>.

Dan Meir Levy: The amount of savings as possible by doing this is not measured in hundreds of dollars, but measured in thousands of dollars.

Dan Meir Levy: And the simplification of the vehicle harness that results from that is also quite significant.

Robert Joseph Scaringe: But it also creates a lot of advantages for customers. We've already seen this, you know, from the launch of R1, where the control of all those platforms allows us to do deep over-the-air updates. When I say deep, I mean real over-the-air updates.

Dan Meir Levy: And Thats, all Libyan facing advantages in terms of cost simplification simplifies the build process, but it also creates a lot of advantages for customers and we've already seen this from the launch of our one where the control of those all of those platforms allow us to do deep over the air update so I say deep I mean real over.

Dan Meir Levy: The updates we're not just changing a color on the screen, but rather introducing real feature is changing the way the vehicle drives improving the battery performance.

Dan Meir Levy: Improving thermal performance.

Robert Joseph Scaringe: We're not just changing a color on the screen, but rather introducing real features, changing the way the vehicle drives, improving the battery performance, improving thermal performance. You know, things that are meaningful to the ownership experience of the vehicle. And that we remain very committed to.

Dan Meir Levy: Things that are meaningful to the ownership experience of the vehicle.

Robert Joseph Scaringe: And in fact, the benefits of the heavy investment necessary to build up all that capability will really be realized with R2, which will leverage the network architecture, the ECU topology, of course, the software stack that's been developed in R1, and the changes that we've just made as part of the cost-down process with R1. We'll be going into R2, so we can look at this also as a de-risking of the launch of R2. And while I've talked about software and electronics, it's important to note that this also extends to the way we've approached our high-voltage systems.

Dan Meir Levy: And that we remain very convicted on and in fact, the benefits of the heavy investment necessary to build up all of that capability.

Dan Meir Levy: Really be realized with our two where are.

Dan Meir Levy: <unk> will leverage.

Dan Meir Levy: The network architecture of that issue topology of course, the software stack. That's been developed and are one and the changes that we've just made as part of the cost down process with our one that architecture.

Dan Meir Levy: We will be going into <unk>. So we can look at this also as a derisking of the launch of our two.

Dan Meir Levy: And.

Dan Meir Levy: Well I've talked about software electronics, it's important to note that this also extends to the way we've approached our high voltage systems, so our batteries or battery packs better modules.

Robert Joseph Scaringe: So our batteries, our battery packs, battery modules, drive units, inverters, these are all areas that we've developed in-house technology around. And of course, at the scale of R1, it has a high fixed cost associated with it. But with R2 coming online, we really see significant structural cost advantages by owning these areas and by building these areas in-house. Thank you. That's a helpful color.

Dan Meir Levy: Drive units Inverters. These are all areas that we've developed in house technology around and of course at the scale of our one it.

Dan Meir Levy: It has a high fixed cost associated with it but with our two coming online we really see.

Dan Meir Levy: Significant structural cost advantages.

Dan Meir Levy: By owning these areas and by building these areas in house.

Speaker Change: Thank you that's helpful color.

Operator: Thank you. The next question comes from George Gianarikas. McCann Accord Genuity, your line is open. Hi, good afternoon, and thank you for taking my questions. I think you mentioned in your prepared remarks that you're bringing the lines back up. I'm curious as to what you can share in terms of the experience there and also how the new supply relationships have gone. I know you've decided to switch out some suppliers, and any detail there would be appreciated.

Speaker Change: Thank you.

Speaker Change: Next question comes from George <unk> with Canaccord Genuity. Your line is open.

George: Hi, good afternoon, and thank you for taking my questions.

George: I think you mentioned.

George: In your prepared remarks that youre, bringing the lines back up.

George: I'm curious as to what you can share in terms of the experience there and also.

George: How the new supplier relationships.

George: Have gone I know you've decided to switch out some suppliers and then any detail there would be appreciated. Thank you.

Operator: Thank you. Thanks, George. You know, it was interesting; we, at the start of the month, at the start of April, we stopped production of our launch vehicle. And walking through the plant and seeing it without a single vehicle in the line was a unique feeling.

Speaker Change: Thanks George.

Speaker Change: It was interesting.

Speaker Change: This started a month or so at start of April.

Speaker Change: We stopped production of our launch vehicle.

Speaker Change: And walking through the plant and seeing it without a single vehicle line was it was a unique feeling we havent seen that since we started production.

Robert Joseph Scaringe: We hadn't seen that since we started production, and it sort of gave you a bit of a feeling in your stomach as you walked through. The precision in the execution of integrating so much new equipment, new process design, as you saw in the letter, hundreds of new robots, and hundreds of updated or modified robots into the plant to allow the plant to run at a 30% higher line rate and to have the orchestration of all those activities, both in the plant and then across our supply base.

George: And.

George: Sort of gave you a.

George: Bit of a feeling in your stomach has walked through.

George: <unk>.

George: Precision in the execution of integrating so much new equipment, new process design as you saw on the letter hundreds of new robots and hundreds of updated or modified robots into the plant.

George: To allow the plant to run at a 30% higher line rate.

George: And to have the orchestra of all of those activities. Both in the plant and then across our supply base to have.

George: Very large number of new suppliers come onboard.

George: And a significant portion of the bill of materials changeover to these new suppliers and updated part designs.

George: To have executed that full effort with the b.

George: The intensity and the focus to drive that efficiency into the plant and it's into our overall Cogs structure. It was really it was an exciting April to say the least.

Robert Joseph Scaringe: And it's, it's amazing to see the plant running again, to see the changes we put in place solving some of the, you know, some of the challenges that existed in the line before solving some of the areas where we felt the costs were not appropriate at the vehicle level. And we're excited to see those changes manifest in improvements and our costs to get sold. And, of course, on the roadmap to our positive gross margin. Right?

George: And.

George: It's amazing to see the plant running again to see the changes we put in place solving some of the.

George: Some of the challenges of that.

George: Existed in the line before solving some of the areas, where we felt the costs were not appropriate at the vehicle level.

George: And we're excited to see those changes.

George: Manifest and in the improvements in our cost of goods sold and of course in the roadmap.

George: To a positive gross margin.

Robert Joseph Scaringe: And maybe as a follow-up, I know you mentioned that, you know, R2 is coming in the first half of 26. What are the opportunities to potentially, you know, pull that forward in terms of the decision to launch R2 out of normal? There were many things that drove it. Claire talked before about the $2.25 billion in capital savings associated with it. But beyond that, what's harder to measure in the numbers was just the ability to leverage existing teams and the operations that we have in normal, and you know those teams we've taken us a lot of time we've built. Strong teams, strong leadership, you know, at the shop level. And I spend a lot of time at the plant, a lot of time on the floor with the team, with our team members.

Speaker Change: Great and maybe as a follow up I know you had mentioned the two is coming in the first half of 2006, it what are the opportunities to potentially.

Speaker Change: Pull that forward in terms of the timing. Thank you.

Speaker Change: The decision to launch or two.

Speaker Change: Out of normal was was to where there is many things that drove it <unk> talked before about the $2 to $5 billion in capital savings associated with it but beyond.

Speaker Change: Beyond that and what's harder to measure than the numbers was just the ability to leverage the existing teams and the operations that we have a normal.

Speaker Change: Those teams, it's taken us a lot of times, we built.

Speaker Change: Strong team strong leadership at the shop level.

Robert Joseph Scaringe: And that build-up of training capabilities, learning capabilities, leadership at the team leader, group leader, manager, and director level across the plant is something we'll now be able to leverage. And it takes not only risk out of the R2 timing but allows us to pull R2 into the first half of 2026. Now, Now, there's not a single person within Rivian that isn't trying to find ways to pull R2 forward, but we would love to see R2 sooner.

Speaker Change: And I spend a lot of time at the plant a lot of time on the floor with the team with our team members.

Speaker Change: And that buildup of training capabilities learning capabilities leadership at the team leader group leader.

Speaker Change: Manager and director level across the plant.

Speaker Change: It is something we will now be able to leverage and it takes not only risk out of the <unk> timing, but allowed us to pull our too.

Speaker Change: Into the first half of 2026.

Speaker Change: Now.

Speaker Change: There's not a single person within ribbon that isn't trying to find ways to pull our two forward, but we would love to see or two sooner the amount of excitement for the product is palpable.

Robert Joseph Scaringe: The amount of excitement for the product is palpable, notwithstanding the excitement that we all have for it on our own. But we also want to ensure that the product, when it hits the market, is exceptional. And making sure our supply base is robust, making sure there aren't any supply issues as we launch is really important to ensure we have as smooth a launch as possible. Of course, learning from the R1T launch, the R1S launch, the EDV launch, the relaunch of EDV with post-cost downs, and now the relaunch of R1 with post-cost downs, we've gone through a number of launch events with each one getting better and stronger.

Speaker Change: Notwithstanding the excitement that we all have for it on our own.

Speaker Change: But.

Speaker Change: But we also want to ensure that the product when it hits. The market is is exceptional and making sure our supply basis robust, making sure there arent supply issues as we launch.

Speaker Change: It is really important to us to ensure we have as smooth of a launch as possible of course learning from the <unk> launch the rns launched the EV launch the relaunch of Adv with post cost Downs and now the relaunch of our one post cost downs, we've gone through a number of launch events with each one getting better and stronger.

Robert Joseph Scaringe: And the clarity we have on the importance of robustness of the supply chain, both from a quality point of view, but also from a ramp efficacy point of view, is driving us to make sure that as we think about that 2026 launch, it's not just what we can control in our plant, it's through all the many relationships across our supply base to ensure we're ready to step from not producing R2 at scale to producing at scale very quickly Thank you. Our next question comes from Alex Potter with Piper Sandler.

Speaker Change: The clarity we have on the importance of robustness of our supply chain both from a quality point of view, but also from a ramp efficacy point of view.

Speaker Change: <unk> is driving us to make sure that that as we think about that 2026 launch its not just what we can control in our plant, but it's through all the many relationships across our supply base to ensure we are ready to step from from from not producing or two at scale to producing at scale very quickly.

Speaker Change: Thank you. Our next question comes from Alex Potter with Piper Sandler Your line is open.

Alexander Eugene Potter: Perfect. Thanks, guys.

Alexander Eugene Potter: I'm wondering if you could talk about what the next call it.

Alexander Eugene Potter: Three to six months in normal will look like now that you've gone through a lot of the heavy lifting with the retooling.

Alexander Eugene Potter: To what extent is there any remaining execution or ramp risk with the plant as it exists right now.

Robert Joseph Scaringe: You know, coming out of a launch, and I was just on line with the team, going through, you know, how things are running post-launch. The energy within the plant is palpable.

Speaker Change: Thanks, Alex you know coming out of a launch.

Speaker Change: I was just don't align with the team.

Alex: Going through how things are running post.

Speaker Change: Post relaunch the energy within the plant is palpable excitement.

Speaker Change: <unk>.

Robert Joseph Scaringe: The excitement to deliver on improved quality and improved cycle time is real. And with the changes we made around the overall efficiency of the layout, the efficiency of material flow, we're really excited to see that pull forward into a reduction in cost of goods sold. Now with that, it's not as if the plant turns back on immediately at full rate.

Speaker Change: Deliver on an improved quality and improved cycle time is real and with the changes we made around the overall efficiency to lay out the efficiency material flow.

Alex: We're really excited to see that.

Alex: Pull forward into <unk>.

Alex: Reduction in cost of goods sold.

Robert Joseph Scaringe: So there is a ramp associated with it; we're following a prescribed and planned ramp of the facility. And, as I said in my previous discussion, that that ties to the suppliers. So we also need to make sure our suppliers are ramping at the same rate. And given the number of changes we've made with our supply base, those suppliers, in many cases new suppliers, are ramping along with us. And so that, as that's all happening.

Alex: Now with that.

Alex: It's not as if the plant turns back on immediately.

Alex: At full rate. So there is a ramp associated with it we're following a prescribed and planned ramp of the facility.

Alex: As I said in.

Alex: Previous.

Alex: Previous discussion that ties to the suppliers. So we also need to make sure our suppliers are ramping at the same rate and given the number of changes we've made with our supply base.

Alex: Those suppliers in many cases, new suppliers are ramping along with us.

Alex: And so that as that's all happening.

Robert Joseph Scaringe: We're also really focused on ensuring that the plant in Normal is also getting ready to ingest R2. And so there's a number of investments we're making into Normal to ensure the R2 ramp is seamless and as capital efficient as possible as well. Okay, perfect.

Alex: We're also really remain focused on ensuring that the plant and normal is also getting ready to to ingest, our too and so theres a number of investments, we're making into normal to ensure the <unk> ramp as seamless and as capital efficient as possible as well.

Claire McDonough: Thanks. And I'm wanting to go back to something Claire mentioned regarding OPEX. It looks like second half OPEX spending is going to be down relative to the first half. Just wondering what it is that you're spending on now or what you did spend on in the first half that you won't be spending on in the second half of this marketing and outreach. You mentioned a lot about test drives and things of that nature after the R2 and R3 unveiling, or maybe it's R&D. Just any additional clarity on that would be helpful. Thanks.

Speaker Change: Okay perfect. Thanks.

Speaker Change: And then wanted to go back to something cleared mentioned regarding opex. It looks like second half opex spending is going to be down relative.

Speaker Change: Relative to the first half just wondering what it is that you are spending on now or what you did spend out in the first half that you wont be spending on in the second half of this marketing and outreach you mentioned a lot with test drives and things of that nature. After the tier two and our free unveiling just or maybe it's R&D.

Speaker Change: Any additional clarity on that would be helpful. Thanks.

Speaker Change: Sure. So the first point is in the first half.

Claire McDonough: Sure, so the first point is, in the first half of the year, in the build-up to the tooling upgrades that we made normal, there were higher levels of R&D spend associated with that. We'll see that increase as well, Q1 into Q2, based on the shutdown time that we took throughout the course of April and the incremental contractors and support that we had to bring back the lines up in short order and succession.

Speaker Change: Here in the buildup to it.

Speaker Change: Turing upgrades that we made in normal there were higher levels of R&D spend associated with that and we'll see that increase as well Q1 into Q2 based off of that shutdown time that we kept throughout the course of April and incremental contractors and support that we had to bring back the lines are being in short order and success.

Speaker Change: <unk>.

Claire McDonough: And so, as we look to the second half of the year, as RJ mentioned, the pivot and focus from an R&D perspective starts to focus around more of the R2 development work versus the focus on both R2 as well as R1 and our commercial vans that you're seeing in the first half results and figures. And then beyond that, we're constantly driving incremental efficiency across the organization as a whole. And so that entails finding ways in which we can reduce expenses in other areas of SG&A to make room for the investments that we're making in our go-to-market teams between sales and service as a whole. And so that intensity and focus is what's enabling our path to reduce our operating expenses overall for the year, but also importantly, to see that second half 2024 step change reduction in OPEX. Excellent. Thanks, guys.

Speaker Change: And so as we look to the second half of the year.

Speaker Change: You mentioned that the pivot and focus from an R&D perspective starts.

Speaker Change: To focus around more at that our acute development work versus.

Speaker Change: The focus on both <unk> as well as our one and our commercial vans that youre seeing in that.

Speaker Change: First half results and figures and then beyond that.

Speaker Change: We're constantly driving incremental efficiency across the organization as a whole and so that entails finding ways in which we can reduce expense in other areas of SG&A to make room for the investments that we're making in our go to market teams.

Speaker Change: Sales and service as a whole and so that.

Operator: That intensity and focus is what's enabling our path to reduce our operating expenses overall for the year, but also importantly, seeing that second half 2020 for a step change reduction in Opex.

Speaker Change: Excellent thanks, guys.

Operator: Thank you. And our next question comes from Emmanuel Rosner with Deutsche Bank. Your line is open.

Speaker Change: Thank you and our next question comes from Emmanuel Rosner with Deutsche Bank. Your line is open.

Operator: Thank you very much. My first question is, now that the shutdown is completed and the upgrades are completed, could you help us quantify some of the benefits that you're expecting that are under your control? So they were always hoping, you know, to understand it better.

Emmanuel Rosner: Thank you very much my first question is now that the.

Operator: Set down is.

Emmanuel Rosner: <unk> and the upgrades completed could.

Emmanuel Rosner: Could you help us quantify some of the benefit that youre expecting that are in your control. So they were always hoping to understand it better. So you had a $79000 loss per vehicle.

Emmanuel Rosner: In Q1 nine of that is maybe sort of like a run rates so call. It maybe a $30000 loss per vehicles starting point.

Claire McDonough: So you had the $39,000 loss per vehicle in Q1, nine of that maybe sort of like not a run rate. So call it maybe a $30,000 loss per vehicle starting point. How much is realistic for your cost of goods sold or bill of materials to improve as a result of the actions that you have just completed? How much per vehicle could we see in terms of a reduction in the fixed cost? And how much do we have to assume, or do you have to assume in terms of pricing or sort of like extra revenues essentially to get towards that positive gross profit per vehicle?

Emmanuel Rosner: How much is realistic for your cost of goods sold or below <unk> III improve as a result of the actions that you just completed how much for vehicle could we see in terms of reduction on the fixed cost and how much do we have to assume or do you have to assume in terms of pricing or sort of like extra revenues essentially.

Emmanuel Rosner: Get towards that positive growth gross profit per vehicle.

Claire McDonough: Emmanuel, as we look back at our Q4 earnings call, we provided a detailed bridge, and we continue to see line of sight at the execution roadmap to achieve those results in aggregate. As I mentioned in 1 of my responses, the largest variable that we have ahead of ourselves is the reduction in our material costs. And similar to what we saw when we took down time in Q1 of 23 to introduce our new Enduro drive unit, as well as our LFP pack in the EDB itself, where we saw a 35% reduction in material costs.

Speaker Change: Emmanuel as you look back at our Q4 earnings call. We provided a detailed bridge and we continue to see line of sight into at the execution roadmap to achieve those results in aggregate.

Emmanuel Rosner: I mentioned in one of my responses the largest variable that we have ahead of ourselves is the reduction in our material costs.

Emmanuel Rosner: And similar to what we saw when we took downtime in Q1 of 'twenty three to introduce our new <unk> drive unit as well as our LLP pack and then <unk> itself, where we saw 35% reduction in material cost out there is significant cost savings coming through the introduction of.

Claire McDonough: There are significant cost savings coming through the introduction of engineering design driven changes into the R1, as well as some of the material changes that we're making to conserve costs as well. So, there is clear visibility into those reductions on a go forward basis. And similarly, as I mentioned, the improvements in operational efficiency that we'll see with reductions in labor and overhead costs per unit, given the increase of 30% in our line rate, are also going to help enable the semi-fixed cost improvements that we anticipate throughout the course of this year as well.

Claire McDonough: Engineering design, driven changes in tier one as well as some of the material changes that we're making to conserve costs as well.

Emmanuel Rosner: Clear visibility into those reductions on a go forward basis, and similarly, as I mentioned the improvements in operational efficiency that we will see with reductions in labor and overhead cost per unit given the increase in F. 30% in our line rate is also going to help enable that.

Claire McDonough: The semi fixed cost improvements that we anticipate throughout the course of this year as well and then there is dynamics with our depreciation and the fact that this quarter, we had accelerated depreciation going into our retooling upgrade in the plant itself that will start to lap and will come off as we also.

Claire McDonough: And then there's the dynamics with our depreciation and the fact that this quarter we had accelerated depreciation going into our retooling upgrade in the plant itself that will start to lap and will come off as we also begin to fully depreciate some of our original tooling. We'll see a material decrease in that depreciation expense per unit as well. Beyond that, we'll see some additional LCNRV benefits in the back half of the year as we drive towards making money on every single vehicle that we sell.

Emmanuel Rosner: <unk> begin to fully depreciate some of our original tooling that we'll see a material decrease in that depreciation expense per unit as well.

Emmanuel Rosner: Beyond that we will see some additional LCN or be benefits in the back half of the year as we drive towards making money on every single vehicle that we sell and then in terms of the underlying assumptions for.

Claire McDonough: And then, in terms of the underlying assumptions for both volume as well as price points, as we mentioned on our last earnings call, our anticipation is not a significant increase in overall volumes associated with Q4 24, relative to Q4 of 2023, and equally a similar price point from an ASP perspective. So, the revenue per unit driver is really driven by non-vehicular revenue streams, predominantly the sale of regulatory credits. We've seen a really robust appetite for our regulatory credits in the market, especially with many OEMs stepping back away from some of their electrification plans, and then equally, the ongoing sales of software and services revenues as well as our remarketing revenue streams that will enable Rivian to achieve a positive gross profit in the fourth quarter. Okay, that's helpful.

Emmanuel Rosner: Volume as well as price points as we mentioned on our last earnings call. Our anticipation is is not a significant increase in overall volumes associated with Q4 hundred 24 relative to Q4 of 2023 and equally a similar price point from an ASP perspective, so that the revenue.

Emmanuel Rosner: Per unit driver is really driven by non vehicle revenue streams.

Emmanuel Rosner: Predominantly yes.

Claire McDonough: The sale of regulatory credits, we've seen a really robust appetite for our regulatory credits in the market, especially with many Oems.

Claire McDonough: Stepping back away from some of their electrification plans and then equally the ongoing sales of our software and services revenues as well as our marketing revenue streams.

Claire McDonough: Will enable <unk> to achieve a positive gross profit in the fourth quarter.

Speaker Change: Okay. That's helpful. And then just one follow up on the volume side I think you made a comment.

Claire McDonough: And then just one follow-up on the volume sign. I think you made a comment in the prepared remarks that now that the shutdown is completed, you have 56,000 units of annual capacity for R1 on two shifts. Is this sort of like the right volume to think about now on a go-forward basis for Rivian all the way until R2 launches in the first half of 2026? So, essentially, a maximum of, you know, 56,000 units of R1 minus any shutdown impact that you may have, let's say next year, plus some level of growth in EDDs. But is that 56,000 essentially the max we'll see in terms of annual R1 capacity? And then it's, Sure, so there's a couple of points I want to make.

Emmanuel Rosner: In the prepared remarks that now.

Emmanuel Rosner: Now that.

Emmanuel Rosner: The shutdown has competed.

Emmanuel Rosner: You have 56000 units of annual capacity for our one on two shifts.

Emmanuel Rosner: Is this sort of reflects derived <unk>.

Emmanuel Rosner: <unk> to think about now on a go forward basis Caribbean all the way until our two launches in the first half of 2026 are essentially a maximum of 56000 units.

Emmanuel Rosner: Minus any shutdown impacts that you may have lets say next year plus some level of growth in <unk>, but as it is at 56000 essentially the Max we will see in terms of annual capacity and then these are true that comes on top of it.

Sure: Sure. So there's a couple of points I wanted to make and first as we think about the longer term introduction of our two than normal.

Claire McDonough: First, as we think about the longer-term introduction of R2 and normal, we're building capacity towards 215,000 units in aggregate. And that can shift between our 3 vehicle lines, where we'll have 85,000 units of maximum capacity for R1, 65,000 units of capacity for commercial vans, and 155,000 units of capacity for R2. So within that matrix, we'll have the ability to flex volumes to stay within the bounds of the 215,000 units of total maximum capacity. And so that could be achieved, for example, running 2 shifts on R1, full 3 shifts on R2, and a single shift on commercial vans.

Emmanuel Rosner: Building capacity towards 215000 units in aggregate and that can shift between our three vehicle lines, where we will have 85000 units a maximum capacity for our 165000 units of capacity for our commercial vans and 155000 units.

Emmanuel Rosner: Past me for our two so within that matrix will have the ability to flex volumes to stay within the bounds of the 215000 units of total maximum capacity and so that could be achieved for example, running two shifts on our one full three shifts on our Q and a single.

Claire McDonough: Sure.

Claire McDonough: On commercial vans. So there is flexibility as we think about the longer term volumes, but it is accurate as you noted that the.

Claire McDonough: So there's flexibility as we think about the longer-term volumes, but it is accurate, as you noted, that the R1 volumes will be 56,000 units based on the 2 shift operation. Great, thank you.

Claire McDonough: Our wine volumes will be 56000 units based off of a two shift operation.

Speaker Change: Great. Thank you.

Operator: Thank you. And our next question comes from Shreyas Patil with Wolf Research. Your line is open.

Claire McDonough: Thank you and our next question comes from <unk> Patil with Wolfe Research. Your line is open.

Operator: Hey, thanks a lot for taking my question. RJ, I'm just curious about the speed at which you could ramp up R2 as we move into 26. I know it's still early, but with a lot of the innovations that you've already talked about around giga castings and structural battery packs, the simplified ECU architecture, just how should we think about the pace at which you could get to volume production once R2? There are just three elements I'd call out.

Patil: Hey, Thanks, a lot for taking my question.

Patil: I'm just curious how we should think about the speed at which you could ramp up or two as we as we move into 2006.

Operator: I know, it's still early but with a lot of the innovations that you've already talked about around.

Patil: Data castings and structural battery packs, the new simplified issue.

Operator: Architecture, just how should we think about the pace.

Patil: At which you could get to volume production once onto gets going.

Robert Joseph Scaringe: The first is just our experience of learning and growing as a company in terms of managing and running a launch. And, you know, if I wind the clock back to when we first launched R1T, relative to where we are today, the strength of our operations organization, the strength of our launch teams, and then the strength of our entire development process as that blends into the launch process is so much higher, given the number of products we've launched and the number of iterations we've gone through there. So with that said, the key enablers for a smooth launch are, first and foremost, making sure the supply base can support the launch.

Operator: <unk> three.

Speaker Change: Three elements I would callout. The first is just our experience.

Patil: And learning and growth as a company in terms of managing and running a launch and.

Patil: Wind the clock back when we first launched our <unk> relative to where we are today.

Patil: The strength of our operations organization the strength of our launch teams and then the strength of our entire development processes that blends into the launch process.

Robert Joseph Scaringe: Is so much higher given the number of products, we've launched and the number of iterations who've gone through there so with that said.

Patil: Key enablers for a smooth launch of our first and foremost making sure the supply base can support the launch and so we've built.

Robert Joseph Scaringe: And so we've built a robust supply chain team that not only is responsible for repairing those supplier relationships and putting in place those contracts, but importantly, also ensuring the development of those components and the launch of those components are at the quality levels that will support the rapid ramp up of our plan. And, of course, it's in the interest of the supplier to also have a rapid ramp up. Everybody wants to ramp up as quickly as possible.

Patil: Our robust supply base.

Patil: Our supply chain team that.

Patil: Is that not only is responsible procuring those supplier relationships and putting in place those contracts, but importantly also.

Patil: Ensuring the development of those components and the launch of its components.

Patil: Our asset quality levels that will support a.

Patil: The rapid ramp up of our plan and of course, it's in the interest of the suppliers saw some rapid ramp up everybody wants to ramp as quickly as possible.

Robert Joseph Scaringe: So the health of not only our process but the health of the way we're managing the supply base for R2, and I should say that should be evidenced by what we will see and what we'll demonstrate here with the re-ramp post this launch. We've also seen it with the ramp of our in-house drive units.

Patil: So so the health of not only our process, but the health of the way, we're managing the supply base for our two and I should say that's been should be evidenced by what we will see what will demonstrate here.

Patil: With the re ramp post this launch.

Patil: We've also seen it with the ramp of our in House drive units, we've seen it with the re ramp of our <unk> program.

Robert Joseph Scaringe: We've seen it with the re-launch of our EDV program. But the last item I'd call out is just the nature of the product has been designed from the get-go to also ramp up easily, so really heavy focus on an efficient design and a design that allows us to very easily put the vehicle together and takes away any of the risk items that we've either encountered on R1 or have addressed in R1 over the last two years. Okay, thanks a lot.

Patil: But the last item I'd call out.

Patil: It's just the nature of the product has been designed from the get go to also ramp for easily so really heavy focus.

Patil: And efficient design and a design that allows us to very easily put the vehicle together and takes away any of the risk items that we've either encountered on our won or have addressed in our won over the last few years.

Speaker Change: Okay, alright, thanks, a lot.

Claire McDonough: And maybe just a point of clarification for Claire, you know, when you talk about reaching gross profit in the fourth quarter of this year. First, is that a run rate figure for Q4? And then, secondly, does that exclude the various cost of revenue efficiency initiatives that you've talked about? It looks like that's being excluded from the EBITDA calculation. I just wanted to make sure if that's also excluded from gross profit.

Speaker Change: And maybe just a point of clarification for clear when you talked about.

Claire McDonough: Reaching gross profit in the fourth quarter.

Claire McDonough: This year first of all is that a run rate figure for Q4 and then.

Speaker Change: Secondly, does that exclude the various cost of revenue efficiency initiatives that you've talked about it looks like thats been excluded from the EBITDA calculation I just wanted to make sure. If that's also excluded from the gross profit target.

Speaker Change: Sure sure yes.

Claire McDonough: As we look to Q4, we don't expect there to be some of those similar charges as we had in Q1 of this year that were really predominantly related to the Peregrine shutdown and some of the changes in supplier contracts that we mentioned earlier. So we do expect Q4 to be gross profit positive for the quarter, and that sets us up nicely as we think about achieving positive gross profit for the full year of 2025 on a go-forward basis as well. Okay, great. Thanks a lot.

Claire McDonough: Looked at Q4, we don't expect there to be some of those similar.

Patil: Similar charges as we had in <unk>.

Patil: In Q1 of this year that we're really predominantly related to add that paragon shutdown and some of the changes in supplier contracts that we mentioned it's also so we do expect.

Patil: Q4 to be gross profit positive for.

Patil: For the quarter and that sets us up nicely as we think about it.

Claire McDonough: Keeping positive gross profit for that full year 2025 on a go forward basis as well.

Claire McDonough: Okay, great. Thanks, a lot.

Speaker Change: Thank you.

Operator: Thank you. And our last question comes from Joseph Spak with UBS. Your line is open.

Claire McDonough: Our last question comes from Joseph Spak with UBS. Your line is open.

Operator: Thank you very much, team. Claire, just to go back to the capacity commentary, because I know you said after launch that the plan changes. My understanding was that 215 requires an additional paint shop. Is that still accurate?

Joseph Robert Spak: Thank you very much team.

Joseph Robert Spak: Claire just to go back to.

Joseph Robert Spak: The capacity commentary because I know you said after launch and plan changes.

Joseph Robert Spak: My understanding was that that 215 requires in addition.

Joseph Robert Spak: Paint shop is that still accurate than like what's sort of the.

Claire: The timing for that because I like is that going to be in advance of the <unk> launch are you going to sort of.

Claire: Wait to see how the RSV launches have gone before you start having some of that capacity.

Claire McDonough: Sure Kevin.

Claire McDonough: And like, what's sort of the timing for that? Because I wonder if that is going to be in advance of the R2 launch? Are you going to sort of, you know, wait to see how the R2 launch is going before you start adding some of that capacity? Sure, Joe. As we look at the paint shop capacity in the plant, we're evaluating a number of different strategies to achieve the 215,000 units of total capacity.

Claire: Look at the paint shop capacity in the plant.

Kevin: We're evaluating a number of different strategies to achieve that 215000 units of total capacity and so that.

Claire McDonough: And so that could be within our existing paint shop; that could be adding additional capacity beyond that. So it's something we're actively looking at and studying. Unknown Speaker, Unknown Speaker, great in the paint shop or the current capacity of the paint shop. It's below that 215.

Joe: And that could be within our existing paint shop that could be adding additional capacity beyond that.

Kevin: Something we're actively looking at and studying.

Kevin: And remember.

Great: Great and the paint shop or the current capacity of the paint shop them.

Kevin: So that $2 15.

Claire McDonough: The current capacity is 150,000 units in the paint shop. Okay. And then RJ, just on the demand generation activities, like the 28k demo rides, 91% increase like that, that feels significant. You mentioned that's an effective demand generation strategy. Obviously, getting potential customers in the vehicle is great. Is there anything you could tell us about conversion?

Kevin: The current capacity is 150000 units in the paint shop.

Joseph Robert Spak: Okay.

Joseph Robert Spak: And then R. J just on the demand generation activities like the 20 8-K demo rides and 91% just like that.

Claire McDonough: Significant.

Joseph Robert Spak: <unk>.

Claire McDonough: You mentioned Thats, an effective demand generation strategy, obviously getting potential customers the vehicle is great.

Claire McDonough: Is there anything you could tell us about two version or like how should we measure that like they're more context should we take that 20 8-K demos because last quarter you mentioned.

Robert Joseph Scaringe: Or like, how should we like measure that? Like, in what context should we take 28k demos? Because, you know, last quarter, you mentioned that the guide is dependent on improvement in the order book, and it seems like this is what would help drive that. So I think it's important to understand how we, like, either convert or what sort of context we should take.

Robert Joseph Scaringe: Right. The guide is dependent on improvement in the order book and it seems like this would help drive that so I think it's important to understand.

Speaker Change: How are you.

Joseph Robert Spak: Either conversion or what sort of context, we should take that number.

Robert Joseph Scaringe: Yeah, Joe, as I said in my opening remarks, demo drives are a really critical focus for us, in terms of expanding awareness of the brand, topple funnel demand, and then translating that topple funnel demand all the way down through purchase. And so those 28,000 test drives or demo drives that we gave in Q1, that's roughly a 90% increase over what we did in Q4 of 2023. So it was a significant step up, and it was...

Speaker Change: Yes Jos.

Speaker Change: A sudden opener opening remarks demo drives is a really critical focus for us.

Speaker Change: In terms of expanding awareness of the brand's top of funnel demand and then translating that top of funnel demand all the way down through <unk>.

Robert Joseph Scaringe: And so that 28000 test drives for demo jobs that we.

Robert Joseph Scaringe: Gave in Q1, that's roughly a 90% increase over what we did in Q4 of 2023. So it was a significant step up in it it was.

Robert Joseph Scaringe: The result of us also leveraging our service network to administer a lot of those test drives. We're really encouraged by the results of that program. But it's one of many initiatives we have. And I do want to just make sure I call out that we've also continued to expand our leasing program, which now includes R1S. We launched the R2 and the R3, which had an outstanding effect of just creating awareness around the brand, and we were encouraged by the early results that we're seeing. So you're satisfied with that improvement in the order book to hit the guidance for the year? Yeah, as I said, we're encouraged by what we've done so far. And, of course, satisfied is a funny word.

Speaker Change: The result of US also leveraging our.

Robert Joseph Scaringe: Service network to administer a lot of those test drives and we're really encouraged by the results.

Robert Joseph Scaringe: Of that program, but its one of many initiatives, we have and I do want to just make sure I call out. We've also continued to expand our leasing program, which now includes our warehouse.

Speaker Change: We launched.

Robert Joseph Scaringe: Tier two and the <unk>, three which had an outstanding effect of just creating awareness around the brand.

Robert Joseph Scaringe: And we were encouraged by the early results that we're seeing.

Robert Joseph Scaringe: So you are satisfied with that improvement in the order book.

Speaker Change: To hit the guidance for the year.

Robert Joseph Scaringe: I'd say my job is to never be satisfied. But I'd say we're very encouraged. Okay, thank you. Thank you. That's all the time we have for questions.

Speaker Change: As I said, we're encouraged.

Robert Joseph Scaringe: With what we've done so far and of course satisfies a funny word I would say Mike.

Robert Joseph Scaringe: My job is to never be satisfied, but I'd say, we're very encouraged.

Speaker Change: Thank you.

Robert Joseph Scaringe: I'd like to turn the call back over to RJ Scaringe for closing remarks. Well, thanks, everyone, for joining us on the call today. You know, we've talked to Claire and I for the last few quarters about the shutdown that we just completed and are now re-ramping R1 production, following that. This was a really important step for us. It was a critical step in order to achieve the long-term gross margin potential of the R1 platform and, of course, therefore, the normal site.

Thank you that's all the time, we have for questions I'd like to turn the call back over to R. J Reynolds for closing remarks.

Robert Joseph Scaringe: The execution that went into that from our teams and the precision through which that was pulled off, we're proud of, and we look forward to starting to see the numbers from that body of work flow into financials and be able to talk about it in the context of these calls. But... With that, we're also happy to now have a physical and visual representation of our future products when we talk about R2.

Robert Joseph Scaringe: Well, thanks, everyone for joining us on our call today.

Speaker Change: We've talked to clarify for the last few quarters about the shutdown that we just.

Robert Joseph Scaringe: We've just completed and are now re ramping our one production following that.

Speaker Change: This is a really important step for us it was a critical step.

Operator: In order to achieve the long term gross margin potential of the <unk> platform and of course, therefore, the normal site.

Claire McDonough: The execution that went into that from our teams and the precision through which that was that was pulled off we're proud of and we look forward to starting to see the numbers from that that body of work.

Speaker Change: Flow into into the financials will be able to talk about it in the context of these calls.

Robert Joseph Scaringe: But.

Robert Joseph Scaringe: With that we're also happy to now have a physical and visual representation of our future products. When we talk about our two so it's not just an esoteric idea of a future product, but actually you can see very specifically, how we see ribbon.

Robert Joseph Scaringe: So it's not just an idea of a future product, but actually, you can see very specifically how we see Rivian expanding to more affordable markets and lower price point vehicles. And the team is incredibly focused on driving efficiency and driving cost effectiveness into the business across every aspect of what we do.

Speaker Change: Adding to more addressable markets and lower price point vehicles.

Robert Joseph Scaringe: The team is incredibly focused on driving efficiency and driving.

Robert Joseph Scaringe: Cost effectiveness into the business across every aspect of what we do.

Speaker Change: We'll see the most of US the improvements, we're making in Cogs and bill of materials, that's conversion cost.

Robert Joseph Scaringe: Talked about that also ties to even starting to realize some of the benefits of our accelerated depreciation of equipment, but we will see that heavy focus continue its.

Robert Joseph Scaringe: Cultural drive within the entire business.

Robert Joseph Scaringe: And we are excited about going through the rest of this year and the path to demonstrating that through the gross margin profitability of our one.

Robert Joseph Scaringe: And then of course as that translates to our two launching in early 2026.

Speaker Change: So thank you. Thank you everybody for joining and look forward to our next call.

Speaker Change: Thank you for your participation. This does conclude the program and you may now disconnect everyone have a great evening.

Robert Joseph Scaringe: Okay.

Robert Joseph Scaringe: [music].

Robert Joseph Scaringe: Okay.

Robert Joseph Scaringe: [music].

Robert Joseph Scaringe: Okay.

Robert Joseph Scaringe: Yeah.

Robert Joseph Scaringe: [music].

Robert Joseph Scaringe: Okay.

Robert Joseph Scaringe: [music].

Robert Joseph Scaringe: What we'll see most of is the improvements we're making in COGS and that's bill of materials, that's conversion costs. As Claire talked about, that also ties to even starting to realize some of the benefits of our accelerated depreciation of equipment. But we'll see that heavy focus continue.

Speaker Change: Good day, and thank you for standing by.

Speaker Change: Welcome to the Arabian first quarter 2024 earnings conference call. At this time, all participants are listen only mode. After the speaker's presentation there'll be a question answer session to ask a question you will need to press star one one.

Speaker Change: Please be advised that today's conference is being recorded.

Operator: It's a cultural drive within the entire business, and we are excited about going through the rest of this year and the path to demonstrating that through gross margin profitability of R1. And then, of course, that translates to R2 launching in early 2026. So thank you everybody for joining us and look forward to our next call. Thank you for your participation. This does conclude the program. You may now disconnect. Everyone, have a great evening. [inaudible] Now, I want to thank you for standing by.

Robert Joseph Scaringe: Now to hand, the conference over to your host.

Operator: Jim <unk>, Vice President Investor Relations you may begin.

Operator: Welcome to the Rivian First Quarter 2024 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, you will need to press star 1 1.

Speaker Change: Good afternoon, and thank you for joining us for radians first quarter 2024 earnings call before we begin matters discussed on this call, including comments and responses to questions reflect managements views as of today, we will also be making statements related to our business operations and financial performance that may.

Operator: Be considered forward looking statements under federal Securities laws.

Operator: Such statements involve risks and uncertainties that could cause actual results to differ materially.

Operator: These risks and uncertainties are described in our SEC filings and today's shareholder letter. During this call. We will discuss both GAAP and non-GAAP financial measures a reconciliation of GAAP to non-GAAP financial measures is provided in our shareholder letter just before the call. We published our shareholder letter which include an overview of our progress over there.

Operator: Please be advised that today's conference is being recorded. I would now like to hand the conference over to your host, Tim Bei, Vice President of Investor Relations. You may begin.

Operator: Recent months I encourage you to read it for additional details around some of the items, we'll cover on today's call with that I'll turn the call over to RJ, who will begin with a few opening remarks.

Timothy Francis Bei: Good afternoon, and thank you for joining us for Rivian's first quarter 2024 earnings call. Before we begin, matters discussed on this call, including comments and responses to questions, reflect management's views as of today. We will also be making statements related to our business operations and financial performance that may be considered forward-looking statements under federal securities law. Such statements involve risks and uncertainties that could cause actual results to differ materially.

Speaker Change: Thank you, Tim Hello, everyone and thanks for joining us today during our call I will highlight key developments in the first quarter and provide an update from the expected progress, we're making against our value drivers first quarter results exceeded our outlook and set a strong foundation for the remainder of the year as we focus on continued demand generation delivering cost and plant efficiency improvements.

Robert Joseph Scaringe: Advancing our two development and driving towards profitability, we continue to make strong progress across each of these goals.

Robert Joseph Scaringe: Before discussing key developments during the quarter I want to congratulate the team on producing our 100000 vehicle at our plant at normal and successfully navigating our plant retooling upgrade while we focus on the work ahead, it's incredible to see what our team has accomplished across our consumer and commercial vehicle platforms.

Robert Joseph Scaringe: I also want to highlight the uniqueness of what we're building at Radian, we have developed a technology platform and brand that are truly differentiated our vertically integrated hardware and software capabilities enable continuous enhancements to the product our ability to improve and add features across autonomy battery management digital experience body control vehicle dynamics in telematics helped deliver an elevated ownership.

Robert Joseph Scaringe: We have developed a technology platform and brand that are truly differentiated. Our vertically integrated hardware and software capabilities enable continuous enhancements to the product. Our ability to improve and add features across autonomy, battery management, the digital experience, body control, vehicle dynamics, and telematics helps deliver an elevated ownership experience for both our consumer and commercial offerings. We also recently transitioned to a new zonal network architecture, which reduced the number of electronic control units in our vehicle by approximately 60%, taking substantial costs out of our vehicle. The feedback on our products has been incredible.

Robert Joseph Scaringe: Experience for both our consumer and commercial offerings.

Robert Joseph Scaringe: We also recently transitioned to a new zone network architecture, which reduced the number of electronic control units in our vehicle by approximately 60% taking substantial cost out of our vehicles.

Robert Joseph Scaringe: The feedback on our products have been incredible since the start of production. We've introduced approximately 30 over the air updates and through an owner satisfaction survey conducted by consumer reports <unk> was recognized as the number one automotive brand with the highest likelihood.

Robert Joseph Scaringe: Since the start of production, we have introduced approximately 30 over-the-air updates, and through an owner satisfaction survey conducted by Consumer Reports, Rivian was recognized as the number one automotive brand with the highest likelihood for customers to purchase again. In launching the R1 platform, our goal is to create a brand that deeply resonates with customers. During the first quarter of 2024, Rivian was the fifth best selling EV maker in the United States, with a market share of 5.1%.

Robert Joseph Scaringe: For customers to purchase again.

Robert Joseph Scaringe: And launching Darwin platform. Our goal is to create a brand that deeply resonates with customers.

Robert Joseph Scaringe: The first quarter of 2020 for ribbon was the fifth best selling EV maker in the United States with a market share of five 1%.

Robert Joseph Scaringe: Our vehicles have driven more than 900 million cumulative miles, and our brand awareness and market position continue to grow. Additionally, the R1T is the only pickup in the United States to receive the Top Safety Pick Plus Award from the Insurance Institute for Highway Safety.

Robert Joseph Scaringe: Our vehicles are driven more than 900 million cumulative cumulative miles and our brand awareness and market position continues to grow.

Robert Joseph Scaringe: Additionally, the <unk> is the only pick up the United States to receive the top safety pick plus award from the Insurance Institute for Highway safety.

Robert Joseph Scaringe: Building on this the results of our recently implemented demand generation and brand awareness strategies have been encouraging we hosted over 28000 demo drivers in the first quarter of 2024, an increase of 90% versus the fourth quarter of 2023.

Robert Joseph Scaringe: We recently launched our when its leasing and grew the number of states with this offering.

Robert Joseph Scaringe: While the broader vehicle market is still experiencing challenges. We are encouraged by the early results of our initiatives and have confidence in our 2020 forward delivery outlook in.

Robert Joseph Scaringe: In March we unveiled our new mid size platform, which underpins VR two or three in archery X products is great to see the outstanding support for our brand and upcoming products are.

Robert Joseph Scaringe: <unk> is our versatile new midsize SUV with room for five people that captures the essence Arabian it's built for ventures as well as everyday use with its exceptional utility performance and capability.

Robert Joseph Scaringe: It's built for adventures as well as everyday use with its exceptional utility, performance, and capability. We expect the price to start at $45,000, with delivery slated to begin in the first half of 2026. R3 is our midsize crossover. This unique vehicle is tidy in dimensions but delivers big in terms of performance, passenger comfort, and storage. R3X is a performance variant of R3, offering even more dynamic abilities both on and off-road. R3 demonstrates the scalability of Rivian across different form factors and segments.

Robert Joseph Scaringe: We expect the prices start at $45000 with delivery slated to begin in the first half of 2026, our threes or mid sized crossover this unique vehicles tidy and dimensions, but delivers big in terms of performance passenger comfort and storage.

Robert Joseph Scaringe: <unk> exited performance variant of our three offering even more dynamic abilities, both on and off road.

Robert Joseph Scaringe: Our three demonstrates the scalability of riveting across different form factors and segments that will be priced below our two and deliveries will start after our two to ensure smooth launch and rapid ramp.

Robert Joseph Scaringe: It'll be priced below R2, and deliveries will start after R2 to ensure a smooth launch and rapid ramp. With these new products, our goal is to take the desirability and brand strength we've established for our R1 products, with the R1S remaining the best-selling EV over $70,000 in the United States, and translate this strength to a much larger addressable market. Our mid-size platform leverages key technologies developed for R1, including our in-house software, in-vehicle electronics, propulsion, and battery technology, and our high-voltage platforms, with a goal to deliver dramatically simplified and lower-cost vehicles relative to R1.

Robert Joseph Scaringe: With these new products our goal is to take the desirability and brand strength, we've established for our own products.

Robert Joseph Scaringe: With the rns remaining the best selling EV over $70000, United States and translate this strength to a much larger addressable market.

Robert Joseph Scaringe: Our mid size platform Leverages key technologies developed for our one including our in house software in vehicle electronics propulsion in battery technology, and our high voltage platforms with a goal to deliver dramatically simplified and lower cost vehicles relative to <unk> or.

Robert Joseph Scaringe: Our massive focus on cost and efficient manufacturing for our tune. Our three is achieved by deeply analyzing every system and associated component and asking if it can be simplified or through opportunities for park consolidation or elimination.

Robert Joseph Scaringe: Use of large high pressure die casting in the body structure, a structural battery pack whereby the top of the batteries for the vehicle further simplification of the electrical system and associated wiring harness through a focus on electronic control unit designed topology are just a few examples of how we're using innovation to drive down costs.

Robert Joseph Scaringe: Beyond engineering opportunities when compared to our one or two also has significant cost opportunities through competitive sourcing.

Robert Joseph Scaringe: At the unveil of our too we announced accelerating to start production in the first half of 2026 and reducing our capital needs for the launch of our two by starting production of our too and our normal plant.

Robert Joseph Scaringe: This will provide flexibility to manufacturing estimated 215000 total annual units per year, which includes up to 155000 units of our two star.

Robert Joseph Scaringe: Starting our two production and normal is expected to save over $2 5 billion.

Robert Joseph Scaringe: Between now and to start production as compared to the original plan of launching the first line of our two production and revenues, Georgia site.

Robert Joseph Scaringe: Incremental to the $2 5 billion and expected savings, we recently announced an incentive package from the state of Illinois with a value of up to $827 million. We're excited to grow our community of normal and continue our partnership with the state of Illinois.

Robert Joseph Scaringe: Turning to our recent tooling upgrades in our normal facility, the team made meaningful progress, and we are now back to producing R1 vehicles on our production line. The upgrade introduced new technologies and cost-focused material changes into the R1 vehicle platform. The plant retooling upgrade also provided the opportunity to improve manufacturing processes that enabled the R1 line to run at approximately 30% higher line rates. In addition, we improved the flow of materials and inventory in the plant.

Robert Joseph Scaringe: Turning to our recent tooling upgrades in our normal facility. The team made meaningful progress and we are now back to producing our own vehicles on our production line.

Robert Joseph Scaringe: We upgrade and introduce new technologies and cost focus material changes into the <unk> vehicle platform.

Robert Joseph Scaringe: Retooling upgrade also provided the opportunity to improve manufacturing processes.

Robert Joseph Scaringe: They are one line to run at approximately 30% higher line rate.

Robert Joseph Scaringe: In addition, we improved the flow materials and inventory and the plan. These.

Robert Joseph Scaringe: These changes are expected to improve cycle time utilization and cost.

Claire McDonough: The opportunity ahead is significant we hope a deep conviction that the entire automotive industry will electrify over the long term and we continue to take the necessary steps to best position <unk> as a leader in this transition with.

Claire McDonough: We look forward to sharing more details around our strategy progress and outlook in late June when we host our Investor day.

Claire McDonough: I would like to thank all those who continue to support our vision, including employees customers partners suppliers communities and shareholders.

Robert Joseph Scaringe: With that I'll pass the call to Claire.

Claire McDonough: Thanks, RJ I wanted to start by reiterating the significant progress and strong results achieved during the first quarter.

Claire McDonough: We exceeded our first quarter delivery outlook successfully completed our plant retooling upgrade and are making progress on our path to profitability.

Claire McDonough: During the first quarter, we produced 13980 vehicles and delivered 13588 vehicles, which represented the primary driver at the $1 2 billion.

Claire McDonough: Revenue we generated.

Claire McDonough: Our first quarter results did not include any meaningful regulatory credit sales.

Claire McDonough: Just on discussions with potential customers and executed contracts, we expect the sale of regulatory credits to increase in the second half of the year.

Claire McDonough: Total gross profit for the quarter was negative $527 million.

Claire McDonough: Our gross profit loss per vehicle delivered was approximately $39000, which includes $15500 and depreciation and $1700 of stock based compensation expense.

Claire McDonough: Our results were negatively impacted by approximately $9300 per vehicle delivered as part of our cost of revenue efficiency initiatives, which we don't anticipate to be part of our long term cost structure.

Claire McDonough: We continue to move closer to making money on every vehicle we sell.

Claire McDonough: We expect to see meaningful improvement in our gross profit during the second half of this year and believe we will reach a positive gross profit for the fourth quarter.

Claire McDonough: Our confidence is underpinned by the actions we have taken within our control specifically, we expect the rethink completion of the tooling upgrade and normal result in meaningful cost improvements and are one and the manufacturing line.

Claire McDonough: Specifically, we expect the recent completion of the tooling upgrade to result in meaningful cost improvements in R1 and the manufacturing line. The upgrade includes the integration of R1 engineering design changes and newly negotiated supplier components that will drive significant cost reductions in our bill of materials. Additionally, fixed costs will benefit from improved manufacturing efficiencies, a reduction in our loss reserve, as well as a reduction in our depreciation expense as we fully depreciate our original tooling for R1 and RCB. Our adjusted EBITDA for the quarter was negative $798 million, which was in line with our expectations.

Claire McDonough: The upgrades include the integration of <unk> engineering design changes and newly negotiated supplier components that will drive significant cost reductions in our bill of materials.

Claire McDonough: Additionally, fixed costs will benefit from improved manufacturing efficiencies reduction in our loss reserve as well as a reduction in our depreciation expense as we fully depreciate, our original tooling for our wine and RCB.

Claire McDonough: Our adjusted EBITDA for the quarter was negative $798 million, which was in line with our expectations.

Claire McDonough: During the first quarter, we experienced elevated cash usage in part due to increased accounts receivable and inventory balances.

Claire McDonough: Consistent with our commentary on our fourth quarter 2023 earnings call at the end of the first quarter. We had a few thousand vehicles, which were built but not yet counted towards our production since they were awaiting part.

Claire McDonough: These work in progress vehicles impacted our first quarter inventory. However, they are now complete and will be counted in the second quarter production.

Claire McDonough: Between this dynamic and our efforts to reduce our raw material inventory balances, we expect to generate a slight cash benefit from working capital for the year over.

Claire McDonough: Over the next 18 months, we plan to reduce our gross inventory balance by more than 25%, providing a significant working capital benefit.

Claire McDonough: I wanted to take a moment to emphasize the significant steps being taken to drive greater capital efficiency throughout the business.

Claire McDonough: These actions include starting production of <unk> in normal driving material costs down increasing manufacturing and production efficiency, reducing operating and capital expenditures and optimizing working capital.

Claire McDonough: These actions are expected to extend our existing cash balance to fund operations through the launch of <unk> in the first half of 2026.

Claire McDonough: As already mentioned our decision to launch our two in normal provides the plant with more flexibility and is expected to reduce our cash usage by over two and a quarter $1 billion.

Claire McDonough: Through its launch in the first half of 2026.

Claire McDonough: We anticipate that most of the work to integrate <unk> into our normal facility will happen in 2025 and as a result, the plant will be down for a few weeks next year.

Claire McDonough: We recently completed the plant retooling upgrade than normal.

Claire McDonough: This is a pivotal step in driving greater efficiency in our one through a reduction in variable and semi fixed costs.

Claire McDonough: We expect lower variable cost to be the largest driver of gross profit improvement in 2024.

Claire McDonough: We are also beginning to see some of the benefits from our Q sourcing on our one and edd cost downs with strategic suppliers.

Claire McDonough: We are making progress driving greater fixed cost efficiencies by transitioning to two shifts from three shifts on the <unk> line.

Claire McDonough: This is made possible by our planned 30% increase in line right.

Claire McDonough: On a two shift operation annual <unk> capacity will be approximately 56000 units.

Claire McDonough: While we don't expect to fully realize these benefits until the second half of 2024, we believe these changes position Rivian to exit 2024 with a much improved margin profile. In addition, since the beginning of the year, we've made meaningful progress optimizing operating expenses. We expect our adjusted operating expenses for the year to be down slightly as compared to 2023, with the second half operating expenses expected to be significantly below the first half.

Claire McDonough: While we don't expect to fully realize these benefits until the second half of 2024. We believe these changes position remain to exit 2024 with a much improved margin profile in.

Claire McDonough: In addition, since the beginning of the year, we've made meaningful progress optimizing operating expenses.

Claire McDonough: We expect our adjusted operating expenses for the year to be down slightly as compared to 2023 with the second half operating expenses expected to be significantly below the first half.

Claire McDonough: We believe this enables <unk> to start 2025 with a more efficient baseline cost structure.

Claire McDonough: We are confident these changes best position <unk> to extend its cash runway improve long term profitability and gain market share.

Claire McDonough: We believe that operating normal at 215000 units of annual production, while executing against our cost efficiency roadmap will allow the business to generate positive free cash flow excluding growth capital investments in new production capacity turning to our guidance. We are reiterating our 2024 production guidance of 57.

Claire McDonough: 1000 vehicles as RJ mentioned, we're encouraged by the early results of our go to market and brand awareness activities, which the team has put in place over the past quarter <unk>.

Claire McDonough: Confidence that total deliveries for the year will grow by low single digits for both our one as well as our commercial vans as compared to 2023.

Claire McDonough: We are also reiterating our 2024 adjusted EBITDA guidance of negative $2 7 billion.

Claire McDonough: We continue to look for ways to rationalize our capital expenditures in Q2, the decision to move the first line of <unk> production to normal we are reducing our 2020 for capex guidance by $550 million to $1 2 billion.

Claire McDonough: We expect the savings from this decision will also impact 2025, Capex, which we expect to be approximately $1 5 billion.

Claire McDonough: Additionally, we plan to receive approximately $100 million in cash proceeds from the state of Illinois. This year to help fund our normal plant expansion.

Claire McDonough: Over the long term, we continue to see a clear path to our approximately 25% gross margin target, high teens adjusted EBITDA margin target, and approximately 10% free cash flow margin target. I want to again thank our team, partners, customers, suppliers, and shareholders for their tremendous support. With that, let me turn the call back over to the operator to open the line for Q&A. Thank you. If you'd like to ask a question, please press star 1 1. If your question has been answered and you'd like to remove yourself from the queue, please press star 11 again.

Claire McDonough: Over the long term, we continue to see a clear path to our approximately 25% gross margin target high teens, adjusted EBITDA margin target and approximately 10% free cash flow margin target.

Claire McDonough: I wanted to again, thank our team partners customers suppliers and shareholders for their tremendous support.

Claire McDonough: With that let me turn the call back over to the operator to open the line for Q&A.

Claire McDonough: Thank you if you'd like to ask a question. Please press star one one.

Claire McDonough: If your question has been answered and you'd like to remove yourself from the queue. Please press star one again, we ask that you. Please limit yourself to one question and one follow up.

Operator: We ask that you please limit yourself to one question and one follow-up. Our first question comes from Mark Delaney with Goldman Sachs. Your line is open. Yes, good afternoon.

Claire McDonough: Our first question comes from Mark Delaney with Goldman Sachs. Your line is open.

Operator: Thanks very much for taking the questions. Claire, you said you had confidence that there could be some growth in deliveries this year, and you talked about some good traction that you've seen from some of the initiatives, including rolling out leasing to more states and also the new variants like Standard Pack that have become available. I'm wondering if you could elaborate a bit more on some of those items and share what's giving you the confidence to guide for some modest delivery volume growth. Q1 was the first quarter that we introduced leasing for R1F, and we've now been able to expand the number of states that we offer leasing up to 32, and we'll be adding that to north of 40 over the coming quarters as well.

Mark Delaney: Yes. Good afternoon, thanks, very much for taking the questions clear you said you have confidence that there could be some growth in deliveries this year and you talked about.

Operator: Good traction that you've seen from some of the initiatives, including rolling out leasing to more states and also the new variants like standard pack that have become available.

Operator: Elaborate a bit more on some of those.

Operator: Some of those items and share what's giving you the confidence to guide for some modest delivery volume growth this year.

Claire McDonough: Thanks, Mark as we think about our broader confidence around demand, it's really driven by some of the early results that we've seen from our go to market initiatives, including the launch of leasing Q1 was the first quarter that we introduced leasing for rns and we've now.

Operator: Been able to expand the number of states that we offer leasing up to 32, and we will be adding that to north of 40 over the coming quarters as well.

Operator: As evidenced by some of the inclusions in the 20,000 test drives that we've had over the course of this quarter, getting more customers into the driver's seat has certainly been a compelling tactic for us as well.

Operator: As evidenced by some of the inclusion on the 20000 test drives that we've had over the course of this quarter getting more customers into the drivers seat has certainly been a compelling tactic for us as well and then as you noted the introduction of the standard package our ability to stretch.

Claire McDonough: And then, as you noted, the introduction of Standard Pack and our ability to stretch the bottom end of the entry price point of the R1 product itself was another key initiative that we launched over the course of Q1. And I think the last but certainly not least was the opportunity that we had to grow broad-based brand awareness through the launch of the R2 reveal and the R3 and R3X as well, which generated significant interest in Rivian as a whole. That's helpful. Thank you for that.

Claire McDonough: The bottom end of of the entry price point of the <unk> product itself.

Claire McDonough: Another key initiative that we launched over the course of Q1 and I think the last but certainly not least was the opportunity that we had to grow broad based brand awareness through the launch of <unk> reveal and archery and our three axis as well that generated significant interest in <unk>.

Claire McDonough: As a whole.

Claire McDonough: It has changed at all in terms of some of the key inputs needed to reach that relative to what you put in your Q3 shareholder letter. Thank you.

Claire McDonough: The largest driver for us in our path to positive gross profit remains the improvements in variable cost reduction and within this category. It's predominantly driven by material cost reductions in Q1, we saw material cost improvements for each of our vehicles to our <unk> and <unk>.

Claire McDonough: And we expect to see a step change in our wind material costs driven by the introduction of engineering driven design changes as well as cost focus material changes that we've already negotiated with suppliers. We also expect to see commodity tailwind in the second half of 2024 as well as the added.

Claire McDonough: Benefit from our two sourcing on our ongoing commercial cost Downs next.

Claire McDonough: Next, turning to our semi-fixed costs, there are two key drivers for the improvement. The tooling upgrades we made in the normal plant enable us the ability to increase our line rate by roughly 30%, which reduces our per unit labor and overhead costs. And we also expect to see depreciation expense decline by Q4 as we fully depreciate some of our original tooling and move past the accelerated depreciation we incurred in Q1.

Claire McDonough: Next turning to our semi fixed costs. There are two key drivers for the improvement the tooling upgrades, we've made and the normal plant enable us the ability to increase our line rate.

Claire McDonough: Roughly 30%, which reduces our per unit labor and overhead costs and we also expect to see depreciation expense declined by Q4 as we fully depreciate some of our original tooling and move past the accelerated depreciation we incurred in Q1.

Claire McDonough: The final lever, as we've talked about in the past, is an increase in our revenue per delivered unit due to the increased sales of regulatory credits, software, and services revenue, as well as remarketing sales. So in summary, we have a detailed roadmap that we're executing against, and we continue to feel confident in our plan and our path to achieve positive growth profits in Q4 of this year. Thank you. The next question comes from Adam Jonas with Morgan Stanley. Your line is open. Hi, thanks. Good afternoon, everybody.

Adam Michael Jonas: The final lever as you've talked about in the past as an increase in our revenue per delivered unit due to the increased sales of regulatory credits software and services revenue as well as re marketing sales in.

Adam Michael Jonas: In summary, we have a detailed roadmap that we're executing against and continue to feel confident in our plan and our path to achieve positive gross profit in Q4 of this year.

Adam Michael Jonas: Thank you.

Claire McDonough: Thank you. Our next question comes from Adam Jonas with Morgan Stanley. Your line is open.

Operator: So, RJ, I'm going to assume you're not going to comment on the widespread story today of a large maker of phones potentially collaborating with an electric vehicle startup unless you want to, but what would be in it for a player of that ilk to work with you, or would it be worthwhile to Rivian? The benefit from a player like that is that Amazon doesn't already strategically and technically provide support to you already, and I have a follow-up.

Adam Michael Jonas: Alright, Thanks, good afternoon everybody.

Operator: So RJ I'm going to assume you're not going to comment on the.

Operator: Spreads story today of a large.

Operator: Maker of.

Operator: Loans potentially collaborating with an electric vehicle startup.

Operator: Unless you want to but what would.

Operator: What would be in it for a player of that ilk.

Operator: Work with you or put it this way what.

Operator: What would be worthwhile to review in.

Operator: The benefits of a player like that that Amazon doesn't already strategically and technically provide support to you already kind of a follow up thanks.

Operator: Thanks. Thanks, Adam. Yeah, you know, we don't comment on mark rumors or speculation, but, As you alluded to, we have... We have a history of partnership, and of course, Amazon is our largest shareholder today and a very close partner across a variety of avenues has been really a foundational element of the business that they were the quarter launch the commercial arm of the business and today represent the vast, vast majority of our commercial vehicle sales.

Adam: Thanks, Adam.

Operator: We don't comment on mark rumors or speculation but.

Operator: As you alluded to we have.

Operator: We have a history of <unk>.

Operator: Partnership and of course Amazon.

Operator: Our largest shareholder today in a very close partner across a.

Operator: Variety of avenues has been.

Operator: Really.

Operator: Foundational element of the business they were quarter launching the commercial arm of the business today represent the vast vast majority of our commercial vehicle sales.

Operator: But.

Operator: As we think about what we've built as a company one of the core.

Robert Joseph Scaringe: Core elements that makes us unique is just the level of vertical integration around our software and associated electronics platforms. So the issues in the vehicle.

Robert Joseph Scaringe: And the essentially the various computers across the vehicle and then the base software based operating system, all the way up to the applications layer.

Robert Joseph Scaringe: Creating those ourselves without the need to rely on tier one suppliers gives us a lot of.

Robert Joseph Scaringe: It gives us a lot of customer facing.

Robert Joseph Scaringe: Strength, but also creates opportunities for partnership certainly.

Robert Joseph Scaringe: Okay, thanks, RJ. Just as a follow-up to that, if I focused on your vehicles' ADAS and data collection capabilities driver plus 10 exterior cameras, 12 ultrasonic sensors, five radars, you got compute, you mentioned the vertical integrated, your custom ECUs and architecture. I think you I think your fleet drives more in five hours than Apple did all of last year with their autonomous car program before it was canceled. We're hearing from people in the field of ADAS and robotics that there's been a real revolution due to LLM and Gen AI on bringing forth end-to-end learning and neural net training.

Speaker Change: Okay. Thanks RJ.

Robert Joseph Scaringe: A follow up to that.

Robert Joseph Scaringe: If I focus on.

Robert Joseph Scaringe: Your vehicles.

Robert Joseph Scaringe: Hey, Das and data collection capabilities driver plus an exterior cameras 12 ultrasonic sensors five radar is you've got confused you mentioned the vertical integrated the customers to use and architecture.

Robert Joseph Scaringe: Thank you your fleet.

Robert Joseph Scaringe: Drives more in flight hours and Apple did in all of last year, where their autonomous car program before it was canceled.

Robert Joseph Scaringe: We are hearing from people in that field of Adas and robotics that theres been a real revolution due to LLM in Gen AI.

Robert Joseph Scaringe: On bringing forth end to end.

Robert Joseph Scaringe: Learning and neural net training.

Robert Joseph Scaringe: I'm curious if you have also witnessed that, and if so, can you concur with that, and if so, does that then change your CapEx profile of how you allocate it to supercomputing either directly through NVIDIA GPU clusters as part of your CapEx the way your rival Tesla is doing, or otherwise working through partners and hyperscalers and Amazon in order to get access to that compute to get closer to achieving autonomy? Thanks.

Robert Joseph Scaringe: I'm curious if you have also witnessed that you and your autonomy Tina can concur with that and if so does that then change your capex profile of how you allocated two super compute either directly through.

Robert Joseph Scaringe: Nvidia GPU clusters as part of your Capex the way your rival Tesla is doing or otherwise working through partners and hyperscale or an Amazon in order to get access to that compute.

Robert Joseph Scaringe: To get closer to achieving autonomy.

Robert Joseph Scaringe: Thanks.

Speaker Change: Just in the nature of the question you made a point that we've made for a while which really agree with which is the <unk>.

Robert Joseph Scaringe: A key element to deliver.

Robert Joseph Scaringe: Really strong autonomy platform and something you continue to grow and get better over time as controlling the perception stack and by controlling the perceptions to access the cameras.

Robert Joseph Scaringe: And radars in particular.

Robert Joseph Scaringe: It allows us to have early fusion of that information.

Robert Joseph Scaringe: And the early fusion of information allows us to not only best perceive the situation around the vehicle, but to create the best response to the best controls for what the vehicles should do next.

Robert Joseph Scaringe: And the challenge with systems that are built through a collection of third party sourced sensors or third party source software is that that learning loop.

Robert Joseph Scaringe: And the opportunity to leverage the entirety of the sensor set and the perception stock becomes far more limited.

Robert Joseph Scaringe: So we've we've architected, our autonomous platforms and in particular, what's to come on our future platforms.

Robert Joseph Scaringe: Around really controlling the entirety of of all of the data coming in and then also really control. How we we use a lot of training models to continue to drive progress into the platform as you pointed out the training models, there's lots of ways to run them, but ultimately requires.

Robert Joseph Scaringe: Sure.

Robert Joseph Scaringe: Build out over time of a large very large customers of ours.

Robert Joseph Scaringe: Cpus to help train and build the robustness into our towards driving models.

Operator: Thanks, everyone. Thank you. Our next question comes from John Murphy with Bank of America. Your line is open.

Speaker Change: Thanks Roger.

Operator: Thank you. Our next question comes from John Murphy with Bank of America. Your line is open.

Operator: Good afternoon, guys. Just a first question, RJ. Now that we've got the two and the three unveiled, and the three X, we're kind of at a point where we're looking at a four to five, arguably, maybe six vehicle portfolio. I'm just curious, as we get through the ramp of the two, and then the three, and the three X, how do you think you're going to manage this portfolio?

John Joseph Murphy: Good afternoon guys.

Operator: First question RJ now that we've got two of the three unveiled in the <unk>.

Operator: And we're kind of at a point, where we're looking at.

Operator: Four to five R&D, maybe six vehicle.

Operator: Portfolio.

Operator: I'm just curious as we get through the ramp.

Operator: Up to and then the three three X I think youre going to manage this portfolio just kind of a portfolio of the churns over time and as we invested in or is it going to be something thats sort of a continuous improvement software defined vehicles there.

Operator: Is this going to be portfolio returns over time, and it's reinvested in, or is it going to be something that's sort of continuous improvement, software-defined vehicles, and there's not going to be these refreshes over time? I'm just curious, how are you going to manage what's becoming a pretty robust and complete portfolio? Yeah, thanks, John.

Operator: There is not going to be these refreshes over time I'm just curious how you see managing that.

Speaker Change: Let me a pretty robust portfolio.

John: Yeah. Thanks, Sean our one platform really represents the flagship product for us as a company and was there a handshake with the world is as <unk> and.

Robert Joseph Scaringe: In terms of introducing Vivien as a brand to customers.

Robert Joseph Scaringe: But importantly, because of its positioning as a flagship product.

Robert Joseph Scaringe: It's it's price point is such that it doesn't allow us to access the largest part of the market.

Robert Joseph Scaringe: And so our midsize platform, which underpins the R2 and R3 products, is really important for us as a company, and the launch of that platform with R2 in the first half of 2026 represents a step change in the scale of the adjustment market we can go after as a business. And what we've demonstrated so far, and what you'll continue to see from us for our products, whether that be R1, R2, or R3, is a really heavy focus on using software to continue to make the vehicles better and better over time.

Robert Joseph Scaringe: And so our mid size platform, which underpins the <unk> III products is really important for us as a company.

Robert Joseph Scaringe: The launch of that platform with our two in the first half of 2026.

Robert Joseph Scaringe: Represents a step change in the scale of the addressable market. We can go after us as a business.

Robert Joseph Scaringe: And what we've demonstrated so far and what Youll continue to see from us for our products, whether that be our one or two or three.

Robert Joseph Scaringe: As a really heavy focus on using software to continue to make the vehicles better and better over time and so as I noted in my opening remarks, we've had over 30 over their updates on the <unk> platform. Since we launch the vehicle and this has led to a really vibrant.

Robert Joseph Scaringe: Customer community that there is.

Robert Joseph Scaringe: A number of folks online. Following these releases that track every detail and it creates a moment of excitement for our owners when they see the vehicle get better.

Robert Joseph Scaringe: Every couple of weeks and so this is something we are absolutely going to maintain and is foundational and core to us as a business.

Robert Joseph Scaringe: We think creates a very different type of ownership experience relative to what we've historically known.

Robert Joseph Scaringe: As owning a car.

Robert Joseph Scaringe: Maybe we can just follow up on that I mean, there's folks that made it.

Robert Joseph Scaringe: All lines there.

Robert Joseph Scaringe: With Black Brexit change form factor.

Robert Joseph Scaringe: And look on a product cycle basis, which one or two years I mean do you think that the vehicles can really stay somewhat strategy in physical form.

Robert Joseph Scaringe: The updated sort of amount of four to five year cycle.

Robert Joseph Scaringe: And thats kind of working across the globe.

Robert Joseph Scaringe: Third product portfolio.

Robert Joseph Scaringe: On the insurance side.

Robert Joseph Scaringe: Six years do you believe that is very good for us, but we're also seeing is installs that are black bricks that they realize that actually.

Robert Joseph Scaringe: Yes.

Robert Joseph Scaringe: We supply them.

Robert Joseph Scaringe: It's early days for you Jon its product portfolio.

Speaker Change: I'm just curious about your philosophy there.

Robert Joseph Scaringe: [inaudible] I think this is a nuanced element here, but historically, when we thought about a product lifecycle, a product would launch, and it really wouldn't change much. The nature of what the vehicle looks like has a lot to do with just the approach of the company and the brand. And for us, you know, we've really emphasized building a timeless design. That's not something that's of the moment or something that feels old, you know, six months after it's released.

Robert Joseph Scaringe: I think this is a nuanced element here, but.

Robert Joseph Scaringe: Historically.

Robert Joseph Scaringe: When we thought about our product lifecycle.

Robert Joseph Scaringe: Our product with launch and it really wouldn't change much until the update came out which would be as you said often four or five years between new product.

Robert Joseph Scaringe: Launching an update coming out.

Robert Joseph Scaringe: And what we believe is the product needs to get better over time, and I talked a moment ago about software, but theres also going to be hardware improvements that occur over time, so it's compute that sensor set.

Robert Joseph Scaringe: And also of course improvements in how we build the vehicles the cost and efficiency improvements and it's already realizing that today, we don't think of the vehicles as a static product, but rather something that continues to get better continues to improve on cost structure.

Robert Joseph Scaringe: And.

Robert Joseph Scaringe: Really the nature of what the vehicle looks like has a lot to do with just the approach of the company and the brand and for us.

Robert Joseph Scaringe: We've really emphasized building a timeless design and thats not something thats of the moment or something that feels old six months afterwards after it's released.

Robert Joseph Scaringe: And we think that timeless element of the design actually provides us the opportunity to make less significant exterior design changes, while we continue to make progress with what's under the skin.

Robert Joseph Scaringe: Okay, and if I could just ask one follow up on that <unk> 27.

Speaker Change: All right.

Robert Joseph Scaringe: <unk> two <unk>, two 5 billion lower capital for normal type versus the Georgia plant.

Robert Joseph Scaringe: It doesn't sound like you're changing that even though you're getting <unk> 27 from Illinois, just yet, but if you were to pro forma how much lower capital pro forma for that what would you roughly think it would be I mean, some of those other things with that capital cycle, just directly to the plant, but it goes to other infrastructure, but how much do you think more and more of that capital.

Claire McDonough: I mean, it sounds like there are other things where that capital is not going just directly to the plant, but it goes to other infrastructure. But how much do you think more could lower that capital? John, I think that the most direct comparison is, as I mentioned in my prepared remarks, the upfront cash that we'll receive from the state of Illinois, which is roughly 100 million dollars this year. Both Georgia's incentive package, as well as Illinois', had payroll incentives and tax incentives associated with each of them.

Claire McDonough: Sure John I think the most direct comparison as I mentioned in my prepared remarks is the upfront cash that we'll receive from state of Illinois, which is roughly $100 million this year.

Claire McDonough: George as incentive package as well as Illinois had payroll and attendance tax incentives associated with each of them, but in the near term I would.

Dan Meir Levy: Pinpoint that as being incremental to the two in a quarter billion.

Dan Meir Levy: Savings that we communicated when we reveal darko.

Dan Meir Levy: Alright, Thank you very much guys.

Claire McDonough: Thank you. Our next question comes from Dan Levy with Barclays. Your line is open.

Dan Meir Levy: Hi, good evening, thanks for taking the questions.

Operator: Wanted to.

Operator: Start with a question on Cogs trajectory.

Operator: Specifically.

Operator: If you're doing if you're planning on doing call. It a mid 40000 dollar based price.

Operator: For our two it means that to get any sort of a decent gross margin you need to get probably Cogs per unit.

Operator: High $30000 range.

Operator: You just did call it like mid 100, <unk>. So we're talking about.

Operator: Almost $100000 or little less of an improvement.

Operator: And Todd maybe you can just help us conceptually or directionally understand.

Operator: How we bridge from Cogs per unit today.

Operator: Down to where you need to be on our to understand that part.

Operator: Partially decon tenting, partially smaller form factor there is scale, but maybe you could just walk through the pieces how much is in your control what's easier what what's a bit trickier.

Operator: Any sort of a frame.

Operator: <unk> framework would be helpful. Thanks.

Operator: Thanks, Dan. Yeah, first, I just want to reiterate what Claire said before, which is on the R1 product; we're on a glide cycle to materially improve its cost of goods sold. And so we're going to see that play out over the course of the year. The reason for the shutdown that we just went through was to implement not only changes in the plant to improve process flow and increase the production rate by 30% but also to integrate a very large number of changes into the vehicle that are focused on cost.

Speaker Change: Thanks, Tim first I just want to.

Operator: Reiterate what Claire said before which is on the <unk> product we are on a.

Operator: Lifecycle to.

Operator: Materially improve.

Operator: Cost of goods sold and so we're going to see that play out over the course of the year.

Operator: The reason for the shutdown that we just went through was to implement not only changes in the plant to improve process flow and increase the production rate by 30%, but also to integrate.

Operator: So those are new suppliers with, you know, updated part designs or designs that have been optimized around cost; areas of the vehicle where we've actually consolidated parts or eliminated parts. And, you know, without going through all the examples, even on this changeover, there are areas of the body structure, for example, where the cost reduction was well in excess of 50%. And that's through part consolidation, or part elimination, or redesigning of parts using different materials or different processes. So as we wind that forward into R2, R2 is a fundamentally different architecture. It's built to a different set of requirements.

Operator: Very large number of changes into the vehicle that are focused on costs. So those are new suppliers.

Operator: With.

Operator: Updated part designs or.

Operator: Designs that have been optimized around cost.

Operator: Areas of vehicle, we've actually consolidated parts or eliminated parts.

Operator: And without going through all the examples even on this changeover there are areas of the body structure for example.

Operator: Where the cost reduction was well in excess of 50%.

Operator: And that's through park consolidation.

Operator: Or part elimination or redesigning of parts using different materials are different processes. So.

Operator: As we wind that forward into our two or choose a fundamentally different architecture.

Operator: Built to a different set of requirements are one is a very extreme set of requirements in terms of on and off road capability.

Robert Joseph Scaringe: R1 is, is, has a very extreme set of requirements in terms of on and off road capability, whereas the R2 product will still be very capable on and off road, but not to the True Xtreme that the flagship product has. And every decision we take, every part, every system, every component, it goes through the lens of, "is the part needed? Can the part be consolidated?" Can the function of that part or system be performed by another part or system?

Robert Joseph Scaringe: Whereas the <unk> two product will still be very people, both on and off road, but not to the.

Robert Joseph Scaringe: Through extreme that the flagship product has.

Robert Joseph Scaringe: And every decision we take.

Robert Joseph Scaringe: That's every part every system every component it goes through the lens of is the part needed tender part be consolidated kind of a function of that partner system be performed by another partner system.

Robert Joseph Scaringe: And it is leading to a materially different vehicle architecture from a body structure point of view and vehicle integration point of view.

Robert Joseph Scaringe: But it's also.

Robert Joseph Scaringe: Supplemented by <unk>.

Robert Joseph Scaringe: Very different supplier relationship.

Robert Joseph Scaringe: Set of supplier relationships and what we had when we negotiated cost on our one.

Robert Joseph Scaringe: Years ago.

Robert Joseph Scaringe: And so we remain very bullish on our ability to deliver on the <unk> cost structure of.

Robert Joseph Scaringe: Of course requires us to execute as we pull the full program together and complete the sourcing on the vehicle, but but.

Robert Joseph Scaringe: But it is a significant set of improvements. I called out a few of the examples, but just to reiterate those. Part consolidation can come in many forms. The use of high-pressure die castings is one way to achieve it.

Robert Joseph Scaringe: But it is a significant set of improvements and I called out a few of the examples but just to reiterate those.

Robert Joseph Scaringe: Park consolidation if you can come in many forms use of high pressure die casting is one way to achieve it.

Robert Joseph Scaringe: Another is to have parts do more than one thing. So the use of the top of the battery pack as the floor of the vehicle is an example. We have massively simplified closure systems in the doors for R2 versus R1. And then, not often appreciated but really significant, is just the opportunity from an electrical point of view in the vehicle to minimize the number of VCUs and optimize the location of those VCUs as well as whatever they're actuating or sensing to minimize the harness design.

Robert Joseph Scaringe: Another is to have parts do more than one thing. So the use of the top of the battery pack is the floor of the vehicle.

Robert Joseph Scaringe: As an example, we have massively simplified closure systems and the doors for our two versus our one.

Robert Joseph Scaringe: And then.

Robert Joseph Scaringe: Not often appreciated but really significant is just the opportunity from an electrical point of view in the vehicle to minimize the number of <unk>.

Robert Joseph Scaringe: And optimize the location of those issues as well as whatever their actuating are sensing.

Robert Joseph Scaringe: To minimize the harness design.

Robert Joseph Scaringe: And so across the board, holistically, we're making all those types of changes, leveraging the learnings from R1T, R1S, the EDV, and the most recent shutdown, which is leading to significant cost reductions in R1 as we roll those into the R2 program to make sure we can achieve, as you said, aggressive but necessary COGS targets. Thank you, that's, that's helpful. Maybe just a follow-up on vertical integration. And so I understand that the move to put R2 into normal instead of Georgia was one of capital efficiency, but, amid this pivot in strategy, maybe you can give us a sense of if you're thinking any differently about your level of vertical integration.

Robert Joseph Scaringe: And so across the board Holistically, we're making all of those types of changes leveraging the learnings from our one tier one ask the EV and in the most recent shutdown, which is leading to the significant cost reductions in our one as we roll those into the <unk> program to make sure. We can achieve as you said.

Robert Joseph Scaringe: <unk>, but necessary Cogs targets.

Speaker Change: Thank you that's helpful.

Speaker Change: Maybe just a follow up.

Speaker Change: On vertical integration and so I understand that and move to put our two.

Robert Joseph Scaringe: Into normal instead of Georgia was one of capital efficiency, but just.

Robert Joseph Scaringe: Amid this pivot in strategy, maybe you can.

Speaker Change: Give us a sense of if youre thinking any differently about your level of vertical integration I understand vertical integration is obviously still very key to the strategy, but are you thinking any differently about the level of vertical integration that you are pursuing.

Robert Joseph Scaringe: I understand vertical integration is obviously still very key to the strategy, but are you thinking any differently about the level of vertical integration that you're pursuing, maybe relying on partners a bit more versus what you maybe would have done in-house in the past? Thank you.

Speaker Change: To be relying on <unk>.

Robert Joseph Scaringe: Partners a bit more versus what you maybe would have done in house in the past.

Speaker Change: Thank you.

Robert Joseph Scaringe: Sure.

Robert Joseph Scaringe: I've just mentioned it a bit, Dan, but one of the really key areas for us is controlling. The electrical architecture in the vehicle, the network architecture, and then the associated software that's running across all those platforms. And what that allows, versus what the vast, vast majority of vehicle manufacturers pursue, essentially, with the exception of one other manufacturer, which is a Tier 1 heavy approach where Tier 1 suppliers provide a variety of controllers that then control a function within the vehicle.

Speaker Change: I just referenced it a bit then but one of the really key areas for us is controlling.

Robert Joseph Scaringe: The electrical architecture in the vehicle.

Robert Joseph Scaringe: The network architecture, and then the associated software that's running across all those platforms.

Robert Joseph Scaringe: And what that versus what.

Robert Joseph Scaringe: The vast vast majority of vehicle manufacturers pursue essentially.

Robert Joseph Scaringe: And one other manufacturer, which is a tier one heavy approach for tier one suppliers provide a variety of controllers that the controller function within the vehicle by controlling all the all of those computers Aldo as you see us it allows us to much more easily consolidate functions not by the domain, but rather.

Robert Joseph Scaringe: By controlling all those computers, all those ECUs, it allows us to much more easily consolidate functions, not by the domain, but rather across zones. So we can set up what we call a zoner controller that's in an area of the vehicle that controls all functions across that area.

Robert Joseph Scaringe: Across zones, so we can set up.

Robert Joseph Scaringe: When we call. It is on a controller that's in an area of the vehicle that controls all functions across that area.

Robert Joseph Scaringe: And <unk>.

Robert Joseph Scaringe: The amount of savings that are possible by doing this is not measured in hundreds of dollars but in thousands of dollars. And the simplification of the vehicle harness that results from that is also quite significant. And that's all, you know, Rivian has advantages in terms of cost, simplification, and simplifying the build process, but it also creates a lot of advantages for customers. We've already seen this, you know, from the launch of R1, where the control of those, all those platforms allows us to do deep over the air updates.

Robert Joseph Scaringe: The amount of savings as possible by doing this is not measured in hundreds of dollars, but measured in thousands of dollars.

Robert Joseph Scaringe: And the simplification of the vehicle harness that results from that is also quite significant.

Robert Joseph Scaringe: And Thats, all Libyan facing advantages in terms of cost simplification simplifies the build process, but it also creates a lot of advantages for customers and we've already seen this from the launch of our one where the control of those all of those platforms allow us to do deep over the air update so I say deep I mean real over.

Robert Joseph Scaringe: When I say deep, I mean real over-the-air updates. We're not just changing a color on the screen but rather introducing real features, changing the way the vehicle drives, improving the battery performance, improving thermal performance, you know, things that are meaningful to the ownership experience of the vehicle. And that we remain very committed to.

Robert Joseph Scaringe: Updates, we're not just changing a color on the screen, but rather introducing real feature is changing the way the vehicle drives improving the battery performance.

Robert Joseph Scaringe: Improving thermal performance.

Robert Joseph Scaringe: Things that are meaningful to the ownership experience of the vehicle.

Robert Joseph Scaringe: And in fact, the benefits of the heavy investment necessary to build up all that capability will really be realized with R2, which R2 will leverage. The network architecture, the ECU topology, of course, the software stack that's been developed in R1, and the changes that we've just made as part of the cost-down process with R1, that architecture, we'll be going into R2. So we can look at this also as a de-risking of the launch of R2. And while I've talked about software and electronics, it's important to note that this also extends to the way we've approached our high-voltage systems.

Robert Joseph Scaringe: And that we remain very convicted on and in fact, the benefits of the heavy investment necessary to build up all of that capability.

Robert Joseph Scaringe: Really be realized with our two where are.

Robert Joseph Scaringe: <unk> will leverage.

Robert Joseph Scaringe: The network architecture of that issue topology of course, the software stack. That's been developed and are one and the changes that we've just made as part of the cost down process with our one that architecture.

Robert Joseph Scaringe: We will be going into <unk>. So we can look at this also as a derisking of the launch of our two.

Robert Joseph Scaringe: And while I've talked about software electronics, it's important to note that this also extends to the way we've approached our high voltage systems, so our batteries or battery packs better modules draw.

Robert Joseph Scaringe: So our batteries, our battery packs, battery modules, drive units, inverters, these are all areas that we've developed in-house technology around. And, of course, at the scale of R1, it has a high fixed cost associated with it. But with R2 coming online, we really see significant structural cost advantages by owning these areas and by building these areas in-house. Thank you. That's a helpful color.

Robert Joseph Scaringe: Drive units Inverters. These are all areas that we've developed in house technology around and of course at the scale of our one.

Robert Joseph Scaringe: It has a high fixed cost associated with it.

Robert Joseph Scaringe: With our two coming online, we really see cigna.

Robert Joseph Scaringe: Significant structural cost advantages.

Robert Joseph Scaringe: By owning these areas and by building these areas in house.

Robert Joseph Scaringe: Thank you that's helpful color.

Operator: Thank you. Our next question comes from George Gianarikas. You can't afford not to be genuity; your line is open.

Speaker Change: Thank you.

Robert Joseph Scaringe: Next question comes from George Gnr, because with Canaccord Genuity. Your line is open.

Operator: Hi, good afternoon, and thank you for taking my questions. I think you mentioned in your prepared remarks that you're bringing the lines back up. Curious as to what you can share in terms of the experience there, and also how the new supply relationships have gone. I know you've decided to switch out some suppliers, and any detail there would be appreciated. Thank you. Thanks, George. You know, it was interesting; we stopped production of our launch vehicle at the start of the month, at the start of April, and walking through the plant and seeing it without a single vehicle in the line was a unique feeling.

George Gianarikas: Hi, good afternoon, and thank you for taking my questions.

Operator: I think you mentioned.

Operator: In your prepared remarks that youre, bringing the lines back up.

Operator: I'm curious as to what you can share in terms of the experience there and also.

Operator: How the new supplier relationships.

Operator: Have gone I know you've decided to switch out some suppliers and then any detail there would be appreciated. Thank you.

Speaker Change: Thanks George.

Speaker Change: It was interesting.

Operator: This started a month or so start of April.

Operator: We stopped production of our launch vehicle.

Operator: And walking through the plant and seeing it without a single vehicle line was it was a unique feeling we havent seen that since we started production.

Robert Joseph Scaringe: And.

Robert Joseph Scaringe: Sort of gave you a.

Robert Joseph Scaringe: A bit of a feeling in your stomach has walked through.

Robert Joseph Scaringe: The precision in the execution of integrating so much new equipment, new process design as you saw on the letter hundreds of new robots and hundreds of updated or modified robots into the plant.

Robert Joseph Scaringe: To allow the plant to run at a 30% higher line rate.

Robert Joseph Scaringe: And to have the orchestra of all of those activities. Both in the plant and then across our supply base to have.

Robert Joseph Scaringe: You know, a very large number of new suppliers come on board, and a significant portion of the bill of materials changes over to these new suppliers and updated part design to have executed that full effort with the intensity and the focus to drive that efficiency into the plant and into our overall cog structure. It was really an exciting April, to say the least, and it's amazing to see the plant running again, and see the changes we put in place solving some of the challenges that existed in the line before solving some of the areas where we felt the costs were not appropriate at the vehicle level. We're excited to see those changes manifest in the improvements and our costs to get sold, and, of course, in the roadmap to our positive gross margin.

Robert Joseph Scaringe: Very large number of new suppliers come onboard.

Robert Joseph Scaringe: And a significant portion of the bill of materials changeover to these new suppliers and updated part designs.

Robert Joseph Scaringe: To have executed that full effort with the intensity and the focus to drive that efficiency into the plant and it's into our overall cost structure.

Robert Joseph Scaringe: It was really it was an exciting April to say the least.

Robert Joseph Scaringe: And.

Robert Joseph Scaringe: It's amazing to see the plant running again to see the changes we put in place solving some of the.

Robert Joseph Scaringe: Some of the challenges of that.

Robert Joseph Scaringe: Existed in the line before solving some of the areas, where we felt the costs were not appropriate at the vehicle level.

Robert Joseph Scaringe: And we're excited to see those changes.

Robert Joseph Scaringe: Manifest and in the improvements in our cost of goods sold and of course in the roadmap.

Robert Joseph Scaringe: So a positive gross margin.

Robert Joseph Scaringe: And maybe as a follow-up, I know you mentioned that, you know, R2 is coming in the first half of 26. What are the opportunities to potentially, you know, pull that forward in terms of the decision to launch R2 out of normal? There were many things that drove it. Claire talked before about the $2.25 billion in capital savings associated with it. But beyond that, what's harder to measure in the numbers was just the ability to leverage existing teams and the operations that we have in normal, and you know, those teams. It's taken us a lot of time we've built strong teams, strong leadership, you know, at the shop level. And I spend a lot of time at the plant, a lot of time on the floor with the team, with our team members.

Speaker Change: Okay, and maybe as a follow up I know you had mentioned the two is coming in the first half of 2016, what are the opportunities to potentially.

Robert Joseph Scaringe: Pull that forward in terms of the timing. Thank you.

Robert Joseph Scaringe: The decision to launch our two.

Robert Joseph Scaringe: Out of normal was was to where there is many things that drove it co talked before about the $2 to $5 billion in capital savings associated with it but beyond.

Robert Joseph Scaringe: Beyond that and what's harder to measure in the numbers was just the ability to leverage the.

Robert Joseph Scaringe: The existing teams and the operations that we have a normal.

Robert Joseph Scaringe: Those teams, it's taken us a lot of times, we built.

Robert Joseph Scaringe: Strong teams strong leadership at the shop level.

Robert Joseph Scaringe: I spend a lot of time at the plant and a lot of time on the floor with the team with our team members.

Robert Joseph Scaringe: And that buildup of training capabilities learning capabilities leadership at the team leader group leader.

Robert Joseph Scaringe: Manager and director level across the plant.

Robert Joseph Scaringe: It's something we will now be able to leverage and it takes not only risk out of the <unk> timing, but allowed us to pull our too.

Robert Joseph Scaringe: Into the first half of 2026.

Robert Joseph Scaringe: Now.

Robert Joseph Scaringe: There's not a single person within ribbon that isn't trying to find ways to pull our two forward, but we would love to see or two sooner the amount of excitement for the product is palpable.

Robert Joseph Scaringe: Notwithstanding the excitement that we all have for it on our own.

Robert Joseph Scaringe: But.

Robert Joseph Scaringe: But we also want to ensure that the product when it hits the market has is exceptional and making sure our supply basis robust, making sure there arent supply issues as we launch.

Robert Joseph Scaringe: It is really important to us to ensure we have as smooth of a launch as possible of course learning from the <unk> launch the rns launched the EV launch the relaunch of Adv with post cost Downs and now the relaunch of our one post cost downs, we've gone through a number of launch events with each one getting better and stronger.

Robert Joseph Scaringe: And the clarity we have on the importance of robustness of the supply chain, both from a quality point of view, but also from a ramp efficacy point of view, is driving us to make sure that, as we think about that 2026 launch, it's not just what we can control in our plant, but it's through all the many relationships across our supply base that we make sure we're ready to step from not producing R2 at scale to producing Thank you. Our next question comes from Alex Potter with Piper Sandler.

Robert Joseph Scaringe: The clarity we have on the importance of robustness of our supply chain both from a quality point of view, but also from a ramp efficacy point of view.

Robert Joseph Scaringe: <unk> is driving us to make sure that that as we think about that 2026 launch its not just what we can control in our plant, but it's through all the many relationships across our supply base to ensure we are ready to step from from from not producing or two at scale to producing at scale very quickly.

Operator: Your line is open. Perfect. Thanks, guys. So I'm wondering if you could talk about what the next, All right, three to six months in normal will look like now that you've gone through a lot of the heavy lifting with the retooling. To what extent is there any remaining execution or ramp risk with the plant as it exists right now? Thanks, Alex. You know, coming out of a launch, and I was just on line with the team, going through, you know, how things are running post-launch. Post-relaunch, the energy within the plant is palpable.

Robert Joseph Scaringe: Thank you. Our next question comes from Alex Potter with Piper Sandler Your line is open.

Speaker Change: Perfect. Thanks, guys.

Operator: I'm wondering if you could talk about what the next call it.

Operator: Three to six months in normal will look like now that you've gone through a lot of the heavy lifting with the retooling.

Operator: To what extent is there any remaining execution or ramp risk with the plant as it exists right now.

Speaker Change: Thanks, Alex coming out of a launch.

Operator: I was just don't align with the team.

Operator: Going through how things are running post.

Operator: Post relaunch the energy within the plant is palpable excitement.

Robert Joseph Scaringe: The excitement to deliver on improved quality and improved cycle time is real. And with the changes we made around the overall efficiency of the layout, the efficiency of material flow, we're really excited to see that pull forward into a reduction in cost of goods sold. Now, with that, it's not as if the plant turns back on immediately at full rate.

Robert Joseph Scaringe: <unk>.

Robert Joseph Scaringe: Deliver on an improved quality and improved cycle time is real and with the changes we made around the overall efficiency to lay out the efficiency material flow.

Robert Joseph Scaringe: We're really excited to see that.

Robert Joseph Scaringe: Pull forward into <unk>.

Robert Joseph Scaringe: Reduction in cost of goods sold.

Robert Joseph Scaringe: So there is a ramp associated with it. We're following a prescribed and planned ramp of the facility. And that, as I said in my previous discussion, that ties to the suppliers. So we also need to make sure our suppliers are growing at the same rate. And given the number of changes we've made with our supply base, those suppliers, in many cases new suppliers, are ramping along with us. And so, as that's all happening,

Robert Joseph Scaringe: Now with that.

Robert Joseph Scaringe: It's not as if the plant turns back on immediately.

Robert Joseph Scaringe: At full rate. So there is a ramp associated with it we're following a prescribed and planned ramp of the facility.

Robert Joseph Scaringe: As I said in.

Robert Joseph Scaringe: Previous.

Robert Joseph Scaringe: Previous discussion that that ties to the suppliers. So we also need to make sure. Our suppliers are ramping at the same rate and given the number of changes we've made with our supply base.

Robert Joseph Scaringe: Those suppliers in many cases, new suppliers are ramping along with us.

Robert Joseph Scaringe: And so that as that's all happening.

Robert Joseph Scaringe: We're also really remain focused on ensuring that the plant and normal is also getting ready to to adjust our too and so theres a number of investments, we're making into normal to ensure the <unk> ramp as seamless and as capital efficient as possible as well.

Speaker Change: Okay perfect. Thanks.

Robert Joseph Scaringe: And then wanted to go back to something cleared mentioned regarding opex. It looks like second half opex spending is going to be down relative.

Claire McDonough: It looks like second half OPEX spending is going to be down relative to the first half. Just wondering what it is that you're spending on now or what you did spend on in the first half that you won't be spending on in the second half of this marketing and outreach. You mentioned a lot about test drives and things of that nature after the R2 and R3 unveiling, or maybe it's R&D. Just any additional clarity on that would be helpful. Thanks.

Claire McDonough: Relative to the first half just wondering what it is that youre spending on now or what you did spend on in the first half that you wont be spending on in the second half of this marketing and outreach you mentioned a lot with test drives and things of that nature. After the tier two and our free unveiling just or maybe it's R&D.

Claire McDonough: Any additional clarity on that would be helpful. Thanks.

Speaker Change: Sure. So the first point is in the first half of the year in the buildup to the tooling upgrades that we made in normal there were higher levels of R&D spend associated with that and we'll see that increase as well Q1 into Q2 based off of that shutdown time that we kept throughout the course of April.

Claire McDonough: And incremental contractors and support that we had to bring back.

Claire McDonough: Winds up being in short order in succession.

Claire McDonough: So as we look to the second half of the year.

Claire McDonough: You mentioned that the pivot and focus from an R&D perspective starts.

Claire McDonough: To focus around more at that our acute development work versus.

Claire McDonough: The focus on both <unk> as well as our wine and our commercial vans that youre seeing in that.

Claire McDonough: First half results and figures and then beyond that.

Claire McDonough: We're constantly driving incremental efficiency across the organization as a whole and so that entails finding ways in which we can reduce expense in other areas of SG&A to make room for the investments that we're making in our go to market teams.

Claire McDonough: Sales and service as a whole and so that.

Claire McDonough: And so that intensity and focus is what's enabling our path to reduce our operating expenses overall for the year, but also importantly, see that second half 2024 step change reduction in OPEX. Excellent. Thanks, guys. Thank you. And our next question comes from Emmanuel Rosner with Deutsche Bank. Your line is open.

Emmanuel Rosner: That intensity and focus is what's enabling our path to reduce our operating expenses overall for the year, but also importantly, seeing that second half 2020 for a step change reduction in Opex.

Emmanuel Rosner: Excellent thanks, guys.

Claire McDonough: Thank you and our next question comes from Emmanuel Rosner with Deutsche Bank. Your line is open.

Emmanuel Rosner: Alright. Thank you very much my first question is now that the.

Emmanuel Rosner: Set down is.

Emmanuel Rosner: <unk> and the upgrades completed could.

Emmanuel Rosner: In Q1 nine of that is maybe sort of lurking around rates so call. It maybe a $30000 loss per vehicles starting point.

Operator: So you had this $39,000 loss per vehicle in Q1, nine of that may be sort of like not a run rate. So call it maybe a $30,000 loss per vehicle starting point. How much is realistic for your cost of goods or bill of materials to improve as a result of the actions that you have just completed? How much per vehicle could we see in terms of a reduction in the fixed cost? And how much do we have to assume, or do you have to assume in terms of pricing or sort of like extra revenues essentially to get towards that positive gross profit per vehicle?

Emmanuel Rosner: How much is realistic for your cost of goods sold or bill of goods steel III improve as a result of the actions that you just completed how much for vehicle could we see in terms of reduction on the fixed cost and how much do we have to assume or do you have to assume in terms of pricing or sort of like extra revenues essentially.

Operator: Get towards that positive growth gross profit per vehicle.

Operator: Emmanuel, as we look back at our Q4 earnings call, we provided a detailed bridge, and we continue to see line of sight at the execution roadmap to achieve those results in aggregate. As I mentioned in 1 of my responses, the largest variable that we have ahead of ourselves is the reduction in our material costs. Similar to what we saw when we took down time in Q1 of 23 to introduce our new Enduro drive unit, as well as our LFP pack in the EDB itself, where we saw a 35% reduction in material costs. There are significant cost savings coming through the introduction of engineering design-driven changes into the R1, as well as some of the material changes that we're making to conserve costs as well.

Operator: Emmanuel as you look back at our Q4 earnings call. We provided a detailed bridge and we continue to see line of sight into the execution roadmap to achieve those results in aggregate.

Operator: I mentioned in one of my responses the largest variable that we have ahead of ourselves is the reduction in our material costs.

Operator: And similar to what we saw when we took downtime in Q1 of 'twenty three to introduce our new Enduro drive unit as well as our LLP pack and then <unk> itself, where we saw 35% reduction in material cost out there is significant cost savings coming through the introduction of <unk>.

Operator: Engineering design, driven changes in tier one as well as some of the material changes that we're making to conserve costs as well.

Claire McDonough: So, I have clear visibility into those reductions on a going forward basis. And similarly, as I mentioned, the improvements in operational efficiency that we'll see with reductions in labor and overhead costs per unit, given the increase of 30% in our line rate, are also going to help enable the semi-fixed cost improvements that we anticipate throughout the course of this year as well. And then there's the dynamics with our depreciation and the fact that this quarter we had accelerated depreciation going into our retooling upgrade in the plant itself that will start to lap and will come off as we also begin to fully depreciate some of our original tooling which will see a material decrease in that depreciation expense per unit as well.

Operator: Clear visibility into those reductions on a go forward basis, and similarly, as I mentioned the improvements in operational efficiency that we will see with reductions in labor and overhead cost per unit given the increase in F. 30% in our line rate is also going to help enable that.

Claire McDonough: Retooling upgrade in the plant itself that will start to lap and will come off as we also begin to fully depreciate. Some of our original tooling that we'll see a material decrease in that depreciation expense per unit as well.

Claire McDonough: Beyond that we will see some additional <unk> benefits in the back half of the year as we drive towards making money on every single vehicle that we sell and then in terms of the underlying assumptions for the <unk>.

Claire McDonough: Beyond that, we'll see some additional LCNRB benefits in the back half of the year as we drive towards making money on every single vehicle that we sell. And then, in terms of the underlying assumptions for both volume as well as price points, as we mentioned on our last earnings call, our anticipation is not a significant increase in overall volumes associated with Q4-24 relative to Q4 of 2023 and equally a similar price point from an ASP perspective. So, the revenue per unit driver is really driven by non-vehicle revenue streams, predominantly the sale of regulatory credits.

Claire McDonough: Volume as well as price points as we mentioned on our last earnings call. Our anticipation is is not a significant increase in overall volumes associated with Q4 hundred 24 relative to Q4 of 2023 and equally a similar price point from an ASP perspective, so that the revenue per.

Claire McDonough: Our unit driver is really driven by non vehicle revenue streams.

Claire McDonough: Predominantly yes.

Claire McDonough: The sale of regulatory credits, we've seen a really robust appetite for our regulatory credits in the market, especially with many Oems as stepping back away from some of their electrification plans and then equally the ongoing sales of <unk>.

Claire McDonough: We've seen a really robust appetite for our regulatory credits in the market, especially with many OEMs stepping back away from some of their electrification plans. And then, equally, the ongoing sales of software and services revenues as well as our remarketing revenue streams that will enable Rivian to achieve a positive gross profit in the fourth quarter. Okay, that's helpful.

Claire McDonough: Software and services revenues as well as our marketing revenue streams that will enable <unk> to achieve a positive gross profit in the fourth quarter.

Speaker Change: Okay. That's helpful. And then just one follow up on the volume side I think you made a comment in there.

Claire McDonough: Prepared remarks that now that.

Claire McDonough: The shutdown has competed.

Claire McDonough: 56000 units of annual capacity for our one on two shifts.

Claire McDonough: Is this sort of reflects to arrive.

Claire McDonough: <unk> to think about now on a go forward basis Caribbean all the way until our two launches in the first half of 2026 essentially.

Claire McDonough: So essentially, a maximum of, you know, 56,000 units of R1 minus any shutdown impact that you may have, let's say next year, plus some level of growth in EDDs. But is that 56,000 essentially the max we'll see in terms of annual R1 capacity? Sure, so there are a couple of points I want to make.

Claire McDonough: Axiom of 56000 units of one minus any shutdown impacts that you may have let's say next year plus some level of growth.

Claire McDonough: But as it is at 56000 essentially be the Max we will see in terms of annual capacity and there are two that comes on top of it.

Speaker Change: Sure. So there's a couple of points I wanted to make and first as we think about the longer term introduction of our two than normal.

Claire McDonough: We're building capacity towards 215000 units in aggregate and that can shift between our three vehicle lines, where we will have 85000 units a maximum capacity for our 165000 units.

Claire McDonough: Capacity for our commercial vans and 155000 units of capacity for our two so within that matrix will have the ability to flex volumes to stay within the bounds of the 215000 units.

Claire McDonough: Total maximum capacity and so that could be achieved for example, running two shifts on our one.

Claire McDonough: <unk> three <unk>.

Claire McDonough: Our Q and a single shift on on commercial vans. So there is flexibility as we think about the longer term volumes, but it is accurate as you noted that.

Claire McDonough: So there's flexibility as we think about the longer term volumes, but it is accurate, as you noted, that the R1 volumes will be 56,000 units based on the 2 shift operation. Great. Thank you. Thank you. And our next question comes from Shreyas Patil with Wolf Research. Your line is open.

Shreyas Patil: Our wine volumes will be 56000 units based off of a two shift operation.

Shreyas Patil: Great. Thank you.

Shreyas Patil: Thank you and our next question comes from <unk> Patil with Wolfe Research. Your line is open.

Shreyas Patil: Hey, Thanks, a lot for taking my question.

Operator: I'm just curious how we should think about the speed at which you could ramp up or two as we as we move into 2006 I know, it's still early but with a lot of the innovations that you've already talked about around.

Operator: Data castings and structural battery packs, the new simplified issue.

Operator: Architecture, just how should we think about the pace.

Operator: At which you could get to volume production once <unk> gets going.

Operator: The first is just our experience of learning and growing as a company in terms of managing and running a launch. And, you know, if I wind the clock back to when we first launched R1T, relative to where we are today, the strength of our operations organization, the strength of our launch teams, and then the strength of our entire development process as that blends into the launch process is so much higher, given the number of products we've launched and the number of iterations we've gone through there. So with that said, the key enablers for a smooth launch are, first and foremost, making sure the supply base can support the launch.

Operator: Sure.

Operator: Three elements I'd callout. The first is just our experience.

Operator: And learning and growth as a company in terms of managing and running a launch and if I wind the clock back when we first launched our <unk> relative to where we are today.

Operator: The strength of our operations organization the strength of our launch teams and then the strength of our entire development processes that blends into the launch process.

Operator: Is so much higher given the number of products, we've launched and the number of iterations have gone through there so with that said.

Operator: Enablers for a smooth launch of our first and foremost making sure the supply base can support the launch and so we've built.

Robert Joseph Scaringe: A robust supply base and a supply chain team that is not only responsible for repairing those supplier relationships and putting in place those contracts, but importantly, also ensuring the development of those components and the launch of those components are at the quality levels that will support a rapid ramp up of our plan. And, of course, it's in the interest of the supplier to also have a rapid ramp up. Everybody wants to ramp up as quickly as possible.

Operator: Robust supply base.

Robert Joseph Scaringe: And team.

Robert Joseph Scaringe: Not only is responsible procuring those supplier relationships and putting in place those contracts, but importantly also.

Robert Joseph Scaringe: Ensuring the development of those components and the launch of its components.

Robert Joseph Scaringe: Our asset quality levels that will support a.

Robert Joseph Scaringe: The rapid ramp up of our plan and of course, it's in the interest of the suppliers saw some rapid ramp up everybody wants to ramp as quickly as possible.

Robert Joseph Scaringe: So, the health of not only our process but the health of the way we're managing the supply base for our two, and I should say that should be evidenced by what we will see and what we'll demonstrate here with the re-ramp post this launch. We've also seen it with the ramp of our in-house drive units.

Robert Joseph Scaringe: So the health of not only our process, but the health of the way, we're managing the supply base for our two and I should say thats been should be evidenced by what we will see what will demonstrate here.

Robert Joseph Scaringe: With the re ramp post this launch.

Robert Joseph Scaringe: We've also seen it with the ramp of our in House drive units, we've seen it with the re ramp of our <unk> program.

Robert Joseph Scaringe: But the last item I'd call out.

Robert Joseph Scaringe: We've seen it with the re-ramp of our program, but the last item I'd call out is just the nature of the product has been designed from the get-go to also ramp for easily, so really heavy focus on an efficient design and a design that allows us to very easily put the vehicle together and takes away any of the risk items that we've either encountered on R1 or have addressed in R1 over the last two years. Okay, all right, thanks a lot.

Robert Joseph Scaringe: It's just the nature of the product has been designed from the get go to also ramp for easily so really heavy focus.

Robert Joseph Scaringe: And efficient design and a design that allows us to very easily put the vehicle together and takes away any of the risk items that we've either encountered on our won or have addressed in our won over the last few years.

Speaker Change: Okay, alright, thanks, a lot.

Robert Joseph Scaringe: And maybe just a point of clarification for Claire, you know, when you talk about reaching gross profit in the fourth quarter of this year. First, is that a run rate figure for Q4? And then, secondly, does that exclude the various cost of revenue efficiency initiatives that you've talked about? It looks like that's being excluded from the EBITDA calculation. I just wanted to make sure if that's also excluded from gross profit.

Robert Joseph Scaringe: And maybe just a point of clarification for clear when you talked about.

Robert Joseph Scaringe: Reaching gross profit in the fourth quarter.

Robert Joseph Scaringe: This year first of all is that a run rate figure for Q4 and then.

Robert Joseph Scaringe: Secondly, does that exclude the various cost of revenue efficiency initiatives that you've talked about it it looks like thats been excluded from the EBITDA calculation I just wanted to make sure if that's.

Robert Joseph Scaringe: Also excluded from the gross profit target.

Speaker Change: Sure sure yes.

Robert Joseph Scaringe: Looked at Q4, we don't expect there to be some.

Claire McDonough: Similar charges as we had in <unk>.

Claire McDonough: Q1 of this year.

Claire McDonough: Predominantly related to add that Paragon shutdown and some of the changes in supplier contracts that we mentioned it's also so we do expect Q4 to be gross profit positive for.

Claire McDonough: In the quarter and that sets us up nicely as we think about achieving positive gross profit for the full year of 2025 on a go forward basis as well.

Claire McDonough: Okay, great. Thanks, a lot.

Speaker Change: Thank you.

Claire McDonough: Thank you. And our last question comes from Joseph Spak with UBS. Your line is open.

Claire McDonough: And our last question comes from Joseph Spak with UBS. Your line is open.

Joseph Robert Spak: Thank you very much team.

Operator: Claire.

Operator: Go back to the.

Joseph Robert Spak: The capacity commentary because I know you said after launch and plan changes.

Joseph Robert Spak: My understanding was that that 215 requires in addition.

Joseph Robert Spak: An additional paint shop is that still accurate than like what's sort of the.

Claire McDonough: And like, what's the sort of timing for that? Because I, like, is that going to be in advance of the R2 launch? Or are you going to sort of, you know, wait to see how the R2 launch is going before you start adding some of that capacity? Sure, Joe. As we look at the paint shop capacity in the plant, we're evaluating a number of different strategies to achieve the 215,000 units of total capacity.

Claire McDonough: The timing for that because I like is that going to be in advance of the <unk> launch are you going to sort of.

Joe: Wait to see how the RSV launches have gone before you start having some of that capacity.

Joe: Sure Kevin.

Speaker Change: Look at the paint shop capacity in the plant.

Claire McDonough: We're evaluating a number of different strategies to achieve that 215000 units.

Claire McDonough: Total capacity and so that.

Claire McDonough: And so that could be within our existing paint shop; that could be adding additional capacity beyond that. So it's something we're actively looking at and studying. [inaudible] great in the paint shop or the current capacity of the paint shop. It's below that 215.

Joe: Yes that could be within our existing paint shop that could be adding additional capacity beyond that.

Claire McDonough: It's something we're actively looking at and studying.

Claire McDonough: And remember.

Claire McDonough: Great and the paint shop or the current capacity of the paint shop them.

Claire McDonough: So that $2 15.

Claire McDonough: The current capacity is 150000 units in the paint shop.

Claire McDonough: Okay.

Claire McDonough: And then R. J just on the demand generation activities like the 20 8-K demo rides and 91% just like that feels significant.

Claire McDonough: <unk>.

Claire McDonough: You mentioned Thats, an effective demand generation strategy, obviously getting potential customers of the vehicle is great.

Robert Joseph Scaringe: Or like, how should we like measure that? Like, in what context should we take 28k demos? Because, you know, last quarter, you mentioned, Right, the guide is dependent on improvement in the order book, and it seems like this is what would help drive that. So I think it's important to understand, Um, you know, how we, like, either convert or what sort of context we should take.

Robert Joseph Scaringe: Right. The guide is dependent on improvement in the order book and it seems like this would help drive that so I think it's important to understand.

Robert Joseph Scaringe: How are you.

Robert Joseph Scaringe: Either conversion or what sort of context, we should take that number.

Speaker Change: Yes Jos.

Robert Joseph Scaringe: I said in open her opening remarks demo drives is a really critical focus for us.

Robert Joseph Scaringe: In terms of expanding awareness of the brand's top of funnel demand and then translating that top of funnel demand all the way down through <unk>.

Robert Joseph Scaringe: And so that 28000 test drives for demo jobs that we.

Robert Joseph Scaringe: Gave in Q1, that's roughly a 90% increase over what we did in Q4 of 2023. So it was a significant step up in it it was.

Robert Joseph Scaringe: The results of us also leveraging our service network to administer a lot of those test drives. We're really encouraged by the results of that program. But it's one of many initiatives we have. And I do want to just make sure I call out that we've also continued to expand our leasing program, which now includes R1S. We launched R2 and R3, which had an outstanding effect of just creating awareness around the brand, and we were encouraged by the early results that we're seeing.

Robert Joseph Scaringe: The result of US also leveraging our.

Robert Joseph Scaringe: Service network to administer a lot of those test drives and we're really encouraged by the results.

Robert Joseph Scaringe: We launched.

Robert Joseph Scaringe: Tier two and three which had an outstanding effect of just creating awareness around the brand.

Robert Joseph Scaringe: And we were encouraged by the early results that we're seeing.

Robert Joseph Scaringe: So you're satisfied with that improvement in the order book to hit the guidance for the year? We're, yeah, we're, as I said, we're encouraged by what we've done so far. And of course, satisfied is a funny word, I'd say, my job is to never be satisfied.

Robert Joseph Scaringe: So you are satisfied with that improvement in the order book.

Robert Joseph Scaringe: To hit the guidance with you.

Robert Joseph Scaringe: But I'd say we're very encouraged. Okay, thank you. Thank you. That's all the time we have for questions.

Robert Joseph Scaringe: As I said, we're encouraged.

Robert Joseph Scaringe: With what we've done so far and of course satisfies a funny word I would say Mike.

Robert Joseph Scaringe: My job is to never be satisfied, but I'd say, we're very encouraged.

Speaker Change: Thank you.

Operator: I'd like to turn the call back over to RJ Scaringe for closing remarks. Well, thanks, everyone, for joining us on the call today. You know, we've talked to Claire and I for the last few quarters about the shutdown that we just completed and are now re-ramping R1 production, following that. This was a really important step for us. It was a critical step in order to achieve the long-term gross margin potential of the R1 platform and, of course, therefore, the normal site.

Speaker Change: Thank you that's all the time, we have for questions I'd like to turn the call back over to R. J Reynolds for closing remarks.

Operator: The execution that went into that from our teams and the precision with which that was pulled off are proud of, and we look forward to starting to see the numbers from that body of work flow into the financials and being able to talk about it in the context of these calls. But... With that, we're also happy to now have a physical and visual representation of our future products when we talk about R2.

Robert Joseph Scaringe: Well, thanks, everyone for joining us on our call today.

Operator: We've talked to <unk> for the last few quarters about the shutdown that we just.

Operator: We've just completed and are now re ramping our one production following that.

Operator: This is a really important step for us it was a critical step.

Operator: In order to achieve the.

Operator: Long term gross margin potential of the <unk> platform and of course, therefore, the normal site.

Operator: The execution that went into that from our teams and the precision through which that was that was pulled off we're proud of.

Operator: We look forward to starting to see the numbers from that that body of work flow.

Operator: Flow into into the financials will be able to talk about it in the context of these calls.

Operator: But.

Operator: With that we're also happy to now have a physical and visual representation of our future products. When we talk about our two so it's not just an esoteric idea of a future product, but actually you can see very specifically, how we see ribbon.

Operator: So it's not just an idea of a future product, but actually, you can see very specifically how we see Rivian expanding to more affordable markets and lower price point vehicles. And the team is incredibly focused on driving efficiency and driving cost effectiveness into the business across every aspect of what we do. What we'll see the most of is the improvements we're making in COGS, and that's the bill of materials, that's the conversion costs.

Operator: Adding to more addressable markets and lower price point vehicles.

Operator: The team is incredibly focused on driving efficiency and driving.

Operator: Cost effectiveness into the business across every aspect of what we do.

Operator: We'll see the most of US the improvements, we're making in Cogs and bill of materials, that's conversion cost.

Operator: As Claire talked about, that also ties to even starting to realize some of the benefits of our accelerated depreciation of equipment. But we'll see that heavy focus continue. It's a cultural drive within the entire business. And we are excited about going through the rest of this year and the path to demonstrating that through the gross margin profitability of R1. And then, of course, as that translates to R2 launching in early 2026.

Operator: Talked about that also ties to even starting to realize some of the benefits of our accelerated depreciation of equipment, but we will see that heavy focus continue its.

Operator: Cultural drive within the entire business.

Operator: And we are excited about going through the rest of this year and the path to demonstrating that through the gross margin profitability of our one.

Operator: And then of course as that translates to our two launching in early 2026.

Robert Joseph Scaringe: So thank you everybody for joining and look forward to our next call. Thank you for your participation. This does conclude the program. You may now disconnect. Everyone, have a great evening.

Speaker Change: So thank you. Thank you everybody for joining and look forward to our next call.

Robert Joseph Scaringe: Thank you for your participation. This does conclude the program and you may now disconnect everyone have a great evening.

Q1 2024 Rivian Automotive Inc Earnings Call

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