Q2 2024 Rivian Automotive Inc Earnings Call

August 6, 2024

Operator: At this time, all participants are in a listen-only mode. Please be advised that today's conference is being recorded. After the speaker's presentation, there will be a question-and-answer session. To ask a question, please press star-one-one on your telephone and wait for your name to be announced.

Operator: in 2024 earnings conference call. At this time, all participants are in a listen-only mode. Please be advised that today's conference is being recorded.

Paul at this time, all participants are in a listen only mode. Please be advised that today's conference is being recorded after the speaker's presentation there'll be a question and answer session to ask a question. Please press star one one on your telephone and wait for your name to be announced to withdraw your question. Please press star one again.

Operator: After the speaker's presentation, there will be a question-and-answer session. To ask a question, please press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again.

Operator: To withdraw your question, please press star-one-one again. I would now like to hand the conference over to your speaker today, Tim Bei, Vice President. Good afternoon, and thank you for joining us for Rivian's second 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 laws. Such statements involve risks and uncertainties that could cause actual results to differ materially.

Timothy Bei: I would not like to hand a conference over to your speaker today, Tim Bay, Vice President, Investor Relations. Good afternoon, and thank you for joining us for Rivian's second quarter 2024 earnings call. Before we begin, matters discussed on this call, including comments and responses to questions, reflect management 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 laws. Such statements involve risks and uncertainties that could cause actual results to differ materially. These risks and uncertainties are described in our SEC filing and today's shareholder letter.

I would now like to hand, the conference over to your Speaker today, Tim Bay.

Tim Bay: Vice President Investor Relations.

Speaker Change: Good afternoon, and thank you for joining us for <unk> second 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 considered forward looking statements under federal Securities laws.

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

Tim Bay: 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.

Timothy Bei: During this call, we will discuss both GAP and non-GAP financial measures. A reconciliation of GAAP to non-GAAP financial measures is provided in our shareholder letter.

Timothy Bei: 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.

Tim Bay: Before the call we published our shareholder letter, which include an overview of our progress over the recent months I.

Robert Scaringe: 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. During our call, I will highlight key developments in the second quarter and provide an update on the progress we're making against our value drivers.

Timothy Bei: 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.

Robert Scaringe: During our call, I will highlight key developments in the second quarter and provide an update on the progress we're making against our value drivers. Prior to discussing quarterly details, I want to reinforce the key messages conveyed in depth during our recent investigation. To achieve the full potential of our vision, we need to aggressively drive towards profitability. The fundamental levers underpinning this goal include the recent transition to our second-generation R1 platform, and the subsequent introduction of our mid-sized platform, which underpins R2.

Robert Scaringe: Prior to discussing quarterly details, I want to reinforce the key messages conveyed in depth during our recent Investor Day. To achieve the full potential of our vision, we need to aggressively drive towards profitability. The fundamental levers underpinning this goal include the recent transition to our second-generation R1 and the subsequent introduction of our midsize platform, which underpins R2. I'm encouraged by the progress ramping up our second-generation R1 vehicles, as well as developing R2, which we expect to launch in the first half of 2026. The ability to dramatically reduce costs in a condensed timeframe and drive continual improvement in the customer experience is based on our intentional approach to vertical integration.

Robert Scaringe: I'm encouraged by the progress ramping up our second generation R1 vehicles and developing R2, which we expect to launch in the first half of 2026. The ability to dramatically reduce costs in a condensed time frame and drive continual improvement in the customer experience is based on our intentional approach to vertical integration. From the beginning, we have vertically integrated certain components of the vehicle, driven by the desire to create superior customer experiences and deliver long-term structural cost savings. The success of this is demonstrated by a recent J.D.

Robert Scaringe: From the beginning, we have vertically integrated certain components of the vehicle, driven by the desire to create superior customer experiences and deliver long-term structural cost advantages. The success of this is demonstrated by a recent JD Power Appeal Study, where Rivian received the highest score and the most satisfying brand across the automotive industry. We spent years developing key technologies such as our software, electrical hardware, autonomy, and propulsion. The significant cost of performance benefits from these technologies gives us confidence in our ability to continue developing and building highly desirable vehicles across the R1, R2, and R3 product lines.

Robert Scaringe: Power appeal study where Rivian received the highest score and the most satisfying brand across the automotive industry. We spent years developing key technologies such as our software, electrical hardware, autonomy, and propulsion. The significant cost and performance benefits from these technologies give us confidence in our ability to continue developing and building highly desirable vehicles across the R1, R2, and R3 products. As a testament to our industry-leading technology platform, on June 25th, we announced the expected joint venture with Volkswagen Group. The announcement validates our technology platform and is expected to substantially expand the market applications for our software and associated Zonal Electroarch.

Robert Scaringe: As a testament to our industry-leading technology platform, on June 25, we announced the expected joint venture with Volkswagen Group. The announcement validates our technology platform and is expected to substantially expand the market applications for our software and associate its own intellectual art.

Robert Scaringe: Dexter. Rivian's proven electronics and software platform is expected to serve as a foundation for future software development in the partnership. The technical workstream to prepare the integration of our electrical architecture and software technology stack into Volkswagen Group products is moving along very well, and we expect to close the joint venture in the fourth quarter of this year. As the auto industry transitions to smarter, more connected, more complex and integrated vehicle architectures, we strongly believe our technology is best positioned to deliver a modular and scalable platform that will help create highly compelling products and services that we expect will accelerate consumer shift to electrification.

Robert Scaringe: Rivian's proven electronics and software platform is expected to serve as the foundation for future software development in the partnership. The technical workstream to prepare the integration of our electrical architecture and software technology stack into Volkswagen Group products is moving along very well, and we expect to close the joint venture in the fourth quarter of this year. As the auto industry transitions to smarter, more connected, more complex, and integrated vehicle architectures, we strongly believe our technology is best positioned to deliver a modular and scalable platform that will help create highly compelling products and services that we expect will accelerate consumers' shift to electrification.

Robert Scaringe: I also want to take this opportunity to acknowledge our team who has continued to execute on our second generation R1 ramp of production and deliveries, R2 development, and the formation of our joint venture with Volkswagen Group. During the second quarter of 2024, we successfully completed the retooling upgrade in normal. This was a pivotal operational event for the company. The upgrade introduced new technologies and cost-focused material changes into the R1 vehicle platform will also incorporating manufacturing process improvements that are expected to improve cycle time utilization and cost. For example, we have reduced complexity and lowered the cost associated with the vehicle body, with a heavy emphasis on removing parts, processes, and steps.

Robert Scaringe: I also want to take this opportunity to acknowledge our team, who have continued to execute on our second generation R1 ramp of production and deliveries, R2 development, and the formation of our joint venture with Volkswagen Group. During the second quarter of 2024, we successfully completed the retooling upgrade in Normal.

Robert Scaringe: This was a pivotal operational event for the company. The upgrade introduced new technologies and cost-focused material changes into the R1 vehicle platform, while also incorporating manufacturing process improvements that are expected to improve cycle time, utilization, and cost. For example, we have reduced complexity and lowered the cost associated with the vehicle body with a heavy emphasis on removing parts, processes, and staff. These changes have reduced nearly 1,500 joints and contributed to an expected 30% improvement in the R1 production line.

Robert Scaringe: These changes have reduced nearly 1,500 joints and contributed to an expected 30% improvement in the R1 production line rate. Following completion of the retooling upgrade, we resume production and are encouraged with the early progress of ramping our second generation R1 variants. The new R1 vehicles have hundreds of design, engineering, and performance upgrades, with the most significant being an entirely new zonal architecture, new compute and autonomy platform, new in-house drive units, and a re-engineered suspension system. The introduction of the second generation R1 platform combined with commercial cost downs and commodity tailwinds are expected to enable significant material cost reduction.

Robert Scaringe: Following completion of the retooling upgrade, we resume production and are encouraged with the early progress of ramping up our second generation R1 variant. The new R1 vehicles have hundreds of design, engineering, and performance upgrades, with the most significant being an entirely new zonal architecture, new compute and autonomy platform, new in-house drive units, and a re-engineered suspension. The introduction of the second-generation R1 platform, combined with commercial cost downs and commodity tailwinds, is expected to enable significant material cost reduction.

Robert Scaringe: Importantly, I want to emphasize there is more to go. We are focused on reducing R1 costs beyond 2024 to lower material cost and conversion cost. As we continue to source materials for R2, we are seeing opportunities to further reduce the cost of R1 through additional supplier cost reductions. In addition, we believe the expected joint venture with Volkswagen Group will allow us to achieve more favorable pricing from suppliers.

Robert Scaringe: Importantly, I want to emphasize there is more to go. We are focused on reducing R1 costs beyond 2024 through lower material costs and conversion. As we continue to source materials for R2, we are seeing opportunities to further reduce the cost of R1 through additional supplier cost reduction. In addition, we believe the expected joint venture with Volkswagen Group will allow us to achieve more favorable pricing from suppliers. This includes components, chipsets, printed circuit board assemblies, and all the associated content that relates to these hardware devices.

Tim Bay: Cost of our one through additional supplier cost reductions.

Tim Bay: In addition, we believe the expected joint venture with Volkswagen Group will allow us to achieve more favorable pricing from suppliers.

Robert Scaringe: This includes components, chipsets, printed circuit board assemblies, and all the associated content that relates to those hardware systems. I want to delve in further on our new second generation driving units, which represent a significant change in capability and cost. The second generation R1 includes our scent motor system, which underpins under tri-motor and quad motor. These motor configurations, in addition to our dual motor released in 2023, mean all motors on all-reviewed vehicles are now designed, engineered, and manufactured fully in-house. The 850 horsepower tri-motor variants are expected to start deliveries towards the end of the third quarter.

Tim Bay: This includes components chipsets printed circuit board assemblies, and all the associated content that relates to those hardware systems.

Robert Scaringe: I want to delve in further on our new second generation drive units, which represent a significant change in capability and cost. The second generation R1 includes our Ascent motor system, which underpins our new tri-motor and quad-motor. These motor configurations, in addition to our dual motor released in 2023, mean all motors on all Rivian vehicles are now designed, engineered, and manufactured fully in-house. The 850 horsepower tri-motor variants are expected to start deliveries towards the end of the third quarter.

Tim Bay: I want to delve in further on our new second generation drive units, which represent a significant change in capability and cost.

Tim Bay: The second generation or one includes our sent motor system, which underpins, our new Tri motor and Quad motor.

Tim Bay: These motor configurations. In addition to our dual motor released in 2023, I mean, all motors on all reviewed vehicles are now designed engineered and manufactured fully in house.

Tim Bay: 850 horsepower trimotor variance are expected to start deliveries towards the end of the third quarter.

Robert Scaringe: The tri-motor variant is equipped with two scent motors in the rear and one in Dura Motor in the front for a blend of exceptional power and range. The tri-motor R1T delivers 0-60 miles per hour in 2.9 seconds while offering an estimated range in conserve mode of approximately 4 miles. Miles. The quad motor is designed for peak adventure with four cent motors. The quad motor delivers 1,025 horsepower, 0 to 60 in less than 2.5 seconds, and achieves the quarter mile in less than 10.5 seconds. Feedback on our second generation R1 has been very positive. It is a fundamentally better vehicle while simultaneously costing less to build.

Robert Scaringe: The tri-motor variant is equipped with two ascent motors in the rear and one enduro motor in the front for a blend of exceptional power and range. The Trimotor R1T delivers 0-60 mph in 2.9 seconds while offering an estimated range in conserved mode of approximately 400 miles.

Tim Bay: The trimotor variant is equipped with two ascent motors in the rear and one in Durham motor in the front for a blend of exceptional power and range.

Tim Bay: <unk> delivers zero to 60 mph and $2 nine seconds, while offering an estimated range and conserve vote of approximately 400 miles.

Robert Scaringe: The quad motor is designed for peak adventure with four cent motors. The quad motor delivers 1025 horsepower, 0-60 in less than 2.5 seconds, and achieves the quarter mile in less than 10.5 seconds. Feedback on our second-generation R1 has been very positive. It is a fundamentally better vehicle while simultaneously costing less to build. We're excited to get more of our second generation products to customers and available for demo drives in the coming quarters.

Speaker Change: The Quad Motors designed for peak adventure with four cent motors, the quad marrow delivers 1025 horsepower zero to 60 in less than two five seconds and achieves the quarter mile in less than 10 five seconds feed.

Speaker Change: Feedback on our second generation or one has been very positive. It is a fundamentally better vehicle, while simultaneously costing less to build.

Robert Scaringe: We're excited to get more of our second generation products to customers and available for demo drives in the coming quarters. At Rivian, we wake up every day thinking about ways to make our products better. This is based on our sense of urgency in transitioning the world towards a fossil fuel-free future. This is possible by creating products that are deeply exciting to consumers, products that carry attributes and design characteristics that pull people out of internal combustion vehicles, because they're experiencing something that isn't just better for the environment, but also really enjoyable and desirable to use every day.

Tim Bay: We're excited to get more of our second generation products to customers and available for demo drives in the coming quarters.

Robert Scaringe: At Rivian, we wake up every day thinking about ways to make our products better. This is based on our sense of urgency in transitioning the world towards a fossil fuel-free future. This is made possible by creating products that are deeply exciting to consumers, products that carry attributes and design characteristics that pull people out of internal combustion vehicles because they're experiencing something that isn't just better for the environment but also really enjoyable and desirable to use every day. I would 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.

Speaker Change: At Radian, we wake up everyday thinking about ways to make our products better.

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

Claire McDonough: With that, I'll pass the call to Claire. Thanks, RJ. During the second quarter of 2024, we made significant progress driving greater cost efficiency, further strengthening our balance sheets, validating the differentiated nature of our technology stack, and establishing new business opportunities. During the second quarter, we produced 9,612 vehicles and delivered 13,790 vehicles, which represented the primary driver of the $1.2 billion of revenue we generated. As expected, second quarter production was impacted by plant downtime associated with the retooling upgrades. Our deliveries were strong as we sold through the majority of inventory of our first generation R1s.

Claire McDonough: Thanks, RJ. During the second quarter of 2024, we made significant progress driving greater cost efficiency, further strengthening our balance, Validating the Differentiated Nature of Our Technology Stack, and Establishing New Business Operations. During the second quarter, we produced 9,612 vehicles and delivered 13,790 vehicles, which represented the primary driver of the $1.2 billion of revenue we generated. As expected, second quarter production was impacted by plant downtime associated with the re

Claire McDonough: Our deliveries were strong as we sold through the majority of inventory of our first generation R1. Due to strong Q2 performance which led to our lower starting finished goods inventory balance and the continued ramp of production throughout the third quarter, we expect our third quarter deliveries to be below our second quarter results and production volumes to be in line with our first quarter levels. Total gross profit was negative $451 million.

Claire McDonough: Due to strong Q2 performance, which led to our lower starting finished goods inventory balance and the continued ramp of production throughout the third quarter, we expect our third quarter deliveries to be below our second quarter results, and production volumes to be in line with our first quarter levels.

Claire McDonough: Total gross profit was negative $451 million. Our gross profit loss per vehicle delivered was approximately $33,000. Which includes approximately $15,000 of depreciation and amortization expense, and $1,200 of stock-based compensation expense. In addition, we incurred approximately $2,400 per vehicle delivered in the quarter related to our cost of revenue efficiency initiatives, which we do not anticipate being part of our long-term normalized cost structure. We expected to see significant cost reductions in our R1 platform during the second half of 2024 as we ramped the production and deliveries of our second-generation R1 vehicles. Additionally, the reduction in our LCNRV write-down for the quarter compared to Q1 2024 reflects the progress we were making in a situation with our material cost reductions and operational efficiencies associated with our second-generation R1 vehicles.

Claire McDonough: Our gross profit loss per vehicle delivered was approximately $33,000, which includes approximately $15,000 of depreciation and amortization expense and $1,200 of stock-based compensation. In addition, we incurred approximately $2,400 per vehicle delivered in the quarter related to our cost of revenue efficiency initiatives, which we do not anticipate being part of our long-term normalized cost structure. We expect to see significant cost reductions in our R1 platform during the second half of 2024 as we ramp up the production and deliveries of our second generation R1 vehicles.

Claire McDonough: Additionally, the reduction in our L-CNRV write-down for the quarter compared to Q1 2024 reflects the progress we are making in association with our material cost reductions and operational efficiencies associated with our second generation R1 vehicle. We remain confident in our path to deliver modest positive gross profit in the fourth quarter of 2024 and for the full year of 2025. Importantly, our team is already focused on driving incremental cost out of our R1 platform to help achieve our long-term gross profit target of 25%.

Claire McDonough: We remain confident in our path to deliver modest positive gross profit in the fourth quarter of 2024 and for the full year of 2025.

Claire McDonough: Importantly, our team is already focused on driving incremental costs out of our R1 platform to help achieve our long-term gross profit target of $25,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000, E.C. The key drivers of our long-term R1 profitability include reducing material costs, leveraging our fixed costs, and scaling our revenues per delivered unit through product mix and pricing, software and services, and other revenues. During the second quarter, we also announced the intention to form an equally controlled and owned joint venture with the Volkswagen Group to create next-generation electrical architecture and best-in-class software technology. In association with this deal, Volkswagen Group have made an initial investment of $1 billion into Rivian, with up to $4 billion in plant additional investments for a total deal size of $5 billion.

Claire McDonough: The key drivers of our long-term R1 profitability include reducing material costs, leveraging our fixed costs, and scaling our revenues per delivered unit through product mix and pricing, software, and services, and other revenues. During the second quarter, we also announced the intention to form an equally controlled and owned joint venture with the Volkswagen Group to create next-generation electrical architecture and best-in-class software technology. In association with this deal, Volkswagen Group has made an initial investment of $1 billion into Rivian, with up to $4 billion in planned additional investments for a total deal size of $5 billion.

Claire McDonough: The incremental investments are subject to the completion of definitive agreements, the achievement of certain milestones, and the receipt of regulatory approvals. Assuming all criteria are met, we expect that the full $5 billion is intended to flow to the benefit of Rivian. In addition to the $5 billion of capital to Rivian, we anticipate incremental benefits through cost savings on materials, operating expense efficiencies, and future revenue opportunities associated with the joint venture. The initial and planned investments by Volkswagen Group in addition to our cash equivalence and short-term investments are expected to provide the capital to fund Rivian's operations through the ramp of RQN normal as well as the mid-sized platform in Georgia, enabling a path to positive free cash flow and meaningful scale.

Claire McDonough: In addition to the $5 billion of capital to Rivian, we anticipate incremental benefits through cost savings on materials, operating expense efficiencies, and future revenue opportunities associated with the joint venture. The initial and planned investments by Volkswagen Group, in addition to our cash, cash equivalents, and short-term investments, are expected to provide the capital to fund Rivian's operations through the ramp of R2 and Normal, as well as the midsize platform in Georgia, enabling a path to positive free cash flow and meaningful scale. As RJ mentioned, we expect the deal to close in the fourth quarter of this year, and we will provide additional details at that time.

Claire McDonough: As Arge mentioned, we expected the deal to close in the fourth quarter of this year, and we will provide additional details at that time. During the second quarter, we improved our cash flow from operations by 41 percent as compared to the first quarter of 2024. This improvement is reflective of our continued focus on cost and greater working capital efficiency across the business. As compared to the first quarter of 2024, we reduced our gross profit loss per vehicle by approximately $6,000 and made progress on reducing our gross inventory balance. We believe these trends will result in further improvements in our cash usage for the second half of 2024.

Claire McDonough: During the second quarter, we improved our cash flow from operations by 41% as compared to the first quarter of 2024. This improvement is reflective of our continued focus on cost and greater working capital efficiency across the business. As compared to the first quarter of 2024, we reduced our gross profit loss per vehicle by approximately $6,000 and made progress on reducing our gross inventory balance. We believe these trends will result in further improvements in our cash usage for the second half of 2024.

Claire McDonough: As we look ahead, we are reaffirming our 2024 production guidance of 57,000 units, delivery expectations of low single-digit growth as compared to 2023, EBITDA guidance of negative $2.7 billion, and capital expenditures of $1.2 billion. As a reminder, coming out of the retooling upgrade, we are currently operating the R1 line on a two-shift operation, which results in 56,000 units of annual run rate output. Our commercial van line is currently running on a limited one-shift operation, which has the potential to deliver a run rate annual output of 15,000 units.

Operator: As a reminder, coming out of the retooling upgrade, we are currently operating the R1 line on a two-shift operation, which results in 56,000 units of annual run rate output. Our commercial van line is currently running on a limited one-shift operation, which has the potential to deliver an annual run rate of 15,000 units. As we look ahead for 2025, we expect that our normal facility will not be producing vehicles for more than one month during the second half of the year as we upgrade and integrate new equipment into the plant ahead of our first half of 2026 R2 launch.

Claire McDonough: As we look ahead for 2025, we expect that our normal facility will not be producing vehicles for more than one month during the second half of the year as we upgrade and integrate new equipment into the plant ahead of our first half of 2026 or two lunch.

Claire McDonough: We continue to see a clear path to long-term, approximately 25% gross margin target, high approximately 10% free cash flow margin target.

Claire McDonough: Margaret. I want to, again, thank our team, partners, customers, suppliers, and shareholders for the tremendous support.

Speaker Change: 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.

Operator: With that, let me turn the call back over to the operator to open the line for Q&A. Thank you. As a reminder to ask a question, please press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again. Please limit yourself to one question and one follow-up. One moment. One moment for questions.

Operator: We continue to see a clear path to a long-term approximately 25% gross margin target, high teens adjusted EBITDA margin target, and approximately 10% free cash flow margin target. I wanted 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. As a reminder, to ask a question, please press star one on your telephone and wait for your name to be announced. To withdraw your question, please press star one again. Please limit yourself to one question and one follow-up.

Speaker Change: Thank you.

Speaker Change: Minder to ask a question. Please press star one one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one again, please limit yourself to one question and one follow up one moment for questions.

George Gianarikas: Our first question comes from George Gianarikas, with thanks George. As it stands today, the R1 products are being sold throughout the United States and Canada. And our EDD products are primarily focused; commercial and products are primarily focused in the United States, but we have made some deliveries in Europe and specifically in Germany.

Operator: One moment for questions. Our first question comes from George Gianarikas with Canaccord Genuity. You may proceed. Hi, good afternoon, and thank you for taking my question. Maybe just to start, can you just please talk about your geographic strategy, particularly in Europe, in light of the recent VW relationship? Thanks, George.

Speaker Change: Our first question comes from George <unk> with Canaccord Genuity you May proceed.

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

George: Maybe just to start can you just please talk about your geographic strategy, particularly in Europe in light of the recent VW relationship.

Robert Scaringe: As it stands today, the R1 products are being sold throughout the United States and Canada, and our EDV products are primarily, our commercial Venn products are primarily focused on the United States, but we have made some deliveries in Europe and specifically in Germany. Now, with regard to our future products with R2 and, of course, R3, those have been developed really at their core to fit not only the U.S. market but also the European market.

Speaker Change: Thanks George.

Speaker Change: As it stands today, the Arlen products are being sold throughout the United States and Canada.

Speaker Change: And our <unk> products are primarily for our commercial van project primarily focused.

In the United States, but we have made some deliveries in Europe and specifically in Germany.

George Gianarikas: Now, with regards to our future products with R2 and, of course, R3, those have been developed really at their core to fit not only the US market, but also fit the European market. And you can really see it as you look at the R2 R3 combination of what we believe captures a sweet spot in terms of both addressing demand for mid-size SUVs in both US and European markets, but also with R3 capturing a smaller crossover market. As you've heard us talk about many times, this is one of the things we're so excited about with the R2 platform: is just the growth in the address market for us as a business.

Speaker Change: Now with regards to our future products with our two end.

Speaker Change: And of course, our three those have been developed really at their core to fit now in the U S market, but also fit the European market and you can really see it as you look at the our two or three combination of what we believe capturing a sweet spot in terms of both addressing demand for midsize Suvs in both U S and European markets.

Robert Scaringe: And you can really see it as you look at the R2, R3 combination of what we believe is capturing a sweet spot in terms of both addressing demand for midsize SUVs in both U.S. and European markets, but also with R3 capturing a smaller crossover market. And so, as you've heard us talk about many times, this is one of the things we're so excited about with the R2 platform, the growth in the addressable market for us as a business.

Speaker Change: But also with our three.

Speaker Change: Capturing a smaller crossover market and so as you've heard us talk about many times. This is one of the things. We're so excited about with with the our two platform is just the growth in the addressable market for us as a business.

George Gianarikas: Thank you.

Robert Scaringe: Thank you. Maybe as a follow-up on the VW relationship, I know you're still working through the details, you mentioned that, but is there any update on the potential to transfer some of your op-ex into that JV? Thank you. Yes, as she said, we're, we're, we haven't announced the specifics around the joint venture, inclusive of, you know, any associated cost sharing. But I think importantly, I'd want to call out how this relationship was formed.

Speaker Change: Thank you and maybe as a follow up on the VW relationship I know you're still working through the details you mentioned that but is there any update on the potential to transfer some of your opex.

George Gianarikas: Maybe as a follow-up on the VW relationship, I know you're still working through the details. You mentioned that, but is there any update on the potential to transfer some of your OPEX into that JV? Thank you. As you said, we haven't announced the specifics around the joint venture inclusive of any associated cost sharing, but I think importantly I'd want to call out how this relationship was formed and it's really formed on the basis of leveraging the technical platform that we built around our network architecture or topology VCs, and of course our software stack. And allowing and enabling that technology to really scale well beyond Ribions product line and to allow and enable us to get to global scale across multiple markets very quickly.

Speaker Change: Into that JV. Thank you.

Robert Scaringe: And it's really formed on the basis of leveraging the technical platform that we built around our network architecture, our topology of ECUs, and, of course, our software stack and allowing and enabling that technology to really scale well beyond Rivian's product line and to allow, enable us to get to global scale across multiple markets very quickly. So we're ecstatic about the impact that that can drive in terms of helping to create exciting products that give consumers choices to move towards electrification. We're also excited about the scale that that provides from a sourcing point of view and a supply chain point of view as we think about the components and the assemblies that go into those systems. Thanks.

Speaker Change: Yes, as you said, we're a risk where we haven't announced the specifics around the joint venture.

Speaker Change: Closer of.

Speaker Change: Any.

And any associated cost sharing.

Speaker Change: But I think importantly, I'd want to call out is how this relationship was formed and it's really formed on the basis of of leveraging the technical platform that we built around our network architecture or topology of ease of use and of course, our software stack.

Speaker Change: And allowing and enabling that technology to really scale well beyond the libyans product line and to allow.

Speaker Change: Enable us to get to global scale across multiple markets very quickly. So we're we're ecstatic about the impact that that can drive in terms of helping to create exciting products that that give consumers choices.

George Gianarikas: So we're ecstatic about the impact that can drive in terms of helping to create exciting products that give consumers choices to move towards electrification.

Speaker Change: To move towards electrification.

George Gianarikas: We're also excited about the scale that that provides us from a sourcing point of view and a supply chain point of view as we think about the components and the assemblies that go into those systems. Thank you.

Speaker Change: We're also excited about the scale that that provides us from a sourcing point of view and a supply chain point of view as we think about the components of the assemblies that go into those systems.

Speaker Change: Thanks.

Speaker Change: Thank you.

Mark Delaney: Our next question comes from Mark Delaney with Goldman Sachs. He may proceed. Yes, good afternoon. Thanks very much for taking the questions. First, I've been to better understand how the company is tracking toward the target of positive growth margin and the fourth quarter and have the drivers change at all, especially as we've seen things like a 2.99% incentive they are utilizing, and perhaps that changes the mechanics to the positive growth profit bridge.

Operator: Thank you. Our next question comes from Mark Delaney with Goldman Sachs. He may proceed. Yes, good afternoon.

Speaker Change: Our next question comes from Mark Delaney with Goldman Sachs. You May proceed.

Operator: Thanks very much for taking the questions. First, I was hoping to better understand how the company is tracking toward the target of a positive gross margin in the fourth quarter. And have the drivers changed at all, especially as we've seen things like a 2.99% incentive they are utilizing, and perhaps that changes the mechanics of the positive gross profit bridge? Thanks, Mark.

Mark Delaney: Yes, hi, good afternoon, thanks, very much for taking the questions.

Mark Delaney: Just hoping to better understand how the company is tracking towards the target of a positive gross margin in the fourth quarter and have the drivers changed at all especially as routine things like at 299% incentive they are utilizing them and perhaps that changes the mechanics add to that positive gross profit bridge.

Mark Delaney: Thanks, Mark. There are still three key drivers to our path to positive growth profit. In Q4, the first is the variable cost improvement. We've had a lot of time at our investor date talking about the material cost reduction roadmap associated with our new gen to technology introductions, material cost reductions that we've had through supplier negotiations, as well as the commodity cost tailwinds that we anticipate seeing throughout the course of the second half of this year and into 2025 as well. The second driver is our fixed cost leverage, and this is enabled by the retooling upgrade that we had in normal, which has improved our production line rate by approximately 30%. This, together with the increased Q4 production volumes we anticipate seeing, as well as our reduction in depreciation expense across the business, will help drive this fixed cost leverage. The last key driver for us, as we've talked about in the past, is an increase in revenue per delivered unit, and this will see through the introduction of our trimotor R1s that you heard RJ speak about in his prepared remarks, as well as non-vehicle revenue growth from the sale of regulatory credits and the introduction of our pre-owned rebellion sales.

Claire McDonough: There are still three key drivers to our path to positive gross profit in Q4. The first is the variable cost improvement. We spent a lot of time at our investor day talking about the material cost reduction roadmap associated with our new Gen 2 technology introductions, material cost reductions that we've had through supplier negotiations, as well as the commodity cost tailwinds that we anticipate seeing throughout the course of the second half of this year and into 2025 as well.

Speaker Change: Thanks, Mark there are still three key drivers to our path to positive gross profit in Q4. The first is the variable cost improvement we spend a lot of time at our Investor day talking about the material cost reduction roadmap associated with our new Gen. Two technology introductions material cost reductions that we've had through supplier negotiations.

Speaker Change: <unk> as well as the commodity cost tailwind that we anticipate seeing throughout the course of the second half of this year and into 2025 as well. The second driver is in our fixed cost leverage and this is enabled by the retooling upgrade that we had a normal which has improved our production line rate by approximately 30%.

Claire McDonough: The second driver is our fixed cost leverage, and this is enabled by the retooling upgrade that we had in normal, which has improved our production line rate by approximately 30%. And this, together with the increased Q4 production volumes we anticipate seeing, as well as our reduction in depreciation expense across the business, will help drive this fixed cost leverage.

Speaker Change: And this together with the increased Q4 production volumes, we anticipate seeing as well as a reduction in depreciation expense across the business will help drive this fixed cost leverage and the last key driver for us as we've talked about in the past is is an increase in revenue per delivery unit and this will see through the introduction.

Claire McDonough: And the last key driver for us, as we've talked about in the past, is an increase in revenue per delivered unit. And this we'll see through the introduction of our tri-motor R1s, which you heard RJ speak about in his prepared remarks, as well as non-vehicle revenue growth from the sale of regulatory credits and the introduction of our pre-owned Rivian sales. We continue to remain confident in our path to positive gross profit in Q4, and it's important to note that our Q2 results had very limited sales of our Gen 2 vehicles.

RJ: Of our Tri mode or are ones that you heard RJ speak about in his prepared remarks as well as non vehicle revenue growth from the sale of regulatory credits and the introduction of our pre owned Caribbean sales and we continue to.

Mark Delaney: We continue to remain confident our path to positive growth profit in Q4, and it's important to note that our Q2 results had very limited sales of our Gen2 vehicles, so you're not actually seeing any of the flow through of the improvements that we've made throughout our production line or our material costs, and yet flow through that the results themselves as we look at the Q2 actions as a whole.

Speaker Change: We remain confident in our path to positive gross profit in Q4, and it's important to note that our Q2 results had very limited sales of our Gen. Two vehicles, so you're not actually seeing any of the flow through of the improvements that we've made throughout our production line or a material cost and yet flow through the results then.

Claire McDonough: So, you're not actually seeing any of the flow through of the improvements that we've made throughout our production line or our material costs, yet flow through the results themselves as we look at the Q2 actions as a whole. Thanks for that, Claire.

Speaker Change: <unk> as we look at the Q2 actions as a whole.

Claire McDonough: My second question was how to better think about the material cost improvements you're looking to achieve, such as the 20% for the dual-motor large pack second-gen R1 compared to the first-gen. I think those cost improvements do not incorporate some of the potential savings you think you may be able to realize now that you have the Volkswagen news out there and some of the response you've seen from suppliers. So I realize it's still somewhat early, but can you share a bit more on the magnitude of potential material cost improvements you may see as you're able to execute on some of that expanded opportunity? Thank you. Yeah, thanks, Mark, for the follow up. You're absolutely right.

Mark Delaney: Thanks for that, Claire. My second question was how to better think about the material cost improvement you're looking to achieve, such as the 20% for the dual motor large pack second gen R1 compared to the first gen. I think those cost improvements did not incorporate some of the potential savings you think you may be able to realize now that you have the VW news out there and some of the response you've seen from suppliers. So it really is still somewhat early, but can you share a bit more on the magnitude of potential material cost improvements you may see as you're able to execute on some of that expanded opportunity? Thank you.

Speaker Change: Thanks for that clarity My second question was how to better think about the material cost improvements you are looking to achieve such as the 20% for the dual motor a large pack second gen or one compared to the firsthand I think those cost improvements did not incorporate some of the potential savings. You think you may be able to realize now that you have.

Speaker Change: The VW news out there and some of the response, you're seeing from suppliers. So I realize it's still somewhat early but can you share a bit more on the magnitude of potential material cost improvements you may see as you're as you're able to execute on some of that extended opportunity. Thank you.

Mark Delaney: Yeah, thanks Mark for the follow-up. You're absolutely right; there's, you know, the 20% that we've referenced in cost reduction on the bill of materials for a light for light vehicle. That's based upon technical changes made to the vehicle and supplier negotiations that we drove over the last 18 months. There's certainly more room to go in terms of applying some of the leverage that we're going to see, not only with their relationship we've we're building with Volkswagen, but also with the scale that comes with R2. And so we do see continued progress as we drive towards a long term goal of 25% gross margin for our normal facility.

Operator: There's, you know, the 20% that we've referenced in Cost Reduction on the Bill of Materials for a Light-for-Light Vehicle. That's based on the technical changes we've made to the vehicle and supplier negotiations that we have driven over the last 18 months. There's certainly more room to go in terms of applying some of the leverage that we're going to see, not only with the relationship we're building with Volkswagen but also with the scale that comes with R2.

Speaker Change: Yes, Thanks, Marc for the follow up you're absolutely right. There is the 20% that we've referenced.

Speaker Change: In cost reduction on the bill of materials for our like for like vehicle.

Speaker Change: That's based upon.

Speaker Change: Tactical changes you made to the vehicle and supplier negotiations that we drove over the last 18 months.

Speaker Change: There are certainly more room to go in terms of applying some of the leverage that we're going to see not only with their relationship with rebuilding with Volkswagen, but also with the scale that comes with our two.

Operator: And so we do see continued progress as we drive towards a long-term goal of 25% gross margin for our normal facility. And it's these continued cost efforts that we're talking about, you know, here on reducing our bill of materials. We also see improvements happening in our conversion costs at the plant. And those conversion costs are both the continued progress around efficiency improvements within the plant but also, over time, the enhanced fixed cost leverage that's going to come from bringing R2 to production to be produced in normal as well. Thank you. Our next question comes from Philippe Houchois with Jeffrey T. Mapersweet. Yes, good afternoon.

Speaker Change: And so we do.

Speaker Change: We do see continued progress as we drive towards our long term goal of 25% gross margin.

Mark Delaney: And it's, you know, these continued cost efforts that we're talking about, you know, here on reducing our bill materials. We also see improvements happening in our conversion cost at the plant. And those conversion costs are both the continued progress around efficiency improvements within the plant, but also over time, the enhanced fixed cost leverage that's going to come from bringing R2 to production, to be produced in normal as well.

Speaker Change: For our normal facility.

Speaker Change: And it is.

Speaker Change: These these continued cost efforts that we're talking about.

Speaker Change: Here on reducing our bill of materials, we also see improvements happening and our conversion costs at the plant and those conversion costs are both the continued progress around efficiency improvements within the plant, but also over time the <unk>.

Speaker Change: Enhanced fixed cost leverage that's going to come from bringing our two.

Speaker Change: To production.

Speaker Change: To be produced in normal as well.

Mark Delaney: Thank you.

Speaker Change: Thank you.

Philippe Poo-Try: Our next question comes from Philippe Puchoye, with Jeffrey; he made her sweet. And yes, good afternoon. Thank you very much. A couple of questions to me. One is Velo mentioned in EDV in the release. Could you give us an update on how your customer trials are going on and might have a kind of an idea of when you might have first customers outside of the Amazon deal? Thanks for the question, Philippe. The EDV program is something that for us is we're really excited about the impact of it in terms of reducing your property emissions on a per mile basis as outstanding over internal combustion vehicles, and we've been able to really prove the robustness of the platform and the strength of the offering through our relationship and partnership with Amazon.

Speaker Change: Our next question comes from Felipe <unk> with Jefferies. You May proceed.

Operator: Thank you very much. I have a couple of questions for you. One is that there is very little mention of EDV in the report.

Felipe: Good afternoon. Thank you very much couple of questions for me one is available mentioned that in the release could.

Robert Scaringe: Could you give us an update on how your customer trials are going on and maybe have a kind of idea of when you might have your first customers outside of the Amazon deal? Thanks for the question, Philippe. The EDB program is something that, for us, we're really excited about the impact of it in terms of reducing carbon emissions on a per mile basis is outstanding compared to internal combustion vehicles. And we've been able to really prove the robustness of the platform and the strength of the offering through our relationship and partnership with Amazon.

Speaker Change: Could you give us an update on how your customer trials going on than might have been kind of an idea of when you might first customers outside of the Amazon deal.

Speaker Change: Thanks for the question Philip.

Speaker Change: The ETB program is something that for us is.

Speaker Change: We're really excited about the impact of it in terms of reducing <unk>.

Speaker Change: Carbon emissions on a per mile basis is outstanding over internal combustion vehicles, and we've been able to really prove the robustness of the platform and the strength of the offering through our relationship and partnership with <unk>.

Speaker Change: With Amazon and having a large deployed fleet of these before we started running the pilot programs, we've talked about in the past with non Amazon customers was really helpful. As we as we were found out just the vehicle, but also the sulfur surrounding a vehicle.

Robert Scaringe: And having a large deployed fleet of these before we started running the pilot programs we've talked about in the past with non-Amazon customers was really helpful as we were finding not just the vehicle but also the software surrounding the vehicle. And so, as we've talked about in the past, we're, over the course of this year, we've been running pilots in anticipation of a more significant ramp up in 2025. And this focus on pilots is really reflective of the nature of this business where these are large decisions around large numbers of vehicles for a lot of these bigger fleets, and it's appropriate that we build effective working models for how the vehicles are serviced, what digital support the vehicles have, and what infrastructure changes are necessary for each respective fleet.

Philippe Poo-Try: Having a large deployed fleet of these before we started running the pilot programs we've talked about in the past with non-Amazon customers was really helpful as we were not just the vehicle, but also the software surrounding the vehicle. And so, as we've talked about in the past, over the course of this year, we've been running pilots in anticipation of a more significant ramp up in 2025. And this focus on pilots is really reflective of the nature of this business, where these are large decisions around large numbers of vehicles for a lot of these bigger fleets. It’s appropriate that we build effective working models for how the vehicles are serviced, what digital support the vehicles have, and what infrastructure changes are necessary for each respective fleet.

Speaker Change: And so as we've talked about in the past where over the course of this year, we've been running pilots in anticipation of more significant ramp up in 2025.

Speaker Change: And this focus on pilots is really a.

Speaker Change: Reflective of the nature of this business where.

Speaker Change: These are large decisions around large numbers of vehicles for a lot of these bigger fleets and it's appropriate that we build.

Speaker Change: Effective working models for how the vehicles are serviced what digital support the vehicles have what infrastructure changes are necessary for each respective fleet.

Robert Scaringe: It's a lot different than adding a single charger in your garage when you buy an R1 when you're thinking about adding many chargers and a lot of new power to, let's say, a fulfillment center, a distribution center, an operating center.

Philippe Poo-Try: It's a lot different than adding a single charger in your garage when you buy an R1. When you're thinking about adding many chargers and a lot of new power until, let's say, a fulfillment center, distribution center, an operating center, if you're a business that's running 20, 30, 40, 50, maybe 100 plus vans out of it. So these are great learnings that we've been driving off the basis of what we put together with Amazon, and we are looking forward to starting to talk about other customers beyond Amazon. Right, thank you very much.

Speaker Change: It's a lot different than adding a single charger in your garage when you buy an R. One.

Speaker Change: When you're thinking about adding many chargers and in a lot of new power until let's say of a fulfillment center distribution Center and operating center, if you're a business Thats running 2030, 40, 50, maybe a 100 plus vans out of it. So these are great learnings that we've been driving off the basis of what we.

Robert Scaringe: If you're a business that's running 20, 30, 40, 50, maybe 100 plus vans out of it, so these are great learnings that we've been driving off the basis of what we put together with Amazon, and we are looking forward to starting to talk about other customers beyond Amazon. All right, thank you very much. If I can squeeze another one in,

Speaker Change: Put together with Amazon and we are looking forward to starting to talk about other customers beyond Amazon.

Robert Scaringe: On this Volkswagen relationship, did I understand correctly that you expect to close in Q4, and at that point, to the extent you agree with Volkswagen, you will disclose the terms of the JV. We might be able to get a lot of questions around the accounting and the JV and how much of the cost might be shared with the JV between regions. Will we get that information in the fourth quarter?

Speaker Change: Alright. Thank you very much if I can squeeze another one on <unk>.

Philippe Poo-Try: If I can squeeze another one, on this Volkswagen relationship, they don't understand correctly, you expected to close in Q4, and at that point you will disclose to the extended agreeable Volkswagen, you will disclose the terms of the JV, and we might be able to get a lot of questions around the accounting on the JV, and how much of the cost might be shared with the JV between reason. Will we get that information in the fourth quarter? Yes, exactly, so we'll be filing the definitive agreements associated with the Volkswagen technology joint venture. Once the JV is closed, which we anticipate being in Q4 this year, and we'll provide additional clarity on some of the financial impacts of the JV to Rivian's longer-term financial forecast and trajectory is already pointed to.

Speaker Change: Well as I can relationship didn't understand correctly, you expected to close in Q4 and at that point you will disclose to the extent you Greensville is that can you will disclose the terms of the JV.

Speaker Change: We may be able to get some questions around the accounting and the JV and how much of the cost may be shared with the JV between region.

Speaker Change: Get that information in the fourth quarter.

Robert Scaringe: Yes, exactly. So we'll be filing the definitive agreements associated with the Volkswagen Technology Joint Venture once the JV is closed, which we anticipate being in Q4 of this year, and we'll provide additional clarity on some of the financial impacts of the JV on Rivian's longer-term financial forecast and trajectory, as RJ pointed out. We do anticipate seeing beyond the capital that the Volkswagen Group will provide incremental benefits, including material cost savings, operating expense efficiencies, and future revenues associated with the joint venture. Great, Thank you very much.

Speaker Change: Yes, exactly so we'll we'll be filing the definitive agreements associated with the the Volkswagen technology joint venture I. Once the JV is closed which we anticipate being in Q4. This year and we'll provide additional clarity on some of the financial impacts of the JV Caribbean is longer term financial forecast and trajectory is.

RJ: As RJ point, you to how we do anticipate seeing beyond the capital that they talk second group will provide.

Philippe Poo-Try: We do anticipate seeing beyond the capital that the Volkswagen Group will provide incremental benefits, including material cost savings, operating expense efficiencies, and future revenues associated with the joint venture.

RJ: Incremental benefits, including material cost savings operating expense efficiencies and future revenues associated with the joint venture.

Philippe Poo-Try: Thank you very much.

Speaker Change: Great. Thank you very much.

Philippe Poo-Try: Thank you.

Speaker Change: Thank you.

Dan Levy: Our next question goes from Dan Levy with Barclays; he may proceed. Hi, thank you for taking the questions. I wanted to go back to Mark's question earlier, and maybe you could just help us unpack some of the ASP dynamics in the quarter, because we know that there was some discounting that you needed to use to clear out some of the old inventory. And guess wondering really what the, you know, how we should think about the right starting point for where you were on an ASP perspective in the second quarter, if we forget about some of the discounts, and just based on what you're seeing, you know, I believe you need to hit flat ASPs from where you were in one queue to hit the gross margin.

Operator: Thank you. Our next question comes from Dan Levy with Barclays. He may proceed.

Speaker Change: Our next question comes from Dan Levy with Barclays. You May proceed.

Operator: Hi, thank you for taking the questions. I wanted to go back to Mark's question earlier, and maybe you could just help us unpack some of the ASP dynamics in the quarter because we know that there was some discounting that you needed to use to clear out some of the old inventory. And I guess wondering really what the right starting point for where you were on an ASP perspective in the second quarter if we, you know, forget about some of those discounts.

Dan Levy: Hi, Thank you for taking the questions I wanted to go back to Mark's question earlier, and maybe you could just help us unpack some of the ASP dynamics in the quarter, because we know that there was some discounting that you needed to use to clear out some of the old inventory and guess wondering really what the.

Speaker Change: Or we should think about the right starting point for where you were on an ASP perspective in the second quarter.

Speaker Change: You had about some of the discounts and just based on what Youre seeing.

Operator: And just based on what you're seeing, you know, I believe you need to hit flat ASPs from where you were in 1Q to hit gross margin. So just anything on the right way to look at ASPs and the discounting needed for your Thanks, Dan. The challenge with introducing an update or a second generation to a product, While still, of course, producing the first generation, is always, always in exactly what you just referenced, which is, we, it's not as if we stop production immediately start production have no inventory in the system.

Speaker Change: I believe you need to hit flat flat Asps from where you were in <unk> to hit the gross margin. So just anything on it the right way to look about asps and the discounting.

Dan Levy: So just anything on the right way to look about ASPs in the discounting needed for your targets. Thanks, Dan.

Speaker Change: What are your targets.

Dan: Thanks, Dan.

Dan Levy: The challenge with introducing an update or a second generation to a product, while still, of course, producing the first generation, is always, always an exactly what you just referenced, which is, you know, we, it's on as if we stopped production immediately, start production and have no inventory in the system. So there's inventory of our Gen 1 vehicles. And, you know, we did have some attractive pricing and some of those variants of our Gen 1 vehicles to essentially, as you said, clear them through the system as we then start producing and delivering our Gen 2 vehicles.

Speaker Change: The challenge with introducing a an update or a second generation to a product.

Operator: So there is inventory of our Gen 1 vehicles, and we did have some attractive pricing on some of those variants of our Gen 1 vehicles to, essentially, as you said, clear them through the system as we then start producing and delivering our Gen 2 vehicles. We don't look at that as a long-term shift in pricing but rather reflective of the step change we've seen in Gen 2 vehicles in terms of performance and capability.

Speaker Change: While still of course, producing the first generation is always always in exactly what you just referenced switches.

Speaker Change: It sounds as if we stopped production immediately start production have no inventory in the system says inventory of our Gen. One vehicles.

Speaker Change: And we did have.

Speaker Change: Some attractive pricing on some of those variance of our Gen. One vehicles.

Speaker Change: To.

Speaker Change: Essentially as you said.

Speaker Change: Clear them through the system as we then start producing and delivering our gen two vehicles.

Dan Levy: We don't look at that as a long-term shift in pricing, but rather reflective of the step change we've seen in the Gen 2 vehicles in terms of performance and capability. And we've been very, very clear in just talking about the differences between the vehicles. And we're really pleased with the results that we saw in Q2. You saw that the number of deliveries exceed production by quite a bit, and that was really the burn down or burn through of the Gen 1 inventory. Now, in terms of ongoing expectations for ASP, the other thing I'd want to call out here is that with the introduction of the Gen 2 vehicle, it clearly references that we have a tri-motor and we have a quad motor.

Speaker Change: We don't look at that as a long term.

Speaker Change: Shifts in pricing, but rather reflective of the step change we've seen in the Gen. Two vehicles in terms of performance and capability.

Operator: And we've been very clear in just talking about the differences between the vehicles, and we're really pleased with the results that we saw in Q2. You saw that the number of deliveries exceeded production by quite a bit, and that was really the burndown or burn through of the Gen 1 inventory.

Speaker Change: And we've been very.

Speaker Change: Very clear and just talking about the differences between the vehicles.

Speaker Change: And we're really pleased with the results, although we saw in Q2.

Speaker Change: You saw the number of deliveries exceed production by quite a bit and that was really the burn down our burn through of the Gen. One inventory.

Robert Scaringe: Now, you know, in terms of ongoing expectations for ASP, the other thing I'd want to call out here is that with the introduction of the Gen 2 vehicle. Claire mentions, but we have a tri-motor and we have a quad motor, and the quad motor performance is extremely high. It's a big step forward relative to our first-generation quad. Acceleration is a lot quicker.

Speaker Change: Now in terms of.

Speaker Change: In terms of ongoing expectations for ISP. The other thing I'd want to call out here is that with the introduction of the Gen. Two vehicle.

Speaker Change: Claire references, but we have a try motor and we have a quad motor and a quad motor performance is extremely high it's a big step forward relative to our first generation quad.

Dan Levy: And the quad motor performance is extremely high. It's a big step forward relative to our first generation quad. Acceleration is a lot quicker. The range and efficiency are improved. The thermal performance for, particularly for off-road, really intense driving is outstanding. And it allowed us to move the quad motor up market in the tri-motor to really occupy the price position of the price space where we saw the first generation quad operate. And so that was very intentional. And the goal was between the dual motor, the tri-motor, and the quad motor to create a wide band of pricing starting at just over 70 and going up, you know, well into, you know, over $100,000, that allows us to not only offer vehicles to folks that are very price-intensive, but also to give products to customers that are want the best of what we can build.

Speaker Change: Acceleration is a lot quicker.

Speaker Change: The range and efficiency has improved.

Robert Scaringe: The range and efficiency are improved. The thermal performance, particularly for off-road, really intense driving, is outstanding. And it allowed us to move the quad motor upmarket and the tri-motor to really occupy the price position and the price space where we saw the first-generation quad operated. And so that was very intentional.

Claire: The thermal performance for particularly for off road really.

Speaker Change: Intense driving is outstanding and it allowed us to move the quad motor upmarket and the Tri motor to really occupy the price position of the price space, where we saw the first generation quad operate.

Robert Scaringe: And the goal was, between the dual motor, the tri motor, and the quad motor, to create a wide band of pricing starting at just over $70 and going up, you know, over, well into, you know, over $100,000. That allows us to not only offer vehicles to folks that are very price sensitive but also to give products to customers that want the best of what we can build. And so those changes happening at the drivetrain level certainly help maintain ASP. But importantly, we also have a new trim package that we've just launched, which is a more premium trim from what we'd originally had. We call this the Ascent trim.

Speaker Change: And so that was very intentional and the goal was between the dual motor the Tri motor on the Quad motor to create a wide band of pricing starting at just over $70 million and going up.

Claire: Over.

Speaker Change: Well into.

Speaker Change: Over $100000.

Speaker Change: That allows us to not only offer vehicles to folks that are very price sensitive, but also to give products to customers that want the best of what we can build.

Claire McDonough: But this trim package, which is built into the tri and the quad motor configurations, is another element of providing customers with a variant or a choice that is at a higher price point but, of course, delivering more content and more features. Maybe just adding a couple of additional points of color back to prior comments that we've made in the past. In our Q4 earnings call, we had said that we expected that our AFP, you know, for the vehicles themselves, would be consistent at Q4 of 23 relative to Q4 of 24. We still expect that to be the case as we sit here today.

Dan Levy: And so those changes happening at the drivetrain level certainly help maintain ASP. But importantly, we also have a new trim package that we've just launched, which is a more premium trim from what we'd originally had. We call this the Ascent Trim. But this trim package, which is built into the tri and the quad motor configurations, is another element of providing customers with a variant or a choice that is at a higher price point, but of course delivering more content and more features. Maybe just adding a couple of additional points of color back to prior comments that we've made in the past.

Speaker Change: And so those changes happening at the drivetrain level certainly help maintain asps.

Speaker Change: But importantly, we also have a new trim package that we've just launched which is a more premium trim from what we had originally had.

Speaker Change: We call this the <unk> centrum.

Speaker Change: But this trim package, which is built into the trial and the quad motor configurations as another element of of providing customers with varian.

Speaker Change: Variance of our choice.

Speaker Change: That is at a higher price point, but of course, delivering more content and more features.

Speaker Change: Maybe just a couple of additional.

Speaker Change: Additional points of color back to prior comments that we made in the past in our Q4 earnings call. We had said that we expected that our ASP.

Dan Levy: In our Q4 earnings call, we had said that we expected that our AFP for the vehicles themselves would be consistent Q4 at 23 relative to Q4 at 24. We still expect that to be the case as we sit here today. And then the other point is we think about the seasonality of the business is consistent with Q4 last year. It's far more index towards our one sales relative to commercial band sales, which in aggregate lifts the overall revenue per delivered unit because of some of the Amazon-related seasonality that we expect to continue to be the case in Q4 of this year.

Speaker Change: For the vehicles themselves would be consistent Q4, 'twenty three relative to Q4 at 24, and we still expect that to be the case as we sit here today and then the other point as we think about the seasonality of the business is consistent with Q4 of last year, it's far more indexed towards our one sales relative to commercial <unk>.

Robert Scaringe: And then the other point is that we think about the seasonality of the business is consistent with Q4 of last year. It's far more indexed towards R1 sales relative to commercial van sales, which in aggregate lifts the overall revenue per delivered unit because of some of the Amazon-related seasonality that we expect to continue to be the case in Q4 of this year. And then back on RJ's final comments, we'll have sales of our tri-motors in Q4, which will allow us to stretch up the higher end of ASPs to complement our starting price point, which is still $69,900 for our standard packs for R1. Got it, so it sounds like there's some positive mix. Thank you.

Speaker Change: <unk> sales, which in aggregate lifts the overall revenue per delivered unit because of some of the Amazon related seasonality that we expect to continue to be the case in Q4 of this year and then back on the <unk> final comments, we will have sales of our <unk> in Q4, which will allow us to stretch up.

Dan Levy: And then back on RJ's, you know, final comments will have sales of our trimotors in Q4, which will allow us to stretch up the higher end of the AFP's to complement our starting price point, which is going to be in the next year. Which is still $69,900 for our standard standard packs for our one team. Got it. So it sounds like there's some positive mix assumptions in there. Thank you.

Speaker Change: The higher end of ASP.

Speaker Change: To complement our starting price point, which is still $69900 for our standard <unk>.

Speaker Change: <unk> tax act or <unk>.

Speaker Change: Okay got it so it sounds like there is some.

Speaker Change: Some positive mix assumptions in there.

Robert Scaringe: As a follow-up, I wanted to go to the VW Invest and wondered, you know, from a the fact that you got this money in what I think many of us consider to be a more sort of efficient manner than going through the capital market. What does this allow you to do from a product plan or capacity perspective that was previously not on the table if you were going to be fully reliant on capital?

Speaker Change: Thank you.

Dan Levy: As a follow up, I wanted to go to the DW investment and wondering, you know, from a, the fact that you got this money and what I think many of us, many of us considered to be a more sort of efficient. What is this allowed you to do from a product plan or capacities perspective that previously wasn't, you know, on the table, if you were going to be fully aligned on the capital market. Yeah, it really important part of what this deal represents for us is that it really eliminates a lot of the risk that was seen around our balance sheet and allows us to focus the launch of our to still in normal, still using our normal facility.

Speaker Change: A follow up.

Speaker Change: Just wanted to go to the VW investment.

Speaker Change: Just wondering.

Speaker Change: From a.

Speaker Change: The fact that you got this money in what I think many of us consider to be a more sort of efficient manner than going through the capital markets.

Speaker Change: What does this allow you to do from a product plan or capacity perspective that previously wasn't.

Speaker Change: On the table, if you were going to be fully reliant on the capital market.

Robert Scaringe: A really important part of what this deal represents for us is that it really eliminates a lot of the risk that we've seen around our balance sheet and allows us to focus. The launch of R2, still in normal, still using our normal facility, but as you've heard Claire and I both talk about as part of our Investor Day, we not only have the balance sheet to support launching R2, but also the balance sheet to support taking us through positive cash flow, and we recognize the importance of that focus on driving efficiency into the business, both in terms of how we operate the business, but also in terms of how we deploy capital from a CapEx And the organization is hyper focused on driving towards profitability and hyper focused on the launch of R2 and what that represents for us in terms of the scaling that comes with it. Great, thank you.

Speaker Change: Yes.

Speaker Change: Really important.

Speaker Change: Part of what this deal represents for US is it really eliminates.

Speaker Change: A lot of the risk that was seen around our balance sheet and allows us to focus.

Speaker Change: The launch of our two.

Speaker Change: Still a normal still using our normal facility.

Dan Levy: But, as you've heard Claire and I both talk about as part of our investor day, not only have the balance sheet to support launching our to, but also the balance sheet to support taking us through positive cash flow. And we recognize the importance of that focus on driving efficiency into the business, both in terms of how we operate the business, but also in terms of how we deploy capital. From a CapEx point of view and investment point of view, and the organization is hyper focused on driving towards profitability and hyper focused on the launch of our to and what that represents for us in terms of the scaling that comes with it.

Speaker Change: But as you've heard Claire and I, both talked about is.

Claire: As part of our Investor day.

Claire: Not only have the balance sheet to support launching our two but also the balance sheet to support taking us through positive cash flow.

Claire: And we recognize the importance of that focus on driving efficiency into the business.

Claire: Both in terms of how we operate the business, but also in terms of how we deploy capital from a capex point of view and an investment point of view and the organization is hyper focused on driving towards profitability and hyper focused on.

Claire: The launch of our two and what that represents for us in terms of the scaling that comes with it.

Dan Levy: Great.

Joseph Spak: Thank you. Our next question comes from Joseph Speck with UBS. He may proceed. Thanks. Good afternoon.

Speaker Change: Great. Thank you.

Speaker Change: Okay.

Speaker Change: Thank you.

Operator: Thank you. Our next question comes from Joseph Spak with UBS. You may proceed. Thanks. Good afternoon.

Speaker Change: Our next question comes from Joseph Spak with UBS you May proceed.

Operator: RJ, maybe you could just dive a little bit more into what's exactly happening in the plant and what's impacting the R1 line and R2 we're doing next year. And then Claire, can we expect that the R1, given that most of the changes are already done, can ramp back up pretty quickly so we, you know, we can understand the shape of gross margins next year? Because it sounds like you guys are planning for maybe some sequential improvement until that downtime, maybe a downtick in the third quarter and then a recovery in the fourth quarter. I just want to make sure that we're properly calibrated. Sure, Joe.

Joseph Spak: Thanks, Good afternoon art.

Joseph Spak: RJ, maybe you could just dive a little bit more into what is exactly happening in the plant and what's impacting the R1 line R2 work doing next year. And then, Claire, can we expect that the R1, given that most of the changes are already done, can ramp back up pretty quickly. So we, you know, we can understand the shape of gross margins next year because it sounds like you guys are planning for maybe some sequential improvement until that downtime. Maybe a downtick in the third quarter and then recover in the fourth quarter. I just want to make sure that's what properly called.

Joseph Spak: Maybe you could just dive a little bit more into.

Joseph Spak: What is exactly happening in the plant and what's impacting.

Art: One line or to work doing next year.

Joseph Spak: And then Claire can can we expect at pier one.

Speaker Change: Given that most of the changes already Don can ramp back up pretty quickly. So we can understand the shape of gross margins next year because it sounds like you guys are planning for maybe some sequential improvement until that downtime, maybe a down tick in the third quarter and then recover in the fourth quarter I just want to make sure that.

Joseph Spak: We're properly calibrated.

Joseph Spak: Schorjo, as we think about the operations next year, this is looking at 2025. We've said we're going to be taking the plant down for roughly a month while we make some of the changes necessary to integrate the R2 production into the plant. Some of that work has already happened. We did some of the preliminary work in the most recent shutdown in conjunction with the move from Gen 1 to Gen 2 on our R1 platform. But the shutdown that's going to happen in the second half of next year will make the splicing together of certain parts of the plant possible.

Robert Scaringe: So as we think about operations next year, this is looking at 2025. You know, we've said we're going to be taking the plant down for roughly a month while we make some of the changes necessary to integrate the R2 production into the plant. Some of that work has already happened. We did some of the preliminary work during the most recent shutdown in conjunction with the move from Gen 1 to Gen 2 on our R1 platform. But the shutdown that's going to happen in the second half of next year will make the splicing together of certain parts of the plant possible. That's part of our plan.

Speaker Change: Sure Joe So as we think about the operations next year. This is looking at 2025.

Speaker Change: We've said, we're going to be taking the plant down for roughly a month, while we make some of the changes necessary to integrate the <unk> production into the plant. Some of that work has already happened we did some some of the preliminary.

Speaker Change: Work in the most recent shutdown in conjunction with the move from Gen. One to Gen. Two on our one platform.

Speaker Change: But the shutdown that's going to happen in the second half of next year, we will make the splicing together certain parts of the plant possible.

Robert Scaringe: We'll be working around that, but as we did with the Gen 1 to Gen 2, we wanted to provide very early guidance on this and make sure expectations were appropriately set for what will have to happen in the plant next year to integrate R2. Then based on the second part of your question as well, given the shutdown, there will be some, you know, choppiness in the financial results as we look through, not just a quarter-sequential improvement in our results as we look at the gross margin trajectory.

Joseph Spak: That part of our plan will be working around that, but as we did with the Gen 1 to Gen 2, we wanted to provide very early guidance around this and make sure expectations were appropriately set for what will have to happen in the plant next year to integrate R2. Then based off of the second part of your question as well, given the shutdown, there will be some, you know, trapping us to the financial results as we look through not just a quarter sequential improvement in that in our results as we look at the gross margin trajectory.

Speaker Change: As part of our plan will be working around that but we've as we've as we did with the Gen. One to Gen. Two we wanted to provide very early guidance around around this and make sure expectations are appropriately set.

Speaker Change: For what will have to happen in the plant next year or two to integrate our two.

Speaker Change: And then based off of the second part of your question as well given the shutdown there will be some choppiness.

Joseph Spak: Dropping.

Joseph Spak: Actual results as we look through.

Speaker Change: Not just at quarter sequential improvement in that in our results as we look at the gross margin trajectory as I mentioned in my prepared remarks, we still maintain that will be have a modest positive gross profit for the entire year of 2025 in particular about certainly with the shutdown itself in the second half we will feel some of that.

Joseph Spak: As I mentioned in my prepared remarks, we still maintain that will be have a modest positive gross profit for the entire year of 2025 in particular, but certainly with the shutdown itself in the second half will feel that some of the impacts of lower absorption of labor overhead and depreciation like we experienced in Q2 of this quarter, given the lower production volumes that we had in the normal facility itself. But to our day's point, more akin to the November shutdown that we had to do some of the pre work for our Q2 shutdown, we were able to get right back up to line rate based off of the aftermath of that shutdown.

Robert Scaringe: As I mentioned in my prepared remarks, we still maintain that we'll have a modest positive gross profit for the entire year of 2025, in particular, but certainly with the shutdown itself in the second half, we'll feel some of the impacts of lower absorption of labor overhead and depreciation like we experienced in Q2 of this quarter, given the lower production volumes that we had in the normal facility itself. But to RJ's point, more akin to the November shutdown where we had to do some of the pre-work for our Q2 shutdown, we were able to get right back up to line rate based on the aftermath of that shutdown.

Joseph Spak: <unk> lower.

Speaker Change: Absorption of labor overhead and depreciation like we experienced in Q2 and this quarter given the lower production volumes that we had in the.

Joseph Spak: Normal facility itself.

Speaker Change: Rj's point more akin to that November shutdown that we had to do some pre work for our QQ shut down we were able to get right back up 10 line rate based off of the aftermath of that shutdown. So we expect we wont see is sort of staged in a ramped back up from a production standpoint given the.

Joseph Spak: So we expect we won't see as sort of staged of a ramp back up from a production standpoint, given the fact that we'll have already ramped up our supply chain, which is one of the, you know, gaining factors as we've gone through the course of ramping up new technologies in our redesign Gen 2 product.

Claire McDonough: So we expect we won't see as sort of a staged ramp-up from a production standpoint, given the fact that we'll have already ramped up our supply chain, which is 1 of the gating factors as we've gone through the course of ramping up new technologies in our redesigned Gen 2 product. Okay, thank you for that. And as a second question, I don't know if you guys really ever, you certainly don't talk about it this way.

Speaker Change: Fact that will have already ramped up our supply chain, which is one of the gating factors as we've gone through the course of ramping up new technologies in our redesign Gen two product.

Joseph Spak: Okay, thank you for that. And as a second question, I don't know if you guys really ever you certainly don't talk about this talk about this. I'm curious if you ever look at or think about this way, but you know, you call out some of the impacts to, you know, the gross loss per vehicle from stuff that's not in the cost structure this quarter. I know that's offset a little bit by regulatory credits, but if we also like take out, you know, DNA and thought comp, it seems like you're actually much closer to a cash gross profit break-even level.

Speaker Change: Okay. Thanks.

Speaker Change: Thank you for that.

Speaker Change: And as a second question.

Speaker Change: I don't know if you guys really ever.

Speaker Change: We don't talk about this talk about it this way I'm curious if you if you ever look at it or think about this way, but you call out some of the impacts.

Claire McDonough: I'm curious if you ever look at it or think about it this way, but you call out some of the impacts to, you know, the gross loss per vehicle from stuff that's not in the cost structure this quarter. I know that's offset a little bit by regulatory credits. But if we also take out, you know, DNA and stock comp, it seems like you're actually much closer to a cash gross profit, break even level. Is that something that is directionally correct?

Speaker Change: Two the gross loss per vehicle from from stuff, that's not in the cost structure this quarter.

Speaker Change: I know thats offset a little bit by regulatory credits, but if we also take out D&A and stock comp it seems like you're actually much closer to a cash gross profit.

Speaker Change: Breakeven level is that something that Directionally is correct and it seems like if that's true.

Joseph Spak: Is that something that that directly is correct, and it seems like if that's true, you would actually even hit that before you would hit your, you know, your modestly gross profit positive number in the fourth quarter. Did you that that's absolutely right, and we wanted to call out in my prior prepared remarks just the, you know, the impact we had: roughly $15,000 of interpretation per unit, $1,200 of stock based company per unit, and then another, you know, roughly $2,400 of other cost of revenue initiatives in the quarter. So that was roughly, you know, $14,000 of loss per unit if you make those three respective adjustments.

Claire McDonough: And it seems like if that's true, you would actually even hit that before you would hit your, you know, your modestly gross profit positive number in the fourth. Yeah, Joe, that's absolutely right. And we wanted to call out, in my prior prepared remarks, just the impact we had roughly $15,000 of depreciation per unit, $1,200 of stock-based comp per unit, and then another, you know, roughly $2,400 of other cost of revenue initiatives in the quarter.

Speaker Change: You would actually even hit that before you would hit your.

Speaker Change: You are modestly gross profit positive number in the fourth quarter.

Claire McDonough: So that was roughly $14,000 of loss per unit if you make those three respective adjustments. So we certainly would anticipate hitting, you know, sort of a cash break even prior to positive gross profit. Okay, thank you. Thank you.

Speaker Change: Yes, that's absolutely right and we wanted to call out in my prior prepared remarks, just the impact we had roughly $15000 of depreciation per unit $200.

Speaker Change: Stock based comp per unit and then another roughly $2400.

Speaker Change: Other cost of revenue initiatives in the quarter. So that was roughly $14000 of loss per unit. If you make those three respective adjustments and so we certainly would anticipate hitting sort of a cash breakeven.

Joseph Spak: So we certainly would anticipate hitting, you know, sort of a cash break even prior to positive gross profit. Thank you.

Speaker Change: To positive gross profit.

Speaker Change: Thank you.

Alex Potter: Our next question comes from Alex Potter with Piper Sandler; you may proceed. Great, thanks. Claire, just a quick one following up on that last question, but these, I guess, quote unquote, other initiatives, the $2,400 a unit, just in layman's terms, what is that? In layman's terms, the way I would characterize it is, as you can imagine, with the significant changes we made in suppliers with the introduction of swapping out roughly half of our material cost as we move from Gen 1 to Gen 2, there are certain costs associated with contract modifications or amendments that we've made, and that's largely what is reflected there.

Speaker Change: Our next question comes from Alex Potter with Piper Sandler You May proceed.

Operator: You may proceed. Great, thanks. Claire, just a quick one following up on that last question about these, I guess, quote unquote, other initiatives, the $2,400 a unit, just in layman's terms, what is that? So, in layman's terms, the way I would characterize it is, as you can imagine, with the significant changes we made in suppliers, with the introduction of swapping out roughly half of our material cost as we move from Gen 1 to Gen And that's largely what is reflected in the results.

Speaker Change: Great. Thanks, Claire just a quick one following up on that last question that these I guess quote unquote other initiatives the 'twenty $400 a unit.

Speaker Change: In layman's terms what is that.

Speaker Change: In layman's terms the way I would characterize it is as you can imagine with the significant changes we made in suppliers with the introduction of swapping out roughly half of our material costs as we move through.

Speaker Change: Gen. One to Gen. Two there are certain cost associated with contract modifications for amendments that we've made and thats largely what is reflected there.

Alex Potter: Okay, very good.

Speaker Change: Okay very good.

Alex Potter: I guess my second question is on the book, so I can join venture. So presumably, I know you've got yet some work to do when it comes to hashing out the financials and all these things and will await information on that in Q4. But in the meantime, you know, presumably you've got engineers, you've got procurement people who are sort of eager to start doing something. You know, design or getting better supplier negotiations underway, are they basically being instructed to sit tight and not do anything until, you know, the ink is dry, or are they allowed to sort of go out into the world and start, you know, I guess restarting supplier negotiations, for instance, with the heft of Volkswagen behind them or, you know, working collaboratively with Volkswagen.

Claire McDonough: Okay, very good. I guess my second question is on the Volkswagen joint venture. So presumably, I know you've got some work to do when it comes to hashing out the financials and all of these things, and we'll await information on that in Q4. But in the meantime, You know, presumably you've got engineers and procurement people who are sort of eager to start doing something, you know, design or getting better supplier negotiations underway? Or are they basically being instructed to sit tight and not do anything until, you know, the ink is dry? Or are they allowed to sort of go out into the world and start?

Speaker Change: I guess my second question is on is on the Volkswagen joint venture so presumably.

Speaker Change: I know you've got.

Speaker Change: Yet some work to do when it comes to hashing out the financials and all of these things and we'll await information on that in Q4, but in the meantime.

Speaker Change: Presumably you've got engineers <unk> got procurement people, who are sort of eager to start doing something.

Speaker Change: The design or getting better.

Speaker Change: Supplier negotiations underway are they basically being instructed to sit tight and not do anything until the ink is dry or are they allowed to.

Speaker Change: Go out into the world and start.

Robert Scaringe: You know, I guess restarting supplier negotiations, for instance, with the heft of Volkswagen behind them, or, you know, working collaboratively with Volkswagen engineers to actually design the platform into Volkswagen vehicles, or do they basically just have to sit. If from a supplier point of view. We absolutely are already seeing some of the tailwinds associated with our Volkswagen joint venture and partnership. You know, this is, you can imagine, at the component level and at the electronics level within the vehicle, where we see a lot of suppliers we have long relationships with that are very excited about this and see this as an opportunity to scale beyond just the Rivian product line for the technology we've developed but beyond that into the Volkswagen Group product portfolio.

Speaker Change: I guess restarting supplier negotiations for instance, with the heft of Volkswagen behind them or working collaboratively collaboratively with Volkswagen engineers to actually design.

Alex Potter: And engineers actually design the platform into Volkswagen vehicles, or do they basically just have to sit tight. From a supplier point of view, we absolutely already seeing some of the tailwinds associated with our Volkswagen joint venture and partnership. You know, this is, you can imagine at the component level and at the electronics level within the vehicle, where we see a lot of the suppliers we have long relationships with that are very excited about this and see this as an opportunity to scale beyond just the Rivion product line for the technology we've developed, but beyond that into the Volkswagen Group product portfolio.

Speaker Change: Platform into Volkswagen vehicles, or do they basically just have to sit tight.

Speaker Change: From a supplier point of view.

Speaker Change: We absolutely are already seeing some of the tailwind associated with our Volkswagen joint venture and partnership.

Speaker Change: This as you can imagine at the.

Speaker Change: At the component level and at the electronics level within the vehicle, where we see.

Speaker Change: A lot of suppliers, we have long relationships with that are that are very excited about this and see this as an opportunity to scale beyond just.

Speaker Change: The revision product line for the technology, we've developed but beyond that into into the Volkswagen group.

Alex Potter: So that's been a really encouraging early read-through in terms of how it's perceived and overall looked at by the supply chain. From a technical point of view, you know, we talked about this even with the announcement of the deal of Volkswagen Group CEO, and I all over, and I just spoke around how the teams have been working really well together, and this is not. You know, it's not as if we do a deal of this scale and this magnitude without having done work together, without having done a lot of beyond diligence, but into the actual actual creation of work content or work product, if you will.

Robert Scaringe: So that's been a really encouraging early read through in terms of how it's perceived and overall looked at by the supply chain. From a technical point of view, we talked about this even with the announcement of the deal; Volkswagen Group CEO and I, Oliver and I, just spoke about how the teams have been working really well together. And this is not – it's not as if we do a deal of this scale and of this magnitude without having done work together and without having done a lot beyond diligence but into the actual creation of work content or work product, if you will.

Speaker Change: Product portfolio, so that's been really encouraging.

Speaker Change: Early read through in terms of how it is perceived in and overall looked at by the supply chain.

Speaker Change: From a technical point of view.

Speaker Change: We talked about this even with the announcement of deal books.

Speaker Change: <unk> group, CEO and Oliver and I.

Speaker Change: Just spoke around how the teams have.

Speaker Change: Been working really well together and this is not.

Speaker Change: Yes, it sounds as if we do a deal of this scaling of this magnitude without having.

Speaker Change: <unk> done work together on without having done a lot of beyond diligence, but into the actual actual accretion of of where content. Our work product if you will.

Robert Scaringe: And so Wassym is on the call here. I'm going to invite him to just talk about this, but our software team and our hardware team have been working really well together, working towards a number of elements that deliver on the first set of products, but the first of which is integrating our platform technically into Volkswagen Group products. But Wassym, could I please have you talk a bit about this?

Alex Potter: And so what seems on the call, I'm going to invite him to just talk about this, but our software team and our hardware team have been working towards a number of elements that deliver on the first set of products, but the first of which is integrating our platform. Tactically into Volkswagen Group products, but we seem to me have you talked a bit about this. Yeah, thanks, RJ. We're actually extremely excited with the progress that we're making in the integration electrical architecture integration analysis. Our engineers have been working very closely with the Volkswagen Group, and we actually have a driver with the administrator now that contains the Rivion electronic components, the Iranian software stack.

Speaker Change: And so it seems on the call here I'm going to invite him to just talk about this but but our software team and our hardware team had been.

Speaker Change: Working towards a number of elements.

Speaker Change: Deliver on the first set of products, but the first of which is integrating our platform tactically.

Speaker Change: Volkswagen group products, but we're seeing.

Wassym Bensaid: Yeah, thanks, RJ. We're actually extremely excited with the progress that we're making in the integration, electrical architecture integration analysis. Our engineers have been working very closely with the Volkswagen Group, and we actually have a drivable demonstrator now that contains the Rivian electronic components, the Rivian software stack, and we're moving forward really, really well in understanding how our technology will scale up and down in the entire Volkswagen Group portfolio. Thanks very much.

RJ: Have you talked a bit about this yes. Thanks RJ.

Speaker Change: Akshay extremely excited with the progress that we're making and the integration electrical architecture integration analysis. Our engineers have been working very closely with the Volkswagen group and we actually have a driver. We've demonstrated now that contains the Caribbean electronic components.

Alex Potter: And we're moving forward really, really well in understanding how our technology will scale up and down and the entire Volkswagen Group portfolio.

Speaker Change: In software stack and we're moving forward, we're really really well in understanding how our technology, we can scale up and down and the entire Volkswagen group portfolio.

Alex Potter: Great, thanks very much. Appreciate it.

Speaker Change: Great. Thanks, very much I appreciate it.

Ben Kallo: Thank you.

Speaker Change: Thank you.

Ben Kallo: Our next question goes from Ben Kallo with Baird; you may proceed. Thank you. My first question is more dear term, just RJ, you can talk about demand trends you've seen since the refresh. And then my second question is, you know, brand is important to everyone, but to you guys, you've done a good job at building a brand.

Operator: I appreciate it. Thank you. Our next question comes from Ben Kallo with Baird. You may proceed. Thank you.

Bengal: Our next question comes from Bengal with Baird You May proceed.

Operator: My first question is more near-term, just RJ, if you could talk about demand trends you've seen since the refresh. And then my second question is that, you know, brands are important to everyone, but to you guys, you've done a good job of building a brand. Can you talk to us about how you measure that internally or or any way that you can put context to how you built your brand? Now that extends to future models? Thank you. Thanks, Ben.

Bengal: Thank you.

Bengal: My first question is more near term.

Bengal: Ajay if you could talk about demand trends you're seeing.

Bengal: Since the refresh and then my second question is.

Speaker Change: Yes.

Speaker Change: Hi, everyone.

Speaker Change: So you guys you've done good job of building a brand.

Ben Kallo: Can you talk us about how you measure that internally or in any way that you can put context to how you build your brand now that extends to future models? Thank you. Thanks, Ben. Ultimately, our first set of products, our one, was our handshake with the world. And they were received really positively. This is two years ago, and it was exciting as we introduced the Gen 2 of our R1 products to see how strong the meteor action was to those products. And you're recognizing we took a great vehicle and made it even better. And that is something that we saw echoed across a variety of different media outlets, from lifestyle to automotive to more pure technology outlets, but recognizing the strength of what we built.

Speaker Change: Talk to us about how you measure about.

Speaker Change: Early or.

Speaker Change: Is there any way that you could.

Speaker Change: Put context too.

Speaker Change: No.

Speaker Change: Extends to future models. Thank you.

Ben: Okay. Thanks, Ben.

Robert Scaringe: Ultimately... Our first set of products, the R1, was our handshake with the world, and they were received really positively. This was two years ago, and it was exciting as we introduced the Gen 2 of our R1 products to see how strong the media action was for those products, and recognize that we took a great vehicle and made it even better. That is something that we saw echoed across A variety of different media outlets, from lifestyle to automotive to more pure technology outlets, but recognizing the strength of what we've built. That really serves as a wonderful foundation for the continued growth, as you put it, of how we're building and developing our brand and how we're perceived. And there are lots of ways for us to measure that.

Speaker Change: Ultimately.

Speaker Change:

Speaker Change: Our general our first set of products of our one was our handshake with the world.

Speaker Change: And they received really positively this is two years ago and it was exciting as we introduce the gen. Two of our own products to see how strong the meteor action was to those products.

Speaker Change: Youre, recognizing we took a great vehicle and made it even better.

Speaker Change: That is something that we saw echoed across.

Speaker Change: A variety of different media outlets from lifestyle to automotive.

Speaker Change: To more pure technology outlets, but recognizing the strength of what we built.

Ben Kallo: And that really serves as a wonderful foundation for the continued growth, as you put it, of how we're building and developing our brand and how we're perceived. And there's lots of ways for us to measure that. We certainly look at things internally. We have a whole host of internal metrics that we track regularly, but I think important for the analyst and investor community is to look at ways that third parties would look at our brand. And most recently, actually, JD Power does a number of ways where they look at the strength of a brand or the strength of a product offering in the market.

Speaker Change: And that really serves as a wonderful foundation for the continued growth as you put it of how we're building and developing our brand and how we're perceived.

Robert Scaringe: We certainly look at things internally. We have a whole host of internal metrics that we track regularly. But I think it's important for the analyst and investor community to look at ways that third parties would look at our brand. And most recently, actually, coincidentally, J.D.

Speaker Change: And there's lots of ways for us to measure that we certainly look at things internally, we have a whole host of internal metrics that we track regularly.

Speaker Change: But I think important for.

Speaker Change: For the analysts and Investor community is to look at ways that third parties would look at our brand.

Robert Scaringe: Power does a number of ways where they look at the strength of a brand or the strength of a product offering in the market. And we've done extremely well in this in the past, and most recently, in their annual appeal study. That looks at a combination of vehicle performance and its overall packaging. We came out number one, and that's the number one rated brand in their study, and to do that after having had previous number one performances in previous years is really exciting and it's incredibly encouraging and we think bodes really well for what's to come with R2.

Speaker Change: And most recently actually.

Speaker Change: J D power does a number of ways. When you look at the strength of our brand and the strength of <unk>.

Speaker Change: Product offering in the market.

Ben Kallo: And we've in the past done extremely well in most recently in their annual appeal study. That looks at a combination of vehicle performance. And its overall packaging. We came out number one. And that's the number one rated brand in their study. And to do that after having had previous number one performance in previous years was really exciting. And it's incredibly encouraging. And we think boats really well for what's to come with R2. If we can carry the same brand strength and the same market share penetration that we have at the premium segment where we're continually one of the best-selling vehicles over $70,000 today in the US.

Speaker Change: And we've in the past done extremely well in this.

Speaker Change: And most recently in their annual appeal study.

Speaker Change: That looks at a combination of vehicle performance.

Speaker Change: It's overall packaging, we came out number one.

Speaker Change: The number one rated brand in their study.

Speaker Change: To do that after having had previous number one performance in previous years.

Speaker Change: Really exciting and it's an incredibly encouraging and we think bodes really well for what's to come with our too.

Robert Scaringe: You know, if we can carry the same brand strength and the same market share penetration that we have in the premium segment, where we're continually one of the best selling vehicles over $70,000. Today in the U.S., if we can take that market share strength and brand strength and apply it with our R2 product into the sub $50,000 price category, with R2 starting at $45,000, and R3 pricing not yet announced but going to be lower than R2, we're really bullish on what that represents in terms of volume but importantly answers a real need in the market where there's what I'd characterize as a pretty severe gap in product Thank you. Our next question comes from Shreyas Patil with Wolf Research. You may proceed.

Speaker Change: If we can carry the same brand strength in the same market share penetration that we have.

Speaker Change: At the premium segment, where we're continually one of the best selling vehicles over $70000.

Speaker Change: Today in the U S. If we can take that that market share strength and brand strength and apply it with our our two products into the sub $50000 price category with our two starting at $45 and our three pricing not yet announced but going to be lower than our two we're really bullish on what that represents in terms of volume, but importantly.

Ben Kallo: If we can take that market share strength and brand strength and apply it with our R2 product into the sub $50,000 price category with R2 starting at $45. And our three pricing not yet announced but going to be lower than R2. We are really bullish on what that represents in terms of volume. But importantly, answers are a real need in the market where there's a characterized as a pretty severe gap in product choice. Davis, for great, highly compelling EVs under $50,000.

Speaker Change: The answer is a real need in the market, where there is a.

Speaker Change: I'd characterize as a pretty severe gap and product choice.

Speaker Change: For great highly compelling evs under $50000.

Shreyas Patil: Thank you. Our next question comes from Fras Patil; it will research. You may proceed. Hey, thanks a lot for taking my question. First of all, curious what you're seeing in terms of opportunities in the sale of regulatory credits. I appreciate it can be lumpy with $17 million in the quarter, but are you seeing growing opportunities to sell right credit at this point, just given some of the struggles that we're seeing with the legacy OEMs? In the, you know, Claire referenced it, you know, just in regards to our top line terms of revenue, but the regulatory credit environment is certainly very strong right now.

Speaker Change: Thank you.

Chris <unk>: Our next question comes from Chris <unk> with Wolfe Research you May proceed.

Operator: Hey, thanks a lot for taking my question. First of all, I'm curious what you're seeing in terms of opportunities for the sale of regulatory credit. I appreciate it can be lumpy with $17 million in the quarter, but are you seeing growing opportunities to sell red credits at this point, just given some of the struggles? We're seeing what the legacy... Claire referenced it, you know, just in regards to our top line in terms of revenue, but the regulatory credit environment is certainly very strong right now.

Chris <unk>: Hey, Thanks, a lot for taking my question first of all Im curious what youre seeing in terms of opportunities in the sale of regulatory credits I. Appreciate it can be lumpy with $17 million in the quarter, but are you seeing growing opportunities to sell right credit at this point just given some of the struggles that we have.

Speaker Change: Seeing with legacy Oems.

Speaker Change: And that Youre clear referenced it.

Speaker Change: Just in regards to our topline in terms of revenue, but the regulatory credit environment is is certainly very strong right now.

Shreyas Patil: You know, in practically speaking, that means we have the potential to generate more revenue around our credits market than what we'd originally planned or anticipated. But I think more importantly, is the fact that the credits market is so strong, is a reflection of the, I'd say the decision that we see a number of companies that are going to be investing less into electrification or have less product and electrified product across multiple segments and across different price points. And so that void of products actually creates this strong credit environment. And for us, I think that the most important read-through is the demand environment we see, you know, coming into 2026, 2027 is going to be very, very advantageous for us where there's a lot of latent demand.

Operator: You know, and practically speaking, that means we have the potential to generate more revenue from our credits market than we'd originally planned or anticipated. But I think more importantly, the fact that the credit market is so strong is a reflection of. The, I'd say that the decision that we see a number of companies that are going to be investing less into electrification or have less product in electrified product across multiple segments and then across different price points. And so that void of products actually creates this strong credit environment.

Speaker Change: Yes.

Speaker Change: Practically speaking that that means we're we have the potential generate more revenue.

Chris <unk>: Around our credit market than what we'd originally planned or anticipated, but I think more importantly.

Speaker Change: Is the fact that the credits market is so strong.

Speaker Change: As a reflection of.

Speaker Change: The.

Speaker Change: The I would say that the decision that we see a number of companies that are going to be investing less into electrification or have less product and electric electrified product across multiple segments and across.

Speaker Change: Different price points.

Speaker Change: And so that void of.

Speaker Change: Products actually creates this.

Speaker Change: This strong credit environment.

Speaker Change: And for US I think the most important read through is the demand environment, we see coming into 2026 2027.

Robert Scaringe: And for us, I think the most important read through is the demand environment we see, you know, coming into 2026, 2027 is going to be very, very advantageous for us, where there's a lot of latent demand; there's a lot of demand that's sitting waiting for the right type of product, a product that has the right form factor, product positioning, attributes, and features. But, you know, folks have been sitting, waiting for that product to show up, but they haven't seen it, so they continue to buy an internal combustion vehicle or continue to buy a hybrid vehicle. We see this really large pool of demand under the surface that's just waiting. And we believe we are waiting for something that's very much like what an R2 is. Okay, great.

Speaker Change: It's going to be very very advantageous for us where there is a lot of latent demand. There is a lot of demand that's sitting waiting for the right type of product a product that has the right form factor product positioning attributes and features.

Shreyas Patil: There's a lot of demand that's sitting waiting for the right type of product, the product that has the right form factor, product positioning, attributes, and features. But, you know, folks have been sitting waiting for that practice show, but haven't seen it. So they continue to buy an internal combustion vehicle or continue to buy a hybrid vehicle. We see this, this really large pool of demand on the surface that's just waiting. And we believe waiting for something that's very much like what an R2 is.

Speaker Change: But folks have been sitting waiting for that practice show up but haven't seen it. So they continue to buy an internal combustion vehicle or continue to buy a hybrid vehicle. We see this this really.

Speaker Change: Large pool of demand on the surface that's just waiting.

Speaker Change: And we believe waiting for something that's very much like what <unk>.

Shreyas Patil: Okay, great.

Robert Scaringe: And my second question is, in thinking about your software architecture, one of the defining elements is that it is almost entirely built in-house, from the baseline operating system to the middleware hypervisor application. You've talked before about legacy automakers. Not really having this level of vertical integration, but clearly this is a big competitive advantage. But with VW now able to access the software platform, I'm curious how you think about the Long-Term Advantage in software. Do you still see potential to maintain an edge here over most legacy OEMs, even those that may want to replicate your approach? or do you feel that the industry will eventually catch up and...

Speaker Change: Okay great.

Shreyas Patil: And my second question is, in thinking about your software architecture, one of the defining elements is that it is almost entirely built in house, from the baseline operating system to the middle layer, hypervisor application layers. You've talked before about legacy automakers, not really having this level of vertical integration. So, clearly, this is a big competitive advantage. But with BW now able to access the software platform, I'm curious how you think about the long-term advantage in software. Do you see, do you still see potential to maintain an edge here over most legacy OEMs, even those that may want to replicate your approach?

Speaker Change: My second question is in thinking about these your software architecture one of the defining elements is that it is almost entirely built in house.

Speaker Change: From the baseline operating system to the middleware hypervisor application layers, you've talked before about legacy automakers not.

Speaker Change: Not really having this level of vertical integration. So clearly this is a big competitive advantage.

Speaker Change: But with BW now able to access the software platform Im curious how you think about.

Speaker Change: The long term advantage in software do you see do you still see potential to maintain an edge here over most legacy Oems, even those that need want to replicate your approach or do you feel that the industry will eventually catch up and essentially this is.

Shreyas Patil: Or do you feel that the industry will eventually catch up and essentially, this is, essentially, this is now an opportunity for you to monetize this.

Robert Scaringe: Essentially, this is what it is. Essentially, this is now an opportunity for you to monetize this asset. And help the industry make the transition to a, There are a few ways to speak to this. I think first, before we get to product differentiation or customer-facing advantages, building a network architecture and associated electronic stack that allows for significant consolidation of ECUs and therefore simplification not only of the number of VCUs but also of the harness and associated wiring, you know, infrastructure within the vehicle that creates meaningful cost advantages relative to a traditional platform, which will have, call it, 50 to 100 ECUs within the vehicle.

Speaker Change: Essentially this is now an opportunity for you to monetize this asset.

Shreyas Patil: and how the industry make the transition to software to find vehicles. There's a few ways to speak to this. I think first, before we get to product differentiation or customer-facing advantages, building a network architecture, an associate electronics stack that allows for significant consolidation of ECUs, and therefore simplification, not only of the number of ECUs, but also of the harness and the associated wiring infrastructure within the vehicle, that creates meaningful cost advantages relative to a traditional platform which will have, call it 50 to 100 ECUs within the vehicle. And so we've talked about this: our Gen 1 vehicle, at 17 in-house ECUs, we reduce that down to 7.

Speaker Change: The industry make the transition to a software defined vehicles.

Speaker Change: Okay.

Speaker Change: If you wish.

Speaker Change: To speak to this I think first.

Speaker Change: Before we get to product differentiation or customer facing advantages.

Speaker Change: And building a.

Speaker Change: And network architecture, and our social electronic stack that allows for significant consolidation of its use.

Speaker Change: And therefore simplification not only of the number of issues, but also the harness and associated wiring infrastructure within the vehicle.

Speaker Change: That creates meaningful cost advantages relative to a traditional platform, which will have.

Speaker Change: All at 50 to 100 is used within the vehicle and so we've talked about this our gen. One vehicle at 17.

Robert Scaringe: And so we've talked about this, our gen one vehicle had 17 in-house ECUs; we reduced that down to seven. And so it is a significant multi-thousand dollar structural cost advantage to have a network architecture and topology of computers that's far simpler and far lower cost than the traditional approach.

Speaker Change: In <unk>, we reduced that down to seven and so it is a significant multi thousand dollar a structural cost advantage to have.

Shreyas Patil: And so it is a significant multi-thousand dollar structural cost advantage to have a network architecture and topology of computers that's far simpler and far lower cost than the traditional approach. So first and foremost, there's a real cost advantage. Now, of course, our partnership with Volkswagen will extend that cost advantage into their respective products as well. And bring with it scale and volume, which will, in turn, allow us to source those components and systems at a lower cost. But from a consumer-facing point of view, what it represents owning, not just the hardware, but owning the software and owning it around a really optimized architecture, as I described, is the ability to continue to make the software a lot better.

Speaker Change: Our network architecture, and and topology of AV computers, it's that's far simpler and far lower cost than than traditional approach. So first and foremost there is a real cost advantage now of course, our partnership with Volkswagen will extend that cost advantage into their respective products as well.

Robert Scaringe: So, first and foremost, there's a real cost advantage. Now, of course, our partnership with Volkswagen will extend that cost advantage into their respective products as well, and bring with it scale and volume, which will, in turn, allow us to source those components and systems at a lower cost. But from a consumer point of view, what it represents is owning not just the hardware but owning the software, and owning it around a really optimized architecture, as I described, is the ability to continue to make the software a lot better.

Speaker Change: And bring with it scale and volume or actual internal allow us to source those components and systems at a lower cost.

Speaker Change: But from a consumer facing point of view, what it represents owning not just the hardware, but owning the software.

Speaker Change: And owning it around a really optimized architecture as Ive described is the ability to continue to make the software a lot better.

Robert Scaringe: So the features can not only become more rich and more robust, but they can truly improve more than just surface-level skins on, let's say, your, you know, your cluster or your center information display, but deep into the vehicle and changing the way the vehicle performs dynamically changing the way you know it's charging profile set up, changing battery management system characteristics, so you can have the vehicle get better and better and better over time. In a way, that's very difficult when you rely on third parties to produce this complex labyrinth of ECUs and all the associated software, where even small changes require coordination amongst many different players. And so things that can take us minutes can take months with a traditional approach.

Shreyas Patil: So the features can not only become more rich and more robust, but they can truly improve more than just surface level skins on, let's say, your cost or your center information display, but into, like, deeply into the vehicle in changing the way the vehicle performs dynamically, changing the way it's charging profiles that up, changing battery management system characteristics. So you can have the vehicle get better and better and better over time in a way that's very difficult when you rely on third parties to produce this complex labyrinth of ECUs and all the associated software, where even small changes require coordination amongst many different players.

Speaker Change: So the features can not only become more rich and more robust, but they can truly improve more than just surface level skins on let's say your your your cluster or your center information display but into like deeply into the vehicle and changing the way the vehicle performs dynamically changing the way it is charging.

Speaker Change: I'll set up changing.

Speaker Change: Battery management system characteristics. So you can have the vehicle get better and better and better over time.

Speaker Change: In a way that is very difficult when you rely on.

Speaker Change: On third parties to produce.

Speaker Change: This complex labyrinth of of east to use and all the associated software, where even small changes require coordination amongst many different players.

Shreyas Patil: And so, things that can take us minutes can take months for a traditional approach. And so all that being said, what the customer experiences, of course, beyond the vehicle performance and the way it drives behaves, is what they see that the digital environment. It's also something that the UI framework, the approach to digital design, the approach to user experience design, something that we've spent an enormous amount of time on and we believe will continue to be differentiated and is facilitated and enabled by our platform, but it requires both. And we hope that by bringing this strong platform to our joint venture with Volkswagen that allows them to have to create products are also really compelling and answer some of the points I made before around there is a real lack of choice.

Speaker Change: And so things that can take us minutes can take months for for a traditional approach.

Robert Scaringe: And so, all that being said, what the customer experiences, of course, beyond the vehicle performance and the way it drives and behaves, is what they see in the digital environment. It's also something that the UI framework, the approach to digital design, the approach to user experience design, something that we've spent an enormous amount of time on, and we believe will continue to be differentiated, and is facilitated and enabled by our platform. But it requires both.

Speaker Change: So all that being said.

Speaker Change: What the customer experiences of course beyond the vehicle performance and the way it drives behaves as what they see that the digital environment. It's also something that the UI framework. The approach to digital design the approach to user experience design something that we spend an enormous amount of time on and we believe we will continue to.

Speaker Change: Differentiated.

Speaker Change: And is facilitated and enabled by our platform, but it requires both.

Robert Scaringe: We hope that by bringing this strong platform to our joint venture with Volkswagen, it allows them to create products that are also really compelling and answer some of the points I made before about there being a real lack of choice. I would characterize it as a pretty extreme lack of consumer choice around EVs and products in the space. And in order for us to really scale towards 100% electrification, we need more than just a couple of highly compelling vehicles. There needs to be, essentially, the amount of choice that we have in the combustion world, which we're not even remotely near in the EV space today.

Speaker Change: We hope that by bringing the strong platform to our joint venture with Volkswagen and it allows them to of.

Speaker Change: Great products are also really compelling and answer some of the points I made before around there is a real lack of choice.

Shreyas Patil: There's a, I would characterize as like a pretty extreme lack of consumer choice around EVs and products in the space. and in order for us to really scale towards 100% electrification, we need to have more than just a couple of highly compelling vehicles. There needs to be essentially mirror the amount of choice that we have in the combustion world, which we're not even remotely near in the EV space today.

Speaker Change: I would characterize as like a pretty extreme.

Speaker Change: Lack of consumer choice around.

Speaker Change: Evs and products in this space and.

Speaker Change: And in order for us to really scale towards 100% electrification, we need to have more than just a couple of highly compelling vehicles there needs to be.

Speaker Change: Essentially mirror the amount of choice that we have in the combustion world, which we're not.

Speaker Change: Not even remotely near and.

Speaker Change: In the EV space today.

Ronald Jewsikow: All right, great, thanks. Thank you.

Speaker Change: Alright, great. Thanks.

Speaker Change: Thank you.

Ronald Jewsikow: Our next question comes from Ron Jewsikow with Guggenheim Securities. He may proceed. Yeah, good evening, and thanks for taking my questions. RJ, you've talked in the past about as Rivian opens new spaces, order and take in those geographies, accelerates. I know you've laid out the plan to 2025 for spaces, but is there any way to think about what is launching in the coming quarter or the second half of this year just to think about demand being an important part of your bridge to growth profit in the fourth quarter? Yes, we have, as you called out, we have a number of spaces that are going to be launching over the next six to 12 months, and those spaces are great ways for consumers to get a chance to experience our vehicles firsthand, to sit in them, to touch them, and play with all the, you know, all the features. But beyond just our spaces, we've also really, over the last six months, begun activating our service infrastructure.

Operator: Thank you. Our next question comes from Ron Jewsikow with Guggenheim Securities. He may proceed.

Ron <unk>: Our next question comes from Ron <unk> with Guggenheim Securities You May proceed.

Operator: Good evening, and thanks for taking my questions. RJ, you've talked in the past about how as Rivian opens new spaces, order intakes in those geographies accelerate. I know you've laid out the plan to 2025 for spaces, but is there any way to think about what is being launched? The coming quarter or the second half of this year, just to think about demand being an important part of your bridge to growth and profit. Yeah, so we have, as you called out, a number of spaces that are going to be launching over the next six to 12 months, and those spaces are great ways for consumers to get a chance to experience our vehicles firsthand, to sit in them, to touch them, and play with all the, you know, all the features. But beyond just our spaces, we've also really begun activating our service infrastructure to support the expansion of our demo drives program. And so we have over 60 service locations that, month over month, quarter over quarter, we're growing the number of those locations that do more than just service.

Ron <unk>: Yeah, good evening and thanks for taking my questions.

RJ: RJ you've talked in the past about as Arabian opens new spaces order intake in those geographies accelerates.

Speaker Change: I know you've laid out the plan to 2025 for spaces, but is there any way to think about.

Speaker Change: One is launching in the coming quarter or the second half of this year just to think about demand being an important part of your bridge to gross profit in the fourth quarter.

Speaker Change: Yes, we have.

Speaker Change: As you called out we have.

Speaker Change: A number of spaces that are gonna be launching over the next six to 12 months in those spaces are great ways for consumers to get a chance to experience our vehicles firsthand.

Speaker Change: Sitting them to touch them in <unk>.

Speaker Change: With all the all the features.

Speaker Change: But beyond just our spaces. We've also really over the last six months have begun activating our service infrastructure to support expansion of our demo drives program.

Ronald Jewsikow: To support expansion of our demo drives program, and so we have, you know, over 60 service locations that, you know, month of a month, quarter of a quarter, we're growing a number of those locations that do more than just service, and they don't provide service, but they support test drive and demo drives, as well as, of course, delivery and other sales really activities. And then, beyond our spaces, our service infrastructure, we're also continuing to build out our Rivian Adventure network. That's our DC Fast Charge network, and that's another touchpoint for customers to experience the brand. Today, that network is close to being for Rivian only, but later this summer, we will be opening our network up, so it'll allow non-Rivian customers to use the network as well, which is a great way for folks to experience Rivian as a brand and get exposure to the products, you mean exposure to us as a company.

Speaker Change: And so we have.

Speaker Change: Over 60 service locations.

Speaker Change:

Speaker Change: Month over month quarter over quarter, we're growing the number of those locations that do more than just service and they don't provide service, but they support test drive and demo drives.

Robert Scaringe: And they not only provide service, but they support test drives and demo drives, as well as, of course, delivery and other sales-related activities. And then, beyond our spaces, our service infrastructure, we're also continuing to build out our Rivian Adventure Network. That's our DC fast charge network, and that's another touchpoint for customers to experience the brand. Today, that network is closed to being for Rivian only.

Speaker Change: As well as of course delivery and other sales related activities.

Robert Scaringe: But later this summer, we'll be opening our network up. So it'll allow non-Rivian customers to use the network as well, which is a great way for folks to experience Rivian as a brand and get exposure to the products and the exposure tests of the company. Thanks for that. And maybe I just want to follow up on Shreyas' question on credit revenues. Do you feel like the 17 million this quarter, or I suppose you probably know this... 17 million this quarter, kind of fully.

Speaker Change: And then it beyond our spaces our service infrastructure. We're also continuing to build out our <unk> adventure network, that's our DC fast charge network.

Speaker Change: Another touch point for our customers.

Speaker Change: <unk> experienced the brand today that network is close to being for Vivien only but later this summer we'll be opening our network up soda allow non repeating customers to use the network as well, which is a great way.

Speaker Change: For folks to experience revenue is a brandon.

Speaker Change: And.

Speaker Change: And get exposure to the products I mean exposure to us as a company.

Ronald Jewsikow: Yeah, thanks for that, and maybe just a follow-up on Trace's question on credit revenues. Do you feel like the 17 million this quarter, or I suppose you probably know this, if the 17 million this quarter kind of fully encapsulates or values of your zero mission vehicles, or is there kind of more to come as we model towards the back. Half of this year and gross profit break even. Yeah, Ron, as we mentioned at that investor day, we have over 200 million of regulatory credits under contracts right now for 2024 itself, and there are additional contracts in place for 25 and beyond as well.

Speaker Change: Yes, thanks for that and maybe just a follow up Andreas question on credit revenues.

Speaker Change: Is do you feel like the $17 million this quarter or I, suppose you'd probably notice it.

Speaker Change: The $17 million this quarter kind of fully.

Robert Scaringe: Encapsulates our values. Is this your zero-emission vehicle, or is there something more to come as we model towards the back half? Yeah, Ron, as we mentioned at investor day, we have over 200 million in regulatory credits under contract right now for 2024 itself. And there are additional contracts in place for 25 and beyond as well.

Speaker Change: Encapsulates our values.

Speaker Change: Zero emission vehicles or is there kind of more to come as we model towards the back half of this year and gross profit breakeven.

Speaker Change: Yeah, Ron this as we mentioned at Investor Day, we have over $200 million of regulatory credits under contract right now for 2020 for itself and there are additional contracts in place for 25 and beyond as well so $17 million is really just the tip of the ice.

Claire McDonough: So 17 million is really just the tip of the iceberg as we think about the opportunity for 2024 and the sale of our regulatory credit. Thanks for taking the time to join us today. We hope to see you again soon. Until then, take care.

Ronald Jewsikow: So 17 million is really just the tip of the iceberg as we think about the opportunity for 2024 and the sale of our regulatory credits. Thank you. Thank you for taking my question. Thank you.

Speaker Change: I guess as we think about the opportunity for 2024 and the sale of our regulatory credits.

Speaker Change: Thanks for taking my questions.

Speaker Change: Thank you.

Stephen Gengaro: Our next question comes from Stephen Gengaro. With people, you may proceed. Thanks, good afternoon, everybody. I think, too, for me, the first, when we talk about the gross profit progression and the expectations for the fourth quarter and beyond, the three kind of key points that were laid out, Claire, can you just talk about, are there any that you have more or less confidence in or are more or less visible at this point? Sure, if we think about the visibility that we have into the three drivers, which for everyone's benefit is variable cost improvement, fixed cost leverage, and increase in revenue per delivered unit on the first piece.

Operator: Thank you. And our next question comes from Stephen Gengaro with Steeple. You may proceed. Thanks. Good afternoon, everybody.

Stephen <unk>: And our next question comes from Stephen <unk> with Stifel. You May proceed.

Operator: I think, too, for me, when we talk about the gross profit progression and the expectations for the fourth quarter and beyond, the three kind of key points that were laid out, Claire, can you just talk about them? Are there any that you have more or less confidence in or are more or less visible at this point? Sure, as we think about the visibility that we have into the three drivers, which for everyone's benefit is variable cost improvement, fixed cost leverage, and increase in revenue per delivery unit on the first piece, and that one, as we sit here today, the contracts with our supplier partners are under contract, so we have clear visibility into the cost-down efforts that we'll see from a material cost trajectory there.

Stephen: Hi, Thanks, good afternoon everybody.

Stephen: I think two from me the first when we when we talk about the gross profit progression in the expectations for for the fourth quarter and beyond.

Speaker Change: The the three kind of key points that were laid out clear can you just talk about.

Speaker Change: Are there any that you have more or less confidence in <unk> are more or less visible at this point.

Speaker Change: Sure as we think about the visibility that we have into the three drivers, which for everyones benefit as variable cost improvement fixed cost leverage and increase in revenue per deliver unit.

Speaker Change: On the first piece and that one as we sit here today the contracts with our supplier partners are under contract.

Stephen Gengaro: And that one, as we said here today, the contracts with our supplier partners are under contract. So we have clear visibility into the cost down at first that we'll see from a material cost trajectory there. Similarly, as we think about the fixed cost leverage, that will be enabled by our production ramp in the second half of the year as we increase volumes. And then the other component is the reduction in depreciation expense, which is already alluded to earlier in the call. We're now anniversary our three years post-artored production. And so, part of the reduction in our ad depreciation expenses is related to fully depreciating some of our initial tooling associated with our launch.

Speaker Change: We have clear visibility into the cost down efforts that we'll see from a material cost trajectory. There. Similarly, as we think about the fixed cost leverage and that will be enabled by our production ramp in the second half of the year as we increase volumes and then the other component is at a reduction in depreciation expense.

Operator: Similarly, as we think about the fixed cost leverage, that will be enabled by our production ramp in the second half of the year as we increase volumes. And then the other component is the reduction in depreciation expense.

Claire McDonough: As RJ alluded to earlier in the call, we're now anniversarying our three years of post-starter production, and so part of the reduction in our depreciation expenses is related to fully depreciating some of our initial tooling associated with our launch. So again, we have clear visibility into the trajectory of that component of it as well. And then, the final component, as we think about the increase in revenue per delivered unit on this end, we're ramping right now.

Speaker Change: And as David alluded to earlier in the call. We're now Anniversarying, our three years post startup production and so part of the reduction in our and depreciation expenses is related 10 fully depreciating some of our initial tooling et cetera.

Speaker Change: Stated with our launch so again, we have clear visibility into the trajectory on that component of it as well.

Stephen Gengaro: And so again, we have clear visibility into the trajectory on that component of it as well. And then the final component, as you think about the increase in revenue per delivered unit, on this end, again, we're ramping right now or sent drive unit line that will enable sales of our trimotor that allow us to see a little bit higher from a mixed perspective. And then I just referenced the regulatory credits, again, that are under contract for this year's as well. So have a lot of visibility as we look into the second half performance. Great. Now, thanks.

Speaker Change: And then the final component as you think about the increase in revenue per delivered unit.

Speaker Change: On this end.

Speaker Change: Again, we're ramping right now are sent drive unit line that will enable sales in our tri motor that allow us to skew a little bit higher from a mix perspective, and then I just referenced our regulatory credits again that are under contracts.

Claire McDonough: We have a 50% drive unit line that will enable sales of our tri-motor that allows us to skew a little bit higher from a mixed perspective. And then I just referenced the regulatory credits again that are under contract for this year as well, so we have a lot of visibility as we look into the second half performance. Great. No, thanks. That's good color.

Speaker Change: For this serious as well so it will have a lot of visibility as we look into the second half outperformance.

Operator: I appreciate that. And the other quick one, and I'm not sure if you'll comment on this or not, CapEx for 25, any parameters we should be thinking about? Yes, as we think about CapEx for 2025, as we mentioned in the past, we estimate spending to be roughly in the, you know, one and a half billion dollar area. Okay, great.

Speaker Change: Great no. Thanks, that's good color I appreciate that and the other quick one on electric who will comment on this or not.

Stephen Gengaro: That's good color. I appreciate that. And the other clip, and unless there's a comment on this or not, CapEx for 25, any parameters we should be thinking about? Yes, as we think about CapEx for 2025, as we mentioned in the past, we estimate spend to be roughly in the one and a half billion dollar area. Okay, great. Thank you.

Speaker Change: Capex for 'twenty five any parameters, we should be thinking about.

Speaker Change: Yes, as we as we think about Capex for 2025, as we mentioned in the past week, we estimate that spend to be roughly in the $1 5 billion area.

Speaker Change: Okay, great. Thank you.

Operator: Thank you. Thank you. I would now like to turn the call back over to RJ Scaringe for any closing remarks. Thank you, everyone, for joining us today.

Robert Scaringe: I would not like to turn the call back over to RJ Scarin for any closing remarks. You know, thank you everyone for joining us today. We were really excited with the progress we're making, the transition to our second generation R1 vehicles and the associated cost structure that that drives both at the bill and material level, but also within our operations, within our plant, is a really important stepping stone for us as a business. And the efficacy through which that launch occurred really reflects the growing capability for us as a business. I'm also really excited to see what we're, how customers have continued to react to the product and seeing how favorably this second generation R1 was seen and continues to be seen, really sets up well for us with what's to come with R2.

Speaker Change: Thank you I would now like to turn the call back over to R. J score in for any closing remarks.

Robert Scaringe: We were really excited with the progress we're making on the transition to our second generation R1 vehicles and the associated cost structure that that drives both at the bill of materials level but also within our operations within our plan. It is a really important stepping stone for us as a business, and the efficacy through which that launch occurred really reflects the growing capability for us as a business. I'm also really excited to see how customers have continued to react to the product, and seeing how favorably this second generation R1 has been seen and continues to be seen really sets up well for us with what's to come with R2, where R2 leverages a lot of the content, particularly around the network architecture, the ECU topology, the software stack, and even beyond that into some of the componentry architecture that we've laid out with the updates to So, again, thanks everyone for joining us.

Speaker Change: Yeah. Thank you everyone for joining us today.

Speaker Change: We're really excited with the progress we're making.

Speaker Change: The transition to our second generation <unk> vehicles, and the associated cost structure that that drives both at the bill of materials level, but also within our operations within our plants.

Speaker Change: As a really important stepping stone for us as a business.

Speaker Change: And the efficacy through which that launch occurred really reflects the growing.

Speaker Change: Capability for us as a business.

Speaker Change: I'm also really.

Speaker Change: Excited to see what we are.

Speaker Change: How customers have continued to add to the product.

Speaker Change: And seeing.

Speaker Change: Seeing how favorably the second generation or one was was seen and continues to be seen.

Speaker Change: Really sets up well for us with what's to come with our two where our two leverages a lot of our content, particularly around the network architecture of issue topology the software stack.

Robert Scaringe: Where R2 leverages a lot of the content, particularly around the network architecture of the issue, topology, the software stack, and even beyond that into some of the componentry architecture that we've laid out with the updates of the R1 platform.

Speaker Change: And even beyond that into some of the componentry architecture that we've laid out with the update to the <unk> platform.

Robert Scaringe: So, again, thanks everyone for joining. We're looking forward to continued progress and continued efforts on our drive to profitability, and look forward to speaking to everybody soon. Thank you.

Speaker Change: So.

Speaker Change: Again, thanks, everyone for joining we're looking forward to continued progress and continued.

Operator: We're looking forward to continued progress and continued efforts on our drive to profitability and look forward to speaking to everybody soon. Thank you.

Speaker Change: Efforts on our drive to profitability and look forward to speaking everybody soon.

Operator: This concludes the conference. Thank you for your participation. You may now disconnect. ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? A.M. P.M. P.M. M.M.

Speaker Change: Thank you. This concludes the conference. Thank you for your participation you may now disconnect.

Operator: This concludes the conference. Thank you for your participation.

Operator: You may now disconnect. Thank you.

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Speaker Change: Bill.

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Operator: M.M. M.M. M.M. M.M. M.M. M.M. M.M. ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? Good day and thank you for standing by.

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Speaker Change: Thanks, Tom.

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Operator: Welcome to the Rivian Second Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. Please be advised that today's conference is being recorded. After the speaker's presentation, there will be a question and answer session. To ask a question, please press star 1 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 1 again.

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Operator: I would now like to hand the conference over to your speaker today, Tim Bei, Vice President, Investor Relations. Good afternoon, and thank you for joining us for Rivian's second quarter 2024 earnings call. Before we begin, Good morning, and thank you for standing by. Welcome to the Rivian Second Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode.

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Speaker Change: Thanks, Tom.

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Operator: Please be advised that today's conference is being recorded. After the speaker's presentation, there will be a question and answer session. To ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again.

Speaker Change: Good day and thank you for standing by welcome to the <unk> second quarter 2024 earnings Conference call. At this time all participants are in a listen only mode. Please be advised that today's conference is being recorded after the speaker's presentation there'll be a question and answer session to ask a question. Please press star one one on.

Speaker Change: Your telephone and wait for your name to be announced to withdraw. Your question. Please press star one again I would now like to hand, the conference over to your Speaker today, Tim Bay.

Timothy Bei: I would now like to hand the conference over to your speaker today, Tim Bei, Vice President, Investor Relations. Good afternoon, and thank you for joining us for Rivian's second 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 laws. Such statements involve risks and uncertainties that could cause actual results to differ materially.

Vice President Investor Relations.

Speaker Change: Good afternoon, and thank you for joining us for <unk> second quarter 2024 earnings call before we begin.

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Good day and thank you for standing by welcome to the <unk> second quarter 2024 earnings Conference call. At this time all participants are in a listen only mode. Please be advised that today's conference is being recorded after the speaker's presentation there'll be a question and answer session to ask a question. Please press star one on your.

After the speaker's presentation, there will be a question-and-answer session. To ask a question, please press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again.

Speaker Change: Telephone and wait for your name to be announced to withdraw. Your question. Please press star one again I would now like to hand, the conference over to your Speaker today, Tim Bay.

I would not like to hand a conference over to your speaker today, Tim Bay, Vice President, Investor Relations. Good afternoon, and thank you for joining us for Rivian's second 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 laws. Such statements involve risks and uncertainties that could cause actual results to differ materially. These risks and uncertainties are described in our SEC filing and today's shareholder letter.

Tim Bay: Vice President Investor Relations.

Timothy 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.

Speaker Change: We will also be making statements related to our business operations and financial performance that may be considered forward looking statements under federal Securities laws.

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

Speaker Change: 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.

During this call, we will discuss both GAP and non-GAP 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 around some of the items we'll cover on today.

Speaker Change: Before the call we published our shareholder letter, which include an overview of our progress over the recent months.

Speaker Change: I encourage you to read it for additional details around some of the items, we'll cover on today's call.

Speaker Change: 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. During our call, I will highlight key developments in the second quarter and provide an update on the progress we're making against our value drivers.

RJ: Thanks, Tim Hello, everyone and thanks for joining us today.

Robert Scaringe: During our call, I will highlight key developments in the second quarter and provide an update on the progress we're making against our value drivers. Prior to discussing quarterly details, I want to reinforce the key messages conveyed in depth during our recent investigation. To achieve the full potential of our vision, we need to aggressively drive towards profitability. The fundamental levers underpinning this goal include the recent transition to our second-generation R1 and the subsequent introduction of our mid-sized platform, which underpins R2.

RJ: Our call I will highlight key developments in the second quarter and provide an update on the progress we're making against our value drivers.

Prior to discussing quarterly details, I want to reinforce the key messages conveyed in depth during our recent Investor Day. To achieve the full potential of our vision, we need to aggressively drive towards profitability. The fundamental levers underpinning this goal include the recent transition to our second generation R1 and the subsequent introduction of our midsize platform, which underpins R2. I'm encouraged by the progress ramping up our second generation R1 vehicles, as well as developing R2, which we expect to launch in the first half of 2026. The ability to dramatically reduce costs in a condensed time frame and drive continual improvement in the customer experience is based on our intentional approach to vertical integrates.

RJ: Prior to discussing quarterly details I want to reinforce the key messages conveyed in depth during our recent investor day.

RJ: To achieve the full potential of our vision, we need to aggressively drive towards profitability.

RJ: The fundamental level levers underpinning. This goal include the recent transition to our second generation are one and the subsequent introduction of our mid sized platform, which underpins our too.

Robert Scaringe: I'm encouraged by the progress ramping up our second generation R1 vehicles and developing R2, which we expect to launch in the first half of 2026. The ability to dramatically reduce costs in a condensed time frame and drive continual improvement in the customer experience is based on our intentional approach to vertical integration. From the beginning, we have vertically integrated certain components of the vehicle, driven by the desire to create superior customer experiences and deliver long-term structural cost advantages. The success of this is demonstrated by a recent J.D.

RJ: I'm encouraged by the progress ramping up our second generation of our one vehicles as well as developing our tube, which we expect to launch in the first half of 2026.

RJ: The ability to dramatically reduce cost in a condensed timeframe and drive continuous improvement in the customer experience is based on our intentional approach to vertical integration.

Delegation. From the beginning, we have vertically integrated certain components of the vehicle driven by the desire to create superior customer experiences and deliver long-term structural cost advantages. The success of this is demonstrated by a recent JD Power appeal study, where Rivian received the highest score and the most satisfying brand across the automotive industry. We spent years developing key technologies such as our software, electrical hardware, autonomy, and propulsion. The significant cost of performance benefits from these technologies gives us confidence in our ability to continue developing and building highly desirable vehicles across the R1, R2, and R3 product lines.

RJ: From the beginning we vertically integrated certain components of the vehicle driven by the desire to create superior customer experiences and deliver long term structural cost advantages.

Robert Scaringe: Power appeal study where Rivian received the highest score and the most satisfying brand across the automotive industry. We spent years developing key technologies such as our software, electrical hardware, autonomy, and propulsion. The significant cost and performance benefits from these technologies give us confidence in our ability to continue developing and building highly desirable vehicles across the R1, R2, and R3 product lines. As a testament to our industry-leading technology platform, on June 25th, we announced the expected joint venture with Volkswagen Group. The announcement validates our technology platform and is expected to substantially expand the market applications for our software and associated Zonal Electroarchs.

Speaker Change: The success of this is demonstrated by our recent J D power Appeal study, where <unk> received the highest score and the most satisfying brand across the automotive industry.

Speaker Change: Spent years developing key technologies, such as our software electrical hardware autonomy and propulsion.

Speaker Change: Given the significant cost and performance benefits from these technologies gives us confidence in our ability to continue developing and building highly desirable vehicles across the <unk> or two in our three product lines.

As a testament to our industry-leading technology platform, on June 25th, we announced the expected joint venture with Volkswagen Group. The announcement validates our technology platform and is expected to substantially expand the market applications for our software and associate its own intellectual architecture. Rivian's proven electronics and software platform is expected to serve as a foundation for future software development in the partnership. The technical workstream to prepare the integration of our electrical architecture and software technology stack into Volkswagen Group products is moving along very well, and we expect to close the joint venture in the fourth quarter of this year.

Speaker Change: As a testament to our industry, leading technology platform on June 25, we announced the expected joint venture with Volkswagen Group.

Speaker Change: The announcement validates our technology platform and is expected to substantially expand the market applications for our software and associated Zona electrical architecture.

Robert Scaringe: Rivian's proven electronics and software platform is expected to serve as a foundation for future software development in the partnership. The technical workstream to prepare the integration of our electrical architecture and software technology stack into Volkswagen Group products is moving along very well, and we expect to close the joint venture in the fourth quarter of this year. As the auto industry transitions to smarter, more connected, more complex, and integrated vehicle architectures, we strongly believe our technology is best positioned to deliver a modular and scalable platform that will help create highly compelling products and services that we expect will accelerate consumers' shift to electrification.

Speaker Change: Maybe it's proven electronics and software platform is expected to serve as the foundation for future software development in the partnership the.

Speaker Change: The technical work streams to prepare the integration of our electrical architecture and software technology stack into Volkswagen group products is moving along very well and we expect to close the joint venture in the fourth quarter of this year.

As the auto industry transitions to smarter, more connected, more complex and integrated vehicle architectures, we strongly believe our technology is best positioned to deliver a modular and scalable platform to help create highly compelling products and services that we expect will accelerate consumer shift to electrification.

Speaker Change: As the auto industry transitions to a smarter more connected more complex and integrated vehicle architectures. We strongly believe our technology is best positioned to deliver a modular and scalable platform to help create highly compelling products and services that we expect will accelerate consumer shift to electrification.

I also want to take this opportunity to acknowledge our team who has continued to execute on our second generation R1 ramp of production and deliveries, R2 development, and the formation of our joint venture with Volkswagen Group. During the second quarter of 2024, we successfully completed the retooling upgrade in normal. This was a pivotal operational event for the company. The upgrade introduced new technologies and cost-focused material changes into the R1 vehicle platform will also incorporate manufacturing process improvements that are expected to improve cycle time utilization and cost. For example, we have reduced complexity and lowered the cost associated with the vehicle body, with a heavy emphasis on removing parts, processes, and steps.

Speaker Change: I also want to take this opportunity to acknowledge our team who has continued to execute on our second generation <unk> ramp of production and deliveries are two development and the formation of our joint venture with Volkswagen Group.

Speaker Change: During the second quarter of 2024, we successfully completed the retooling upgrade and normal.

This was a pivotal operational event for the company.

Speaker Change: The upgrade introduce new technologies and cost focus material changes into the <unk> vehicle platform. While also incorporating manufacturing process improvements that are expected to improve cycle time utilization and cost.

Speaker Change: For example, we have reduced complexity and lowered the cost associated with the vehicle body with a heavy emphasis on removing parts processes and steps.

These changes have reduced nearly 1,500 joints and contributed to an expected 30% improvement in the R1 production line rate. Following completion of the retooling upgrade, we resume production and are encouraged with the early progress of ramping our second generation R1 variants. The new R1 vehicles have hundreds of design, engineering, and performance upgrades, with the most significant being an entirely new, zonal architecture, new compute and autonomy platform, new in-house drive units, and a re-engineered suspension system. The introduction of the second generation R1 platform, combined with commercial cost downs and commodity tailwinds, are expected to enable significant material cost reduction.

Robert Scaringe: These changes have reduced nearly 1,500 joints and contributed to an expected 30% improvement in the R1 production line. Following completion of the retooling upgrade, we resume production and are encouraged with the early progress of ramping up our second generation R1 variants. The new R1 vehicles have hundreds of design, engineering, and performance upgrades, with the most significant being an entirely new zonal architecture, new compute and autonomy platform, new in-house drive units, and a re-engineered suspension. The introduction of the second-generation R1 platform, combined with commercial cost downs and commodity tailwinds, is expected to enable significant material cost reduction.

Speaker Change: These changes have reduced nearly 1500 joints and contributed to an expected 30% improvement in the R. One production line rate.

Speaker Change: Following completion of the retooling upgrade we resumed production and are encouraged with the early progress of ramping our second generation or one variance.

Speaker Change: <unk> vehicles have hundreds of design engineering and performance upgrades with the most significant being an entirely new zonal architecture, new compute and autonomy platform New in house drive units and a reengineered suspension system.

Speaker Change: The introduction of the second generation <unk> platform combined with commercial cost downs and commodity tailwind are expected to enable significant material cost reduction.

Importantly, I want to emphasize ours more to go. We are focused on reducing our R1 cost beyond 2024 to lower material cost and conversion cost. As we continue to source materials for R2, we are seeing opportunities to further reduce the cost of R1 through additional supplier cost reduction.

Speaker Change: Importantly, I want to emphasize there is more to go we are focused on reducing our own costs beyond 2024 through lower material costs and conversion costs.

Speaker Change: As we continue to source materials for our two we're seeing opportunities to further reduce the cost of our one through additional supplier cost reductions.

Sessions. In addition, we believe the expected joint venture with Volkswagen Group will allow us to achieve more favorable pricing from suppliers. This includes components, chipsets, printed circuit board assemblies, and all the associated content that relates to those hardware systems. I want to delve in further on our new second-generation driving units, which represent a significant change in capability and cost. The second-generation R1 includes our scent motor system, which underpins under tri-motor and quad motor. These motor configurations, in addition to our dual motor released in the 2023, mean all motors on all-reviewed vehicles are now designed, engineered, and manufactured fully in-house.

Speaker Change: In addition, we believe the expected joint venture with Volkswagen Group will allow us to achieve more favorable pricing from suppliers. This.

Speaker Change: This includes components chipsets printed circuit board assemblies, and all the associated content that relates to those hardware systems.

Speaker Change: I want to delve in further on our new second generation drive units, which represent a significant change in capability and cost.

Speaker Change: The second generation or one includes our sent motor system, which underpins, our new Tri motor and Quad Motor <unk>.

Speaker Change: These motor configurations. In addition to our dual motor released in 2023, I mean, all motors on all reviewed vehicles are now designed engineered and manufactured fully in house.

The 850 horsepower tri-motor variants are expected to start delivery towards the end of the third quarter. The tri-motor variant is equipped with two scent motors in the rear, and one in-dura motor in the front for a blend of exceptional power and range. The tri-motor R1T delivers zero to 60 miles per hour and 2.9 seconds while offering an estimated range in conserve mode of approximately 4 miles. The quad motor is designed for peak adventure with four scent motors. The quad motor delivers 1,025 horsepower, zero to 60 in less than 2.5 seconds, and achieves the quarter mile in less than 10.5 seconds.

Speaker Change: 850 horsepower trimotor variance are expected to start deliveries towards the end of the third quarter.

Robert Scaringe: The Trimotor Variant is equipped with two ascent motors in the rear and one enduro motor in the front for a blend of exceptional power and range. The Trimotor R1T delivers 0-60 mph in 2.9 seconds while offering an estimated range in conserved mode of approximately 400 miles.

The Tri Motor variant is equipped with 2% motors in the rear and one in Durham motor in the front for a blend of exceptional power and range.

The <unk> delivers zero to 60 miles per hour and $2 nine seconds, while offering an estimated range and conserve vote of approximately 400 miles.

Robert Scaringe: The quad motor is designed for peak adventure with four cent motors. It delivers 1025 horsepower, 0 to 60 in less than two and a half seconds, and achieves the quarter mile in less than 10 and a half. Feedback on our second generation R1 has been very positive. It is a fundamentally better vehicle while simultaneously costing less to build. We're excited to get more of our second generation products to customers and available for demo drives in the coming quarters.

Speaker Change: The Quad Motors designed for adventure with four cent motors, the QUADRA or delivers 1025 horsepower zero to 60 in less than two five seconds and achieves the quarter mile in less than 10 five seconds feed.

Feedback on our second-generation R1 has been very positive. It is a fundamentally better vehicle while simultaneously costing less to build. We're excited to get more of our second-generation products to customers, and available for demo drives in the coming quarters. Every review, we wake up every day thinking about ways to make our products better. This is based on our sense of urgency in transitioning the world towards a fossil fuel-free future. This is possible by creating products that are deeply excited to consumers, products that carry attributes and design characteristics that pull people out of internal combustion vehicles because they're experiencing something that isn't just better for the environment, but also really enjoyable and desirable to use every day.

Speaker Change: Feedback on our second generation <unk> has been very positive it is a fundamentally better vehicle, while simultaneously costing less to build.

Speaker Change: We're excited to get more of our second generation products to customers and available for demo drives in the coming quarters.

Speaker Change: At <unk>, we wake up everyday thinking about ways to make our products better.

Speaker Change: This is based on our sense of urgency and transitioning the world towards a fossil fuel free future.

Speaker Change: This is possible by creating products that are deeply exciting to consumers.

Speaker Change: <unk> attributes in design characteristics that pull people out of internal combustion vehicles, because they are experiencing something that isn't just better for the environment, but also really enjoyable and desirable to use everyday.

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

Claire: I would 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.

With that, I'll pass the call to Claire. Thanks, Arjay. During the second quarter of 2024, we made significant progress driving greater cost efficiency, further strengthening our balance sheets, validating the differentiated nature of our technology stack, and establishing new business opportunities. During the second quarter, we produced 9,612 vehicles and delivered 13,790 vehicles, which represented the primary driver of the $1.2 billion of revenue we generated. As expected, second quarter production was impacted by plant downtime associated with the retooling upgrade. Our deliveries were strong as we sold through the majority of inventory of our first generation R1s. Due to strong Q2 performance, which led to our lower starting finish goods inventory balance and the continued ramp of production throughout the third quarter, we expect our third quarter deliveries to be below our second quarter results and production volumes to be in line with our first quarter levels.

Claire McDonough: Thanks, RJ. During the second quarter of 2024, we made significant progress driving greater cost-efficiency, further strengthening our balance, validating the differentiated nature of our technology Stack, and establishing New Business Operations. During the second quarter, we produced 9,612 vehicles and delivered 13,790 vehicles, which represented the primary driver of the $1.2 billion of revenue we generated. As expected, second quarter production was impacted by plant downtime associated with the re

Claire: Thanks, RJ during the second quarter of 2024, we made significant progress driving greater cost efficiency further strengthening our balance sheet validating the differentiated nature of our technology stack and establishing new business opportunities.

Claire: During the second quarter, we produced 9612 vehicles and delivered 13790 vehicles, which represented the primary driver of the $1 2 billion of revenue we generated.

Claire: As expected second quarter production was impacted by planned downtime associated with the retooling upgrade our.

Claire: Our deliveries were strong as we sold through the majority of inventory of our first generation <unk>.

Claire: Due to strong Q2 performance, which led to our lower starting finished goods inventory balance and the continued ramp of production throughout the third quarter, we expect our third quarter deliveries to be below our second quarter results and production volumes to be in line with our first quarter levels.

Total gross profit was negative $451 million. Our gross profit loss per vehicle delivered was approximately $33,000, which includes approximately $15,000 of depreciation and expense, and $1,200 of stock-based compensation.

Claire: Total gross profit was negative $451 million.

Claire McDonough: Our gross profit loss per vehicle delivered was approximately $33,000, which included approximately $15,000 of depreciation and amortization expense and $1,200 of stock-based compensation. In addition, we incurred approximately $2,400 per vehicle delivered in the quarter related to our cost of revenue efficiency initiatives, which we do not anticipate being part of our long-term normalized cost structure. We expect to see significant cost reductions in our R1 platform during the second half of 2024 as we ramp up production and deliveries of our second generation R1 vehicles.

Claire: Gross profit loss per vehicle delivered was approximately $33000.

Claire: Which includes approximately $15000 of depreciation and amortization expense and $200 and stock based compensation expense.

Expend. In addition, we incurred approximately $2,400 per vehicle delivered in the quarter related to our cost of revenue efficiency initiatives, which we do not anticipate being part of our long-term, normalized cost structure. We expect to see significant cost reductions in our R1 platform during the second half of 2024 as we ramp the production and deliveries of our second generation R1 vehicles. Additionally, the reduction in our LC-NRV write-down for the quarter compared to Q1 2024 reflects the progress we are making in association with our material cost reductions and operational efficiencies associated with our second-generation R1 vehicles.

Claire: In addition, we incurred approximately $2400 per vehicle delivered in the quarter related to our cost of revenue efficiency initiatives, which we do not anticipate being part of our long term normalized cost structure.

Claire: We expect to see significant cost reductions in our <unk> platform. During the second half of 2024, as we ramped up production and deliveries of our second generation <unk> vehicles.

Claire McDonough: Additionally, the reduction in our LCNRV write-down for the quarter compared to Q1 2024 reflects the progress we're making in association with our material cost reductions and operational efficiencies associated with our second generation R1 vehicle. We remain confident in our path to deliver modest positive gross profit in the fourth quarter of 2024 and for the full year of 2025. Importantly, our team is already focused on driving incremental costs out of our R1 platform to help achieve our long-term gross profit target of 25%.

Claire: Additionally, the reduction in our LC and RV write down for the quarter compared to Q1 2024 reflects the progress we are making in association with our material cost reductions and operational efficiencies associated with our second generation <unk> vehicles.

We remain confident in our path to deliver modest positive growth profit in the fourth quarter of 2024 and for the full year of 2025. Importantly, our team is already focused on driving incremental costs out of our R1 platform to help achieve our long-term growth profit target of 25%. The key drivers of our long-term R1 profitability include reducing material costs, leveraging our fixed costs, and scaling our revenues per delivered unit through product mix and pricing, software and services, and other revenues. During the second quarter, we also announced the intention to form an equally controlled and owned joint venture with the Volkswagen Group to create next-generation electrical architecture and best-in-class software technology.

Claire: We remain confident in our path to deliver modest positive gross profit in the fourth quarter of 2024 and for the full year of 2025.

Claire: Importantly, our team is already focused on driving incremental cost out of our <unk> platform to help achieve our long term gross profit target at 25%.

Claire: The key drivers of our long term <unk> profitability include reducing material costs, leveraging our fixed costs and scaling our revenue per delivered unit through product mix and pricing software and services and other revenues.

Claire: During the second quarter, we also announced the intention to form an equally controlled and owned joint venture with the Volkswagen group to create next generation electrical architecture and best in class software technology.

In association with this deal, Volkswagen Group have made an initial investment of $1 billion into R1, with up to $4 billion in plant additional investments for a total deal size of $5 billion. The incremental investments are subject to the completion of definitive agreements, the achievement of certain milestones, and the receipt of regulatory approvals. Assuming all criteria are met, we expect that the full $5 billion is intended to flow to the benefit of R1. In addition to the $5 billion of capital to R1, we anticipate incremental benefits through cost savings on materials, operating expense efficiencies, and future revenue opportunities associated with the joint venture.

Speaker Change: Dedication with this deal Volkswagen group have made an initial investment of $1 billion into Arabian.

With up to $4 billion in planned additional investments for a total deal size of $5 billion.

Speaker Change: The incremental investments are subject to the completion of definitive agreements the achievement of certain milestones and the receipt of regulatory approvals.

Speaker Change: Assuming all criteria are met we expect that the full $5 billion is intended to flow to the benefit of radian.

Claire McDonough: In addition to the $5 billion of capital to Rivian, we anticipate incremental benefits through cost savings on materials, operating expense efficiencies, and future revenue opportunities associated with the joint venture. The initial and planned investments by Volkswagen Group, in addition to our cash, cash equivalents, and short-term investments, are expected to provide the capital to fund Rivian's operations through the ramp of R2 and Normal, as well as the midsize platform in Georgia. Enabling a Path to Positive Free Cash Flow on Meaningful Scale. As RJ mentioned, we expect the deal to close in the fourth quarter of this year, and we will provide additional details at that time.

Speaker Change: In addition to the $5 billion of capital to Caribbean, We anticipate incremental benefits through cost savings on materials operating expense efficiencies and future revenue opportunities associated with the joint venture the.

The initial and planned investments by Volkswagen Group in addition to our cash equivalents and short-term investments are expected to provide the capital to fund Rivian's operations through the ramp of R2 in normal as well as the mid-size platform in Georgia, enabling a path to positive free cash flow and meaningful scale. As our day mentioned, we expected deal to close in the fourth quarter of this year, and we will provide additional details at that time. During the second quarter, we improved our cash flow from operations by 41 percent as compared to the first quarter of 2024.

Speaker Change: The initial and planned investments by Volkswagen Group. In addition to our cash cash equivalents and short term investments are expected to provide the capital to fund <unk> operations through their ramp up <unk> and normal as well as the mid size platform in Georgia.

Speaker Change: Enabling our path to positive free cash flow and meaningful scale.

Speaker Change: As already mentioned, we expect the deal to close in the fourth quarter of this year and we will provide additional details at that time.

Speaker Change: During the second quarter, we improved our cash flow from operations by 41% as compared to the first quarter of 2024.

This improvement is reflective of our continued focus on cost and greater working capital efficiency across the business. As compared to the first quarter of 2024, we reduced our gross profit loss per vehicle by approximately $6,000 and made progress on reducing our gross inventory balance. We believe these trends will result in further improvements in our cash usage for the second half of 2024.

Speaker Change: This improvement is reflective of our continued focus on cost and greater working capital efficiency across the business.

Speaker Change: As compared to the first quarter of 2024, we reduced our gross profit loss per vehicle by approximately $6000 and made progress on reducing our gross inventory balance.

Speaker Change: We believe these trends will result in further improvements in our cash usage for the second half of 2024.

As we look ahead, we are reaffirming our 2024 production guidance of 57,000 units, delivery expectations of low single-digit growth as compared to 2023, EBITDA guidance of negative $2.7 billion, and capital expenditures of 1.2 billion scholars. As a reminder, coming out of the retooling upgrade, we are currently operating the R1 line on a two-shift operation, which results in 56,000 units of annual run rate output. Our commercial van line is currently running on a limited one-shift operation, which has the potential to deliver a run rate annual output of 15,000 units.

As we look ahead, we are reaffirming our 2024 production guidance at 57000 units.

Speaker Change: Delivery expectations of low single digit growth as compared to 2023.

Speaker Change: EBITDA guidance of negative $2 $7 billion in capital expenditures of $1 2 billion.

Claire McDonough: As a reminder, coming out of the retooling upgrade, we are currently operating the R1 line on a two-shift operation, which results in 56,000 units of annual run rate output. Our commercial van line is currently running on a limited one-shift operation, which has the potential to deliver an annual run rate of 15,000 units. As we look ahead for 2025, we expect that our normal facility will not be producing vehicles for more than one month during the second half of the year as we upgrade and integrate new equipment into the plant ahead of our first half of 2026 R2 launch.

Speaker Change: As a reminder, coming out of the retooling upgrade we are currently operating the art one line on a two shift operation, which resulted in 56000 units of annual run rate output.

Speaker Change: Our commercial van line is currently running on a limited one shift operation, which has the potential to deliver a run rate annual output of 15000 units.

As we look ahead for 2025, we expect that our normal facilities will not be producing vehicles for more than one month during the second half of the year as we upgrade and integrate new equipment into the plant ahead of our first half of 2026 R2 launch. We continue to see a clear path to long-term, approximately 25% growth margin target, high teams adjusted EBITDA margin target, and approximately 10% free cash flow margin target.

Speaker Change: As we look ahead for 2025, we expect that our normal facility will not be producing vehicles for more than one month during the second half of the areas, we upgrade and integrate new equipment into the plant ahead of our first half of 2026, our acute launch.

Claire McDonough: We continue to see a clear path to a long-term approximately 25% gross margin target, high teens adjusted EBITDA margin target, and approximately 10% free cash flow margin target. I wanted 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. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again.

Speaker Change: We continue to see a clear path to long term 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 the tremendous support.

Speaker Change: I wanted 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.

With that, let me turn the call back over to the operator to open the line for Q&A. Thank you. As a reminder, to ask a question, please press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again.

Speaker Change: Thank you.

Speaker Change: A reminder to ask a question. Please press star one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one again, please limit yourself to one question and one follow up one moment for questions.

Please limit yourself to one question and one follow-up; one moment for questions.

Our first question comes from George Gianaritas with Canaccord Genuity. You may proceed. Hi, good afternoon, and thank you for taking my questions.

Operator: Please limit yourself to one question and one follow-up. One moment for questions. Our first question comes from George Gianarikas with Canaccord Genuity. You may proceed. Hi, good afternoon, and thank you for taking my question. Um, maybe just to start, could you please talk about your geographic strategy, particularly in Europe, in light of the recent V-Billy relationship? Thanks, George.

George <unk>: Our first question comes from George <unk> with Canaccord Genuity you May proceed.

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

Maybe just to start, can you just please talk about your geographic strategy, particularly in Europe, in light of the recent Biblia relationship? Thanks, George. As it stands today, the R1 products are being sold throughout the United States and Canada, and our EDD products are primarily focused in the United States, but we have made some deliveries in Europe and specifically in Germany. Now, with regards to our future products with R2, and, of course, R3, those have been developed really at their core to fit not only the US market, but also fit the European market, and you can really see it as you look at the R2 R3 combination of what we believe, capturing a sweet spot in terms of both addressing demand for midsize SUVs in both US and European markets, but also with R3, capturing a smaller crossover market.

George <unk>: Maybe just to start can you just please talk about your geographic strategy, particularly in Europe in light of the recent VW relationship.

Robert Scaringe: As it stands today, the R1 products are being sold throughout the United States and Canada, and our EDD products are primarily focused, our commercial van products are primarily focused in the United States, but we have made some deliveries in Europe, and specifically in Germany. Now, with regard to our future products with R2 and, of course, R3, those have been developed really at their core to fit not only the U.S. market but also the European market.

Speaker Change: Thanks George.

Speaker Change: Today, our one products are being sold throughout the United States and Canada.

Speaker Change: And our <unk> products are primarily commercial van products are primarily focused.

Speaker Change: In the United States, but we have made some deliveries in Europe and specifically in Germany.

Speaker Change: Now with regards to our future products with our too.

Speaker Change: Of course, our three those have been developed really at their core to fit not only the U S market, but also fit the European market and you can really see it as you look at the our two or three combination of what we believe capturing a sweet spot in terms of both addressing demand for midsize Suvs in both U S and European markets, but.

Speaker Change: Also with our three <unk>.

Speaker Change: Capturing a smaller crossover market and so.

As you've heard us talk about many times, this is one of the things we're so excited about with the R2 platform: is just the growth in the address market for us as a business.

Speaker Change: As you've heard US talk about many times. This is one of the things. We're so excited about with with the <unk> platform is just the growth in the addressable market for us as a business.

Thank you. Maybe as a follow-up on the VW relationship, I know you're still working through the details. You mentioned that, but is there any update on the potential to transfer some of your OPEX into that JV? Thank you. As you said, we haven't announced the specifics around the joint venture inclusive of any associated cost sharing, but I think importantly, I'd want to call out how this relationship was formed on the basis of leveraging the technical platform that we built around our network architecture or topology VCs, and, of course, our software stack. Mark, and allowing and enabling that technology to really scale well beyond Rivian's product line, and to allow and enable us to get to global scale across multiple markets very quickly.

Speaker Change: Thank you.

Speaker Change: As a follow up on the VW relationship I know you are still working through the details you mentioned that but is there any update on the potential to transfer some of your opex into that JV. Thank you.

Robert Scaringe: And it's really formed on the basis of leveraging the technical platform that we built around our network architecture, our topology of ECUs, and, of course, our software stack and allowing and enabling that technology to really scale well beyond Rivian's product line and to allow and enable us to get to global scale across multiple markets very quickly. So we're ecstatic about the impact that that can drive in terms of helping to create exciting products that give consumers choices to move towards electrification.

Speaker Change: Yes, as you said.

Speaker Change: We haven't announced the specifics around the joint venture.

Speaker Change: Inclusive of.

Speaker Change: Any.

And any associated cost sharing.

Speaker Change: And allowing and enabling that technology to really scale, well beyond <unk> product line and to allow.

Speaker Change: They enable us to get to global scale across multiple markets very quickly. So we're ecstatic about the impact that that can drive in terms of helping to create exciting products that give.

So we're ecstatic about the impact that can drive in terms of helping to create exciting products that give consumers choices to move towards electrification. We're also excited about the scale that that provides us from a sourcing point of view and a supply chain point of view.

Speaker Change: Give consumers choices.

Speaker Change: To move towards electrification.

Robert Scaringe: We're also excited about the scale that that provides us from a sourcing point of view and a supply chain point of view, as we think about the components and the assemblies that go into those systems.

As we think about the components and the assemblies that go into those systems. Thanks.

Speaker Change: Thanks.

Thank you.

Speaker Change: Thank you.

Our next question comes from Mark Delaney with Goldman Sachs. He may proceed. Yes, good afternoon. Thanks very much for taking the questions.

Operator: Thank you. Our next question comes from Mark Delaney with Goldman Sachs. He may proceed. Yes, good afternoon.

Speaker Change: Our next question comes from Mark Delaney with Goldman Sachs. You May proceed.

Operator: Thanks very much for taking the questions. First, I was hoping to better understand how the company is tracking toward the target of positive gross margin in the fourth quarter and whether the drivers have changed at all, especially as we've seen things like a 2.99% incentive they are utilizing, and perhaps that changes the mechanics of the positive gross profit bridge. Thanks, Mark. There are still three key drivers to our path to positive gross profit in Q4.

Mark Delaney: Yes, hi, good afternoon, thanks, very much for taking the questions.

First of all, I'm going to better understand how the company is tracking toward the target of positive growth margin and the fourth quarter. And have the drivers changed at all, especially as we've seen things like a 2.99% incentive they are utilizing, and perhaps that changes the mechanics to the positive growth profit bridge. Thanks, Mark. There are still three key drivers to our path to positive growth profit in Q4. The first is the variable cost improvement within a lot of time that our investor date talking about the material cost reduction road map associated with our new gen to technology introductions, material cost reductions that we've had through supplier negotiations, as well as the commodity cost tail ones that we anticipate seeing throughout the course of the second half of this year into 2025 as well.

Mark Delaney: Just hoping to better understand how the company is tracking towards the target of positive gross margin in the fourth quarter and have the drivers changed at all especially as we've seen things like at $2, 99% incentive they are utilizing it and perhaps that changes the mechanics to that positive gross profit bridge.

Speaker Change #100: Thanks, Mark there are still three key drivers to our path to positive gross profit in Q4. The first is the variable cost improvement we spend a lot of time at our Investor day talking about the material cost reduction roadmap associated with our new Gen. Two technology introductions material cost reductions that we've had through supplier negotiations.

Operator: The first is the variable cost improvement. We spent a lot of time at our investor day talking about the material cost reduction roadmap associated with our new Gen 2 technology introductions, material cost reductions that we've had through supplier negotiations, as well as the commodity cost tailwinds that we anticipate seeing throughout the course of the second half of this year and into 2025 as well. The second driver is our fixed cost leverage, and this is enabled by the retooling upgrade that we had in normal, which has improved our production line rate by approximately 30%. And this, together with the increased Q4 production volumes we anticipate seeing, as well as our reduction and depreciation expense across the business, will help drive this fixed cost leverage.

Speaker Change #100: <unk> as well as the commodity cost tailwind that we anticipate seeing throughout the course of the second half of this year and into 2025 as well. The second driver is our fixed cost leverage and this is enabled by the retooling upgrade that we had a normal which has improved our production line rate by approximately 30%.

The second driver is our fixed cost leverage, and this is enabled by the retooling upgrade that we had at Normal, which has improved our production line rate by approximately 30%. And this, together with the increased Q4 production volumes we anticipate seeing, as well as our reduction in depreciation expense across the business, will help drive this fixed cost leverage. And the last key driver for us, as we talked about in the past, is an increase in revenue per delivered unit. And this will see through the introduction of our trimotor R1s that you heard RJ speak about in his prepared remarks, as well as non-vehicle revenue growth from the sale of regulatory credits and the introduction of our pre-owned Ruby and sales.

Speaker Change #100: And this together with the increased Q4 production volumes, we anticipate seeing as well as a reduction in depreciation.

RJ: <unk> across the business will help to drive this fixed cost leverage and the last key driver for us as we've talked about in the past is is an increase in revenue per delivery unit and this will see through the introduction of our Tri mode or are ones that you heard RJ speak about in his prepared remarks as well as non vehicle revenue growth from the sale of regulatory <unk>.

RJ: And the introduction of our pre owned Ruby in sales.

We continue to remain confident or path to positive growth profit in Q4, and it's important to note that our Q2 results had very limited sales of our gen to vehicles. So you're not actually seeing any of the flow through of the improvements that we've made throughout our production line or our material costs yet flow through the results themselves as we look at the Q2 actions as a whole.

Speaker Change #101: Continue to remain confident in our path to positive gross profit in Q4, and it's important to note that our Q2 results had very limited sales of our Gen. Two vehicles. So you are not actually seeing any of the flow through of the improvements that we've made throughout our production line or our material costs and yet flow through the results.

Speaker Change #102: <unk> themselves as we look at the Q2 actions and that's helpful.

Claire McDonough: My second question was how to better think about the material cost improvements you're looking to achieve, such as the 20% for the dual motor large pack second gen R1 compared to the first gen. I think those cost improvements did not incorporate some of the potential savings you think you may be able to realize now that you have the Volkswagen news out there and some of the response you've seen from suppliers. So, I realize it's still somewhat early, but can you share a bit more on the magnitude of potential material cost improvements you may see as you're able to execute on some of that expanded opportunity? Thank you. Yeah, thanks, Mark, for the follow up. You're absolutely right.

Thanks for that, Claire. My second question was how to better think about the material cost improvements you're looking to achieve, such as the 20% for the dual motor large pack second gen R1 compared to the first gen. I think those cost improvements did not incorporate some of the potential savings you think you may be able to realize now that you have the VW news out there and some of the response you've seen from suppliers. So it really is still somewhat early, but can you share a bit more on the magnitude of potential material cost improvements you may see as you're able to execute on some of that expanded opportunity.

Speaker Change #103: Thanks for that clarity My second question was how to better think about the material cost improvements you are looking to achieve such as the 20% for the dual motor a large pack second gen <unk> compared to the firsthand I think those cost improvements did not incorporate some of the potential savings. You think you may be able to realize now that you have.

Speaker Change #103: VW news out there and some of the response, you're seeing from suppliers. So I realize it's still somewhat early but can you share a bit more on the magnitude of potential material cost improvements you may see as.

Speaker Change #104: As you are able to execute on some of that extended opportunity. Thank you.

Thank you. Thanks, Mark, for the follow-up. You're absolutely right; there's the 20% that we've referenced. West, in cost reduction on the bill of materials for a light for light vehicle. That's based upon technical changes made to the vehicle and supplier negotiations that we drove over the last 18 months. There's certainly more room to go in terms of applying some of the leverage that we're going to see, not only with the relationship we're building with Volkswagen, but also with the scale that comes with R2. We do see continued progress as we drive towards the long-term goal of 25% gross margin for our normal facility.

Claire McDonough: There's, you know, the 20% that we've referenced in Cost Reduction on the Bill of Materials for a Light-for-Light Vehicle. That's based on the technical changes we've made to the vehicle and supplier negotiations that we have driven over the last 18 months. There's certainly more room to go in terms of applying some of the leverage that we're going to see, not only with the relationship we're building with Volkswagen but also with the scale that comes with R2.

Speaker Change #104: Yes, Thanks, Marc for the follow up you are absolutely right. There is the 20% that we've referenced.

Speaker Change #104: In cost reduction on the bill of materials for our like for like vehicle.

Speaker Change #104: That's based upon.

Speaker Change #104: Technical changes, we've made to the vehicle and supplier negotiations that we drove over the last 18 months.

Speaker Change #104: There are certainly more room to go in terms of applying some of the leverage that we're going to see not only with the relationships. We're building with Volkswagen, but also with the scale that comes with our two.

Claire McDonough: And so we do, we do see continued progress as we drive towards a long-term goal of 25% gross margin for our normal facility. And it's these continued cost efforts that we're talking about here, reducing our bill of materials. We also see improvements happening in our conversion costs at the plant. And those conversion costs are both the continued progress around efficiency improvements within the plant but also, over time, the enhanced fixed cost leverage that's going to come from bringing R2 to production to be produced in normal as well. Thank you. Our next question comes from Philippe Houchois with Jeffrey T. Mapersweet. Yes, good afternoon.

Speaker Change #104: And so we do we do.

Speaker Change #104: Do you see continued progress as we drive towards our long term goal of 25% gross margin.

Speaker Change #104: For our normal facility.

These continued cost efforts that we're talking about here on reducing our bill of materials; we also see improvements happening in our conversion costs at the plant. Those conversion costs are both the continued progress, run efficiency improvements within the plant, but also over time the enhanced fixed cost leverage that's going to come from bringing R2 to production to be produced in normal as well.

Speaker Change #105: And it is.

Speaker Change #105: These continued cost efforts that we're talking about.

Speaker Change #105: Reducing our bill of materials, we also see improvements happening and our conversion costs at the plant and those conversion costs are both the continued progress around efficiency improvements within the plant, but also over time.

Speaker Change #105: Hence the fixed cost leverage that's going to come from bringing our two.

Speaker Change #105: Production.

Speaker Change #105: To be produced in normal as well.

Thank you. Our next question comes from Philippe Poo-Try. With Jeffrey, he made her sweet. Yes, good afternoon. Thank you very much.

Speaker Change #106: Thank you.

Speaker Change #107: Our next question comes from Felipe Dutra with.

Jefferies You May proceed.

Operator: Thank you very much. I have a couple of questions for you. There is very little mention of EDV in the... Could you give us an update on how your customer trials are going on and maybe have a kind of an idea of when you might have your first customers outside of the Amazon deal? Thanks for the question, Philippe. The EDV program is something that, for us, we're really excited about the impact of it in terms of reducing carbon emissions on a per mile basis is outstanding compared to internal combustion vehicles.

Felipe Dutra: Yes. Good afternoon. Thank you very much couple of questions for me one is.

A couple of questions to meet. One is a very low mention of EDV in the release. Could you give us an update on how your customer trials are going on and might have a kind of an idea of when you might have first customers outside of the Amazon deal? Thanks for the question, Philippe. The EDV program is something that for us is we're really excited about. The impact of it in terms of reducing your carbon emissions on a per mile basis is outstanding over internal combustion vehicles. We've been able to really prove the robustness of the platform and the strength of the offering through our relationship and partnership with Amazon.

Speaker Change #109: <unk> mentioned that in the release.

Yes.

Speaker Change #110: Could you give us an update on how your customer trials are going on in Canada.

Speaker Change #111: A an idea of when you might first customers outside of the Amazon deal.

Speaker Change #111: Thanks for the question Philip.

Speaker Change #112: The ETB program is something that for us is.

Speaker Change #112: We're really excited about the impact of it in terms of reducing.

Speaker Change #112: Carbon emissions on a per mile basis is outstanding over internal combustion vehicles, and we've been able to really prove the robustness of the platform and the strength of the offering through our relationship and partnership with.

Operator: And we've been able to really prove the robustness of the platform and the strength of the offering through our relationship and partnership with Amazon. And having a large deployed fleet of these before we started running the pilot programs we've talked about in the past with non-Amazon customers was really helpful as we refined not just the vehicle but also the software surrounding the vehicle. And so, as we've talked about in the past, over the course of this year, we've been running pilots in anticipation of a more significant ramp-up in 2025.

Having a large deployed fleet of these before we started running the pilot programs we talked about in the past with non-Amazon customers was really helpful, as we were not just the vehicle, but also the software surrounding the vehicle. As we've talked about in the past, over the course of this year we've been running pilots in anticipation of a more significant ramp up in 2025. This focus on pilots is really reflective of the nature of this business, where these are large decisions around large numbers of vehicles for a lot of these bigger fleets. It's appropriate that we build effective working models for how the vehicles are serviced, what digital support the vehicles have, and what infrastructure changes are necessary for each respective fleet.

Speaker Change #112: With Amazon.

Speaker Change #112: And having a large deployed fleet of these before we started running the pilot programs, we've talked about in the past with non Amazon customers was really helpful. As we as we refine not just the vehicle, but also the software surrounding the vehicle and.

Speaker Change #112: And so as we've talked about in the past where over the course of this year, we've been running pilots in anticipation of more significant ramp up in 2025.

Operator: And this focus on pilots is really reflective of the nature of this business where these are large decisions around large numbers of vehicles for a lot of these bigger fleets. And it's appropriate that we build effective working models for how the vehicles are serviced, what digital support the vehicles have, and what infrastructure changes are necessary for each respective fleet. It's a lot different than adding a single charger in your garage when you buy an R1 when you're thinking about adding many chargers and a lot of new power to, let's say, a fulfillment center, a distribution center, an operating center.

Speaker Change #112: And this focus on pilots is really.

Speaker Change #112: Reflective of the nature of this business where.

Speaker Change #112: These are large decisions around large numbers of vehicles for a lot of these bigger fleets and it's appropriate that we build.

Speaker Change #112: Effective working models for how the vehicles are serviced what digital support the vehicles have what infrastructure changes are necessary for each respective fleet.

It's a lot different than adding a single charger in your garage when you buy an R1, when you're thinking about adding many chargers and a lot of new power until, let's say, a fulfillment center, distribution center, an operating center. If you're a business that's running 20, 30, 40, 50, maybe 100 plus vans out of it.

Speaker Change #112: It's a lot different than adding a single charger in your garage when you buy an R. One.

Speaker Change #112: When youre thinking about adding many chargers and a lot of new power until let's say of a fulfillment Center distribution Center operating center share business Thats running 2030, 40, 50, maybe a 100 plus vans out of it. So these are great learnings that we've been driving off the basis of what we.

Robert Scaringe: If you're a business that's running 20, 30, 40, 50, maybe 100 plus vans out of it, so these are great learnings that we've been driving off the basis of what we put together with Amazon. And we are looking forward to starting to talk about other customers beyond Amazon. All right, thank you very much. If I can squeeze another one in,

These are great learnings that we've been driving off the basis of what we put together with Amazon, and we are looking forward to starting to talk about other customers beyond Hi. Thank you very much.

Put together with Amazon and we are looking forward to starting to talk about other customers beyond Amazon.

Robert Scaringe: On this Volkswagen relationship, did I understand correctly that you expect to close in Q4, and at that point, you will disclose, to the extent you agree with Volkswagen, the terms of the JV. We might be able to get a lot of questions around the accounting and the JV and how much of the cost might be shared with the JV between regions. Will we get that information in the fourth quarter?

If I can squeeze another one, on this Volkswagen relationship, they don't understand correctly. You expected to close in Q4, and at that point, you will disclose, to the extent you agree with Volkswagen, you will disclose the terms with the JV, and we might be able to get some lot of questions around the accounting on the JV and how much of the cost might be shared with the JV between reason. Will we get that information in the fourth quarter? Yes, exactly, so we'll be filing the definitive agreement associated with the Volkswagen technology joint venture. Once the JV is closed, which we anticipate being in Q4 this year, and we'll provide additional clarity on some of the financial impacts of the JV to Rivian's longer-term financial forecast and trajectory is already pointed to.

Speaker Change #112: Alright. Thank you very much if I can squeeze another one on <unk>.

Speaker Change #113: Those are good relationship didn't understand correctly, you expect it to close in Q4 and at that point you will disclose to the extent you Greensville is they can you will disclose the terms of the JV.

Speaker Change #114: We may be able to get some questions around the accounting and the JV and how much of the costs may be shared with the JV between region.

That information in the fourth quarter.

Speaker Change #115: Yes, exactly so we'll be filing the definitive agreement associated with the Volkswagen technology joint venture once the JV is closed which we anticipate being in Q4. This year and we'll provide additional clarity on some of the financial impacts of the JV Caribbean longer term financial forecast and trajectory is.

We do anticipate seeing beyond the capital that the Volkswagen Group will provide incremental benefits, including material cost savings, operating expense efficiencies, and future revenues associated with the joint venture.

Speaker Change #115: As Jay pointed out we do anticipate seeing beyond the capital that Volkswagen group will provide.

Jay: Incremental benefits, including material cost savings operating expense efficiencies and future revenues associated with the joint venture.

Right, thank you very much.

Speaker Change #117: Great. Thank you very much.

Thank you. Our next question comes from Dan Levy with Barclays, who may proceed. Hi, thank you for taking the questions. I wanted to go back to Mark's question earlier, and maybe you could just help us unpack some of the ASP dynamics in the quarter, because we know that there was some discounting that you needed to use to clear out some of the old inventory. I guess wondering really how we should think about the right starting point for where you were on an ASP perspective in the second quarter, if we forget about some of the discounts, and just based on what you're seeing, I believe you need to hit flat ASPs from where you were in one queue to hit the gross margin, so just anything on the right way to look about ASPs in the discounting needed for your targets.

Speaker Change #118: Thank you.

Operator: Thank you. Our next question comes from Dan Levy with Barclays. He may proceed.

Speaker Change #119: Our next question comes from Dan Levy with Barclays. You May proceed.

Dan Levy: Hi, Thank you for taking the questions I wanted to go back to Mark's question earlier, and maybe you could just help us unpack some of the ASP dynamics in the quarter, because we knew that there was some discounting that you needed to use to clear out some of the old inventory and guess wondering really what the how.

Speaker Change #120: We should think about the right starting point for where you were on an ASP perspective in the second quarter.

Speaker Change #121: Forget about some of the discounts and just based on what Youre seeing.

Operator: You know, I believe you need to hit flat, flat ASPs from where you were in 1Q to hit gross margin. So just anything on the right way to look at ASPs and the discounting needed for your time. Thanks Dan.

Speaker Change #122: I believe you need to hit flat flat Asps from where you were in <unk> to hit the gross margin. So just anything on until the right way to look about asps and the discounting.

What are your targets.

Thanks, Dan.

A challenge with introducing an update or a second generation to a product, while still, of course, producing the first generation, is always an example, which you just referenced, which is, it's on as if we stop production immediately. Start production have no inventory in the system, so it's inventory of our Gen 1 vehicles, and we did have some attractive pricing on some of those variants of our Gen 1 vehicles. Essentially, as you said, clear them through the system as we then start producing and delivering our Gen 2 vehicles. We don't look at that as a long-term shift in pricing, but rather reflective of the step change we've seen in the Gen 2 vehicles in terms of performance and capability, and we've been very, very clear in just talking about the differences between the vehicles, and we're really pleased with the results that we saw in Q2.

Dan Levy: Thanks, Dan.

Speaker Change #123: The challenge with introducing it and update on our second generation to a product.

Robert Scaringe: The challenge with introducing an update or a second generation to a product, Well, still, of course, producing the first generation is always, always in exactly what you just referenced, which is, we, it's not as if we stop production immediately start production have no inventory in the system. So there's inventory of our gen one vehicles. And we did have some attractive pricing on some of those variants of our Gen 1 vehicles to, essentially, as you said, clear them through the system as we then start producing and delivering our Gen 2 vehicles.

Speaker Change #124: While still of course, producing the first generation is always always in exactly what you just referenced switches.

Speaker Change #125: It sounds as if we stopped production immediately start production have no inventory in the system sort of inventory of our Gen. One vehicles.

Speaker Change #125: And we did have.

Speaker Change #125: Some attractive pricing on some of those variance of our Gen. One vehicles.

Speaker Change #125: To.

Speaker Change #126: Essentially as you said.

Speaker Change #126: Clear them through the system as we then start producing and delivering our gen two vehicles.

Robert Scaringe: We don't look at that as a long-term shift in pricing but rather reflective of the step change we've seen in the Gen 2 vehicles in terms of performance and capability. And we've been very, very clear in just talking about the differences between the vehicles. And we're really pleased with the results that we saw in Q2. You saw that the number of deliveries exceeded production by quite a bit. And that was really the burndown or burn through of the Gen 1 inventory.

Speaker Change #126: We don't look at that as a long term.

Speaker Change #126: Shifts in pricing, but rather reflective of this step change we've seen in the Gen. Two vehicles in terms of performance and capability and we've been very.

Speaker Change #126: Very clear and just talking about the differences between the vehicles.

Speaker Change #126: And we're really pleased with the results, although we saw in Q2.

You saw that the number of deliveries exceed production by quite a bit, and that was really the burn down or burn through of the Gen 1 inventory. Now, in terms of ongoing expectations for ASP, the other thing I'd want to call out is with the introduction of the Gen 2 vehicle, it clear references, but we have a tri-motor, and we have a quad motor, and the quad motor performance is extremely high. It's a big step forward relative to our first generation quad. Acceleration is a lot quicker. The range and efficiency are improved. The thermal performance for particularly for off-road really intense driving is outstanding, and it allowed us to move the quad motor up market in the tri-motor to really occupy the price position of the price space where we saw the first generation quad operate.

Speaker Change #126: You saw the number of deliveries exceed production by quite a bit and that was really the burn down our burn through of the Gen. One inventory.

Speaker Change #126: Now in terms of.

Speaker Change #126: In terms of ongoing expectations for ISP. The other thing I would want to call out here is that with the introduction of the Gen. Two vehicle.

Speaker Change #127: Claire references, but we have a try motor and we have a quad motor and the Quad Motor performance is extremely high it's a big step forward relative to our first generation quad.

Speaker Change #128: Acceleration is a lot quicker.

Speaker Change #129: The range and efficiency has improved.

Robert Scaringe: The range and efficiency are improved. The thermal performance, particularly for off-road, really intense driving, is outstanding. And it allowed us to move the quad motor upmarket and the tri-motor to really occupy the price position and the price space where we saw the first generation quad operated. And so that was very intentional.

Claire: The thermal performance for particularly for off road really.

Intense driving is outstanding and it allowed us to move the quad motor upmarket and the Tri motor to really occupy the price position of the price space, where we saw the first generation quad operate.

and so that was very intentional, and the goal was between the dual motor, the tri motor, and the quad motor to create a wide band of pricing starting at just over 70 and going up, you know, well into, you know, over $100,000 that allows us to not only offer vehicles to folks that are very price sensitive, but also to give products to customers that are want the best of what we can build. And so those changes happening at the drivetrain level certainly help. We also have a new trim package that we've just launched, which is a more premium trim from what we'd originally had.

Claire: And so that was very intentional and the goal was between the dual motor the Tri motor on the Quad motor to create a wide band of pricing starting at just over 70 and going up.

Claire: Over.

Claire: And two.

Claire: Over $100000 that allows us to not only offer vehicles to folks that are very price sensitive, but also to give products to customers that want the best of what we can build.

Claire McDonough: But this trim package, which is built into the tri and the quad motor configurations, is another element of providing customers with a variant or a choice that is at a higher price point, but, of course, delivering more content and more features. Maybe just adding a couple of additional points of color back to prior comments that we've made in the past. In our Q4 earnings call, we had said that we expected that our AFP, you know, for the vehicles themselves, would be consistent Q4 of 23 relative to Q4 of 24. And we'd still expect that to be the case as we sit here today.

Claire: And so those changes happening at the drivetrain level certainly help maintain asps.

Claire: But importantly, we also have a new trim package that we've just launched which is a more premium trim from what we had originally had.

We call this the scent trim, but this trim package, which is built into the tri and the quad motor configurations, is another element of providing customers with a variant or choice that is at a higher price point, but of course, delivering more content and more features.

Speaker Change #130: We call this <unk> trim.

Speaker Change #130: But this trim package, which is built into the trial and the quad motor configurations as another element of.

Speaker Change #130: <unk> of providing customers with.

Speaker Change #130: Variance of our choice.

Speaker Change #130: That is at a higher price point, but of course, delivering more content and more features.

Maybe just having a couple of additional points of colored back to prior comments that we've made in the past. In our Q4 earnings call, we had said that we expected that our AFP, you know, for the vehicles themselves would be consistent Q423 relative to Q424. We still expect that to be the case as we sit here today. And then the other point is we think about the seasonality of the business is consistent with Q4 last year. It's far more index towards our one sales relative to commercial band sales, which in aggregate lift the overall revenue per delivered unit because of some of the Amazon-related seasonality that we expect to continue to be the case.

Speaker Change #130: Maybe just a couple of additional.

Speaker Change #130: Additional points of color back to prior comments that we made in the past in our Q4 earnings call. We had said that we expected that our ASP.

Speaker Change #131: For the vehicles themselves would be consistent Q4, 'twenty three relative to Q4 at 24, and we still expect that to be the case as we sit here today and then the other point as we think about the seasonality of the business is consistent with Q4 of last year, it's far more indexed towards our one sales relative to commercial <unk>.

Claire McDonough: And then the other point is that we think about the seasonality of the business is consistent with Q4 of last year. It's far more indexed towards R1 sales relative to commercial van sales, which in aggregate lifts the overall revenue per delivered unit because of some of the Amazon-related seasonality that we expect to continue to be the case in Q4 of this year. And then back on RJ's final comments, we'll have sales of our tri-motors in Q4, which will allow us to stretch up the higher end of ASPs to complement our starting price point, which is still $69,900 for our standard packs for R1. Got it, so it sounds like there's some positive mix. Thank you. As a follow-up, I wanted to go to the VW event.

Speaker Change #131: <unk> sales, which in aggregate lifts the overall revenue per delivered unit because of some of the Amazon related seasonality that we expect to continue to be the case in Q4 of this year and then back on <unk> final comments, we will have sales of our <unk> in Q4, which will allow us to stretch up.

Thank you for this year. And then back on our final comments, we'll have sales of our trimotors in Q4, which will allow us to stretch up the higher end of the AFP to complement our starting price point, which is still $69,900 for our standard, standard packs for R1T. Got it. So it sounds like there's some positive mix assumptions in there. Thank you.

Speaker Change #132: The higher end of Asps.

Speaker Change #132: To complement our starting price point, which is still $69900 for our standard.

Speaker Change #132: <unk> tax for ROIC.

Speaker Change #132: Okay got it so it sounds like there is.

Speaker Change #133: Some positive mix assumptions in there.

As a follow-up, I wanted to go to the VW investment. And wondering, you know, from a, the fact that you got this money in what I think many of us, many of us consider to be a more sort of efficient manner than going through the capital markets. What does this allow you to do from a product plan or capacities perspective that previously wasn't on the table if you were going to be fully relied on the capital markets? Yeah, it really important part of what this deal represents for us is that it really eliminates a lot of the risk that was seen around our balance sheet and allows us to focus the launch of our two still in normal, still using our normal facility.

Speaker Change #133: Thank you.

Speaker Change #133: A follow up.

Speaker Change #134: Just wanted to go to the VW investment.

Robert Scaringe: And wondering, you know, from a fact that you got this money in what I think many of us consider to be a more sort of efficient manner than going through the capital markets, what does this allow you to do from a product plan or capacity perspective that previously wasn't on the table if you were going to be fully reliant on capital? A really important part of what this deal represents for us is that it really eliminates a lot of the risk that was seen around our balance sheet and allows us to focus.

Speaker Change #134: Just wondering.

Speaker Change #134: From a.

Speaker Change #136: The fact that you got this money in what I think many many of those considered to be a more sort of efficient manner than going through the capital markets.

Speaker Change #136: What does this allow you to do from a product plan or capacity perspective that previously wasn't.

Speaker Change #137: On the table, if you were going to be fully reliant on the capital market.

Speaker Change #137: Yes.

Speaker Change #137: Really important.

Speaker Change #137: Part of what this deal represents for US is it really eliminates.

Speaker Change #137: A lot of the risk that we've seen around our balance sheet and allows us to focus.

Robert Scaringe: The launch of R2, still in normal, still using our normal facility, but as you've heard Claire and I both talk about as part of our Investor Day, we not only have the balance sheet to support launching R2, but also the balance sheet to support taking us through positive cash flow, and we recognize the importance of that focus on driving efficiency into the business. Both in terms of how we operate the business, but also in terms of how we deploy capital from a CapEx point of view and an investment point of view, and the organization is hyper focused on driving towards profitability and hyper focused on the launch of R2 and what that represents for us in terms of the scaling that comes with it. Great, thank you.

Speaker Change #137: The launch of our two because it's still a normal still using our normal facility.

But, as you've heard, Claire and I both talked about, as part of our investor day, not only have the balance sheet to support launching our two, but also the balance sheet to support taking us through positive cash flow. And we recognize the importance of that focus on driving efficiency into the business, both in terms of how we operate the business, but also in terms of how we deploy capital from a capex point of view and investment point of view. And the organization is hyper focused on driving towards profitability and hyper focused on the launch of our two and what that represents for us in terms of the scaling that comes with it.

Speaker Change #137: But as you've heard Claire and I both talked about.

Speaker Change #138: As part of our Investor day.

Speaker Change #139: Not only have the balance sheet to support launching our two but also the balance sheet to support taking us through positive cash flow.

Speaker Change #140: And we recognize the importance of that focus on driving efficiency into the business.

Speaker Change #141: Both in terms of how we operate the business, but also in terms of how we deploy capital from a capex point of view, an investment point of view and the organization is hyper focused on driving towards profitability and hyper focused on that.

Speaker Change #141: The launch of our two and what that represents for us in terms of the scaling of that comes with it.

Great, thank you. Thank you.

Speaker Change #141: Great. Thank you.

Speaker Change #141: Okay.

Speaker Change #141: Thank you.

Our next question goes from Joseph Spak with UBS. He may proceed. Thanks. Good afternoon.

Operator: Thank you. Our next question comes from Joseph Spak with UBS. He may proceed. Thanks. Good afternoon, RJ. Maybe you could just go a little bit more into what is exactly happening in the plant and what's impacted?

Speaker Change #141: Our next question comes from Joseph Spak with UBS you May proceed.

Speaker Change #142: Thanks, Good afternoon, RJ, maybe you could just dive a little bit more into.

RJ, maybe you could just dive a little bit more into what is exactly happening in the plant and what's impacting the R1 line R2 work doing next year. And then Claire, can we expect that the R1, given that most of the changes are already done, can ramp back up pretty quickly. So we, you know, we can understand the shape of gross margins next year because it sounds like you guys are planning for maybe some sequential improvement until that downtime, maybe a downtick in the third quarter and then recover in the fourth quarter. I just want to make sure that's properly calibrated there.

Speaker Change #143: What is exactly happening in the plant and what's impacting.

Operator: the R1 line, and R2 work done next year. And then Claire, can we expect that the R1, given that most of the changes are already done, can ramp back up pretty quickly so we, you know, we can understand the shape of gross margins next year? Because it sounds like you guys are planning for maybe some sequential improvement until that downtime, maybe a downtick in the third quarter and then a recovery in the fourth quarter. I just want to make sure that we're properly calibrated. Sure, Joe.

Speaker Change #143: One line or to work doing next year.

Speaker Change #144: Unclear can we expect at pier one.

Speaker Change #145: Given that most of the changes are already done can ramp back up pretty quickly. So we can understand the shape of gross margins next year because it sounds like you guys are planning for maybe some sequential improvement until that downtime, maybe a down tick in the third quarter and then recover in the fourth quarter I just want to make sure that that's worked.

Speaker Change #145: We're properly calibrated.

Torjo, as we think about the operations next year, this is looking at 2025. You know, we've said we're going to be taking the plant down for roughly a month while we make some of the changes necessary to integrate the R2 production into the plant. Some of that work has already happened. We did some of the preliminary work in the most recent shutdown in conjunction with the move from Gen 1 to Gen 2 on our R1 platform, but the shutdown that's going to happen in the second half of next year will make the splicing together of certain parts of the plant possible.

Robert Scaringe: So as we think about operations next year, this is looking at 2025. You know, we've said we're going to be taking the plant down for roughly a month while we make some of the changes necessary to integrate the R2 production into the plant. Some of that work has already happened. We did some of the preliminary work in the most recent shutdown in conjunction with the move from Gen 1 to Gen 2 on our R1 platform, but the shutdown that's going to happen in the second half of next year will make the splicing together of certain parts of the plant possible.

Speaker Change #147: Sure Joe So as we think about the operations next year.

Speaker Change #145: Looking at 2025.

Speaker Change #148: We've said, we're going to be taking the plant down for roughly a month, while we make some of the changes necessary to integrate the <unk> production into the plant. Some of that work has already happened we did some some of the preliminary.

Speaker Change #149: Work in the most recent shutdown in conjunction with the move from Gen. One to Gen. Two on our our one platform.

Speaker Change #150: But the shutdown thats going to happen in the second half of next year, we will make the splicing together certain parts of the plant possible.

Robert Scaringe: That's part of our plan. We'll be working around that, but as we did with the Gen 1 to Gen 2, we wanted to provide very early guidance on this and make sure expectations were appropriately set for what will have to happen in the plant next year to integrate R2. And then based on the second part of your question as well, given the shutdown, there will be some, you know, choppiness in the financial results as we look through, not just a quarter-sequential improvement in our results as we look at the gross margin trajectory.

That's part of our plan. We'll be working around that. But as we did with the Gen 1 to Gen 2, we wanted to provide very early guidance around this and make sure expectations were appropriately set for what will have to happen in the plant next year to integrate R2. Then based off of the second program of your question as well, given the shutdown, there will be some, you know, trapping as to the financial results as we look through, not just a quarter to financial improvement in our results as we look at the gross margin trajectory.

Speaker Change #151: As part of our plan will be working around that but we've as we've as we did with the Gen. One to Gen. Two we wanted to provide very early guidance around around this and make sure expectations are appropriately set.

Speaker Change #151: For what will have to happen in the plant next year or two to integrate our two.

Speaker Change #151: And then based off of the second part of your question as well given the shutdown there will be some choppiness.

Speaker Change #151: Dropping.

Speaker Change #151: Actual results as we look through.

Speaker Change #151: Not just at quarter sequential improvement in that in our results as we look at the gross margin trajectory as I mentioned in my prepared remarks, we still maintain that will be have a modest positive gross profit for the entire year 2025 in particular about certainly with the shutdown itself in the second half we will feel some of that.

As I mentioned in my prepare remarks, we still maintain that we'll be have a modest positive growth profit for the entire year of 2025 in particular. But certainly, with the shutdown itself, and the second half will feel that some of the impacts for a lower absorption of labor overhead and depreciation, like we experienced in Q2 of this quarter, given the lower production volumes that we had in the normal facility itself. But to our J's point, more akin to the November shutdown that we had to do some of the pre-work for our Q2 shutdown, we were able to get right back up to line rate based off of the aftermath of that shutdown.

Speaker Change #151: <unk> lower at.

Speaker Change #152: <unk> of labor overhead and depreciation like we experienced in Q2 and this quarter.

Speaker Change #151: Given the lower production volumes that we had in the.

Speaker Change #151: Normal facility itself, but.

Speaker Change #153: Rj's point more akin to that November shutdown that we had to do some pre work for our TQ shut down we were able to get right back up 10 line rate based off of the aftermath of that shutdown. So we expect we wont see is sort of staged a a ramped back up from a production standpoint given the.

Robert Scaringe: So we expect we won't see as sort of a staged ramp-up from a production standpoint, given the fact that we'll have already ramped up our supply chain, which is 1 of the gating factors as we've gone through the course of ramping up new technologies in our redesigned Gen Q product. Okay, thank you for that. And as a second question, I don't know if you guys really ever, you certainly don't talk about this, talk about it this way. I'm curious if you ever look at it or think about it this way.

So we expect we won't see as sort of staged of a ramp back up from a production standpoint, given the fact that we'll have already ramped up our supply chain, which is one of the, you know, gating factors as we've gone through the courses of ramping up new technologies in our redesigned GEN2 product.

Speaker Change #154: <unk> will have already ramped up our supply chain, which is one of the gating factors as we've gone through the course of ramping up new technologies in our redesigned Gen two product.

Okay, thank you for that.

Operator: But, you know, you call out some of the impacts, to you know, the gross loss per vehicle from stuff that's not in the cost structure this quarter. I know it's offset a little bit by regulatory credits. But if we also take out, you know, DNA and stock comp, it seems like you're actually much closer to a cash gross profit, break even level. Is that something that is directionally correct?

Speaker Change #153: Okay.

And as a second question, I don't know if you guys really ever, you certainly don't talk about this, talk about it this way. I'm curious if you ever look at it or think about this way. But you know, you call out some of the impacts to, you know, the gross loss per vehicle from stuff that's not in the cost structure this quarter. I know that's offset a little bit by regulatory credits. But if we also like take out, you know, DNA and stuff, it seems like you're actually much closer to a cash gross profit break-even level.

Speaker Change #153: Thank you for that.

Speaker Change #153: And as a second question.

Speaker Change #155: I don't know if you guys clearly ever.

Speaker Change #155: We don't talk about this talk about it this way Im curious if you if you ever look at it or think about it this way, but you call out some of the impacts.

Speaker Change #155: Two the gross loss per vehicle from from stuff, that's not in the cost structure this quarter.

Speaker Change #155: I know thats offset a little bit by regulatory credits, but.

If we also take out D&A and stock comp it seems like you're actually much closer to a cash gross profit.

Is that something that that directly is correct? And it seems like if that's true, you would actually even hit that before you would hit your, you know, your modestly gross profit positive number, Carter. That's absolutely right, and we wanted to call out in my prior prepare remarks just that. You know, they impact we had roughly $15,000 of the interpretation per unit, $1,200 of Stockways Compay per unit, and then another, you know, roughly $2,400 of other costs of revenue initiatives in the quarter. So that was roughly, you know, $14,000 of loss per unit if you make those three respective adjustments.

Speaker Change #156: Breakeven level is that something that Directionally is correct and it seems like if that's true.

Speaker Change #157: You would actually even hit that before you would hit your.

Speaker Change #158: You are modestly gross profit positive number in the fourth quarter.

Speaker Change #159: Yes, that's absolutely right and we wanted to call out in my prior prepared remarks, just the impact we had roughly $15000 depreciation per unit $1200 of stock.

Speaker Change #160: Stock based comp per unit and then another roughly $2400.

Speaker Change #160: Other cost of revenue initiatives in the quarter. So that was roughly $14000 of loss per unit. If you make those three respective adjustments. So we certainly would anticipate hitting sort of a cash breakeven prior to positive gross profit.

So we certainly would anticipate hitting, you know, a sort of a cash break even prior to positive growth profit. Okay.

Thank you. Our next question comes from Alex Potter with Piper Sandler. You may proceed. Great. Thanks.

Speaker Change #161: Okay. Thank you.

Speaker Change #161: Thank you.

Operator: You may proceed. Great, thanks. Claire, just a quick one following up on that last question about these, I guess, quote unquote, other initiatives, the $2,400 a unit, just in layman's terms, what is that? So, in layman's terms, the way I would characterize it is, as you can imagine, with the significant changes we made in suppliers, with the introduction of swapping out roughly half of our material cost as we move from gen one to And that's largely what is reflected in the results.

Speaker Change #161: Our next question comes from Alex Potter with Piper Sandler You May proceed.

Claire, just a quick one following up on that last question, but these, I guess, quote unquote, other initiatives, the $2,400 of the unit, just in layman's terms, what is that? In layman's terms, the way I would characterize it is, as you can imagine, with the significant changes we made in suppliers, with the introduction of swapping out roughly half of our material costs as we move from Gen 1 to Gen 2, there are certain costs associated with contract modifications or amendments that we've made, and that's largely what is reflected there. Okay. Very good.

Speaker Change #162: Great. Thanks clear just a quick one following up on that last question that these I guess quote unquote other initiatives the 'twenty $400 a unit.

Alex Potter: In layman's terms what is that.

Speaker Change #164: In layman's terms the way I would characterize it is as you can imagine with the significant changes we made in suppliers with the introduction of swapping out roughly half of our material costs as we moved from Gen. One to Gen. Q there are certain cost associated with contract modifications.

Speaker Change #164: For amendments that we've made and thats largely what is reflected there.

Speaker Change #164: Okay very good.

I guess my second question is on the boat, so I can join venture. So presumably, I know you've got yet some work to do when it comes to hashing out the financials and all of these things and will await information on that in Q4, but in the meantime, presumably you've got engineers, you've got procurement people who are sort of eager to start doing something, you know, design or getting better supplier negotiations underway. Are they basically being instructed to sit tight and not do anything until the ink is dry, or are they allowed to sort of go out into the world and start, you know, I guess restarting supplier negotiations, for instance, with the heft of Volkswagen behind them, or working collaboratively with Volkswagen engineers to actually design the platform into Volkswagen vehicles, or do they basically just sit tight?

Claire McDonough: Okay, very good. I guess my second question is on the Volkswagen joint venture. So presumably, I know you've got it.

Speaker Change #164: I guess my second question is on is on the Volkswagen joint venture so presumably.

Speaker Change #164: I know you've got yes.

Operator: There is still some work to do when it comes to hashing out the financials and all these things, and we'll await information on that in Q4. But in the meantime, you know, presumably you've got engineers, you've got procurement people who are sort of eager to start doing something, you know, design or getting better supplier negotiations underway. Are they basically being instructed to sit tight and not do anything until, you know, the ink is dry? Or are they allowed to sort of go out into the world and start?

Speaker Change #165: Yet some work to do when it comes to hashing out the financials and all of these things and we'll await the information on that in Q4, but in the meantime.

Speaker Change #166: Presumably you've got engineers <unk> got procurement people, who are sort of eager to start doing something.

Speaker Change #166: Design or getting better.

Speaker Change #167: Supplier negotiations underway are they basically being instructed to sit tight and not do anything until the ink is dry or are they allowed to sort of.

Speaker Change #167: Go out into the world and start.

Robert Scaringe: You know, I guess restarting supplier negotiations, for instance, with the heft of Volkswagen behind them, or, you know, working collaboratively with Volkswagen engineers to actually design the platform into Volkswagen vehicles, or do they basically just have to sit down? If from a supplier point of view. We absolutely are already seeing some of the tailwinds associated with our Volkswagen joint venture and partnership. You know, this is, you can imagine, at the component level and at the electronics level within the vehicle, where we see a lot of suppliers we have long relationships with that are very excited about this and see this as an opportunity to scale beyond just the Rivian product line for the technology we've developed but beyond that into the Volkswagen Group product portfolio.

Speaker Change #168: I guess restarting supplier negotiations for instance, with the heft of Volkswagen behind them or working collaboratively.

Speaker Change #168: <unk> typically with Volkswagen engineers.

Speaker Change #168: Design.

Speaker Change #169: The platform into Volkswagen vehicles or did they basically just have to sit tight.

From a supplier point of view, we absolutely are already seeing some of the tailwinds associated with our Volkswagen joint venture and partnership. You know, and this is, you can imagine at the component level and at the electronics level within the vehicle where we see a lot of the suppliers we have long relationships with that are very excited about this and see this as an opportunity to scale beyond just the Rivion product line for the technology we've developed, but beyond that into the Volkswagen Group product portfolio. So that's been a really encouraging early read-through in terms of how it's perceived and overall looked at by the supply chain.

Speaker Change #169: From a supplier point of view.

Speaker Change #170: We absolutely are already seeing some of the tailwind associated with our Volkswagen joint venture and partnership.

Speaker Change #169: This as you can imagine it.

Speaker Change #169: The component level and at the electronics level within the vehicle, where we see.

Speaker Change #169: A lot of suppliers, we have long relationships with that are that are very excited about this and see this as an opportunity to scale beyond just.

Speaker Change #169: The revision product line for the technology, we've developed but beyond that into into the Volkswagen group.

Robert Scaringe: So that's been a really encouraging early read through in terms of how it's perceived and overall looked at by the supply chain from a technical point of view. You know, we talked about this, even with the announcement of the deal, Volkswagen Group CEO and I, Oliver and I just spoke about how the teams have been working really well together. And this is not It's not as if we do a deal of this scale and this magnitude without having done work together and without having done a lot beyond diligence but into the actual actual creation of Work Content or Work Product, if you will.

Product portfolio, so that's been really encouraging.

Speaker Change #169: Early read through in terms of how it is perceived in overall looked at by the supply chain.

From a technical point of view, you know, we talked about this even with the announcement that the Volkswagen Group CEO and I all over and I just spoke around how the teams have been working really well together. And this is not, you know, it's not as if we do a deal of this scale and this magnitude without having done work together or without having done a lot of, you know, beyond diligence, but into the actual creation of work content or work product, if you will. And so, with teams on the call here, I'm going to invite him to just talk about this, but our software team and our hardware team have been working towards a number of elements that deliver on the first set of products. The first of which is integrating our platform tactically into Volkswagen Group products, but we'll see.

Speaker Change #169: From a technical point of view.

Speaker Change #169: We talked about this even with the announcement of the deal books.

Speaker Change #169: <unk> group, CEO, and I, Oliver and I.

Speaker Change #171: Just spoke around how the teams have.

<unk> been working really well together and this is not.

Speaker Change #171: Yes, it sounds as if we do a deal of this scaling of this magnitude without having.

Speaker Change #171: Doesn't work together without having done a lot of beyond diligence, but into the actual actual accretion of of where content. Our work product if you will.

Robert Scaringe: And so, Wassym's on the call here. I'm going to invite him to just talk about this, but our software team and our hardware team have been working towards a number of elements that deliver on the first set of products, but the first of which is integrating our platform technically into Volkswagen Group products. But Wassym, could I have you talk a bit about this?

Speaker Change #172: And so it seems on the call here I'm going to invite him to just talk about this but but our software team and our hardware team had been.

Speaker Change #172: Working towards a number of elements.

Deliver on the first set of products, but the first of which is integrating our platform tactically.

Speaker Change #172: <unk> group products, but we are seeing.

Let me have you talk a bit about this. Yeah, thanks, Arjay. We're actually extremely excited with the progress that we're making and the integration, electrical architecture, integration analysis. Our engineers have been working very closely with the Volkswagen Group, and we actually have a driver with demonstrator now that contains the review and electronic components, the Iranian software stack, and we're moving forward really, really well in understanding how our technology will scale up and down in the entire Volkswagen Group portfolio. Great, thanks very much. Appreciate it.

RJ: Have you talked a bit about this yes. Thanks RJ.

Akshay: Akshay extremely excited with the progress that we're making and the integration electrical architecture integration analysis, our engineers have been working very closely with the <unk>.

Speaker Change #174: If I can group and we actually have a driver. We've demonstrated now that contains the Arabian electronic components and software stack and we're moving forward, we're really really well in understanding how our technology, we can scale up and down and the entire Volkswagen group portfolio.

Speaker Change #174: Great. Thanks, very much I appreciate it.

Thank you. Our next question comes from Ben Kallo, with Beard. You may proceed. Thank you.

Thank you.

Operator: I appreciate it. Thank you. Our next question comes from Ben Kallo with Baird. You may proceed. Thank you.

Speaker Change #175: Our next question comes from Vanguard with Baird You May proceed.

Operator: My first question is more near term. RJ, if you could talk about demand trends you've seen since the refresh. And then my second question is that brands are important to everyone, but you guys have done a good job of building a brand. Can you talk to us about how you measure that internally or any way that you can put context to how you built your brand and how that extends to future models? Thank you. Thanks, Ben.

My first question is more dear term, just RJ, if you can talk about demand trends you've seen since the refresh, and then my second question is that, you know, brand is important to everyone, but to you guys, you've done a good job of building a brand, can you talk just about how you measure that internally or in any way that you can put context to how you build your brand now that extends to future models? Thank you. Thanks, Ben. Ultimately, our first set of products, our one, was our handshift with the world, and they were received really positively.

Speaker Change #175: Thank you.

Speaker Change #176: My first question is more near term.

Speaker Change #177: RJ, if you could talk about demand trends you're seeing.

Brad: Since the refresh and then my second question is Youll Brad.

Brad: It's important.

Brad: Doug.

Speaker Change #179: So you guys you got a good job of building a brand.

Speaker Change #180: Can you talk to us about how you measure about totally or.

Speaker Change #181: Or any way that you couldnt.

Speaker Change #181: Put context to help you build your brands.

Speaker Change #182: That tends to future models. Thank you.

Speaker Change #183: Okay. Thanks, Ben.

Speaker Change #182: Ultimately.

Robert Scaringe: Our first set of products, the R1, was our handshake with the world, and they were received really positively. This was two years ago, and it was exciting as we introduced the Gen 2 of our R1 products to see how strong the media reaction was to those products and recognize that we took a great vehicle and made it even better. That is something that we saw echoed across.

Speaker Change #182: Our John what are our first set of products that are one was our handshake with the world.

And they received really positively this is two years ago and it was exciting as we introduce the gen. Two of our own products to see how strong the meteor action was to those products in.

This is two years ago, and it was exciting as we introduced the Gen 2 of our urban products to see how strong the meteor action was to those products, and you're recognizing we took a great vehicle and made it even better. That is something that we saw echoed across a variety of different media outlets, from lifestyle to automotive to more pure technology outlets, but recognizing the strength of what we built. And that really serves as a wonderful foundation for the continued growth, as you put it, of how we're building and developing our brand and how we're perceived.

Speaker Change #182: Youre, recognizing we took a great vehicle that made it even better and.

Speaker Change #182: That is something that we saw echoed across a.

Robert Scaringe: A variety of different media outlets, from lifestyle to automotive to more pure technology outlets, but recognizing the strength of what we've built. And that really serves as a wonderful foundation for the continued growth, as you put it, of how we're building and developing our brand and how we're perceived. And there are lots of ways for us to measure that.

Speaker Change #182: A variety of different media outlets from lifestyle to automotive.

Speaker Change #182: To more pure technology outlets, but recognizing the strength of what we built.

Speaker Change #182: And that really serves as a wonderful foundation further continued growth as you put it of how we're building and developing our brand and how we are perceived and there's lots of ways for us to measure that we certainly look at things internally, we have a whole host of internal metrics that we track regularly.

And there's lots of ways for us to measure that. We certainly look at things internally. We have a whole host of internal metrics that we track regularly, but I think important for the analysts and investor community is to look at ways that third parties would look at our brand. And most recently, actually, Quince Huntley, JD Tower does a number of ways where they look at the strength of a brand, the strength of a product offering in the market, and we've in the past done extremely well in this. In most recently, in their annual appeal study, that looks at a combination of vehicle performance, and its overall packaging.

Speaker Change #182: But I think important for.

Speaker Change #182: For the analysts and Investor community is to look at ways that third parties would look at our brand.

Robert Scaringe: Power does a number of ways where they look at the strength of a brand or the strength of a product offering in the market. And we've done extremely well in this in the past, and most recently, in their annual appeal study. That looks at a combination of vehicle performance and its overall packaging. We came out number one, and that's the number one rated brand in their study. And to do that after having had previous number one performances in previous years.

Speaker Change #184: And most recently actually quit selling J D power does a number of ways. When you look at the strength of our brand and the strength of <unk>.

Speaker Change #184: Product offering in the market.

Speaker Change #184: And we've in the past done extremely well in this.

Speaker Change #184: And most recently in their annual appeal study.

Speaker Change #184: That looks at a combination of vehicle performance.

Speaker Change #184: It's overall packaging, we came out number one.

We came out number one, and that's the number one rated brand in their study. And to do that after having had previous number one performance in previous years is really exciting, and it's incredibly encouraging. And we think boats really well for what's to come with R2. If we can carry the same brand strength and the same market share penetration that we have at the premium segment where we're continually one of the best-selling vehicles over $70,000 today in the U.S.

Speaker Change #184: The number one rated brand in their study.

Speaker Change #184: To do that after having had previous number one performance in previous years.

Robert Scaringe: It's really exciting and it's incredibly encouraging, and we think Bode really well for what's to come with R2. If we can carry the same great strength and the same market share penetration that we have in the premium segment, where we're continually one of the best selling vehicles over $70,000. Today in the US, if we can take that market share strength and brand strength and apply it with our R2 product into the sub $50,000 price category, with R2 starting at $45,000, and R3 pricing not yet announced but going to be lower than R2, we're really bullish on what that represents in terms of volume, but importantly, it answers a real need in the market where there's a characterized as a pretty severe gap in product choice for Our next question comes from Shreyas Patil with Wolf Research. You may proceed.

Speaker Change #184: Really exciting and it's an incredibly encouraging and we think bodes really well for what's to come with our too.

Speaker Change #184: If we can carry the same brand strength in the same market share penetration that we have.

Speaker Change #184: At the premium segment, where we're continually one of the best selling vehicles over $70000.

So if we can take that market share strength and brand strength and apply it with our R2 product into the $50,000 price category with R2 starting at 45 and our three pricing not yet announced but going to be lower than R2, we're really bullish on what that represents in terms of volume, but importantly answers a real need in the market where there's a characterized a pretty severe gap in product choice.

Speaker Change #185: Today in the U S. If we can take that market share strength and brand strength and apply it with our two products into the sub $50000 price category with our two starting at 45 million and our three pricing not yet announced but going to be lower than our two we're really.

Speaker Change #185: Bullish on what that represents in terms of volume, but importantly.

Speaker Change #185: The answer is a real need in the market, where there is a.

Speaker Change #185: Characterize as a pretty severe gap and product choice.

for great, highly compelling EVs under $50,000. Thank you.

Speaker Change #185: Great highly compelling evs under $50000.

Speaker Change #186: Thank you.

Our next question comes from Ferris Patil. It will research; you may proceed. Hey, thanks a lot for taking my question. First of all, curious what you're seeing in terms of opportunities in the sale of regulatory credits? I appreciate it can be lumpy with $17 million in the quarter, but are you seeing growing opportunities to sell red credits at this point, just given some of the struggles that we're seeing with the legacy OEMs? In the, you know, Claire referenced it, you know, just in regards to our top line terms of revenue, but the regulatory credit environment is certainly very strong right now.

Speaker Change #187: Our next question comes from Chris <unk> with Wolfe Research you May proceed.

Operator: Hey, thanks a lot for taking my question. First of all, I'm curious what you're seeing in terms of opportunities for the sale of regulatory credit. I appreciate it can be lumpy with $17 million in the quarter, but are you seeing growing opportunities to sell red credits at this point, just given some of the struggles? We're seeing what the legacy is. Claire referenced it, you know, just in regards to our top line in terms of revenue. But the regulatory credit environment is certainly very strong right now.

Speaker Change #188: That we're seeing with our legacy Oems.

Clay: And that clay referenced it.

Speaker Change #190: Just in regards to our top line in terms of revenue, but the regulatory credit environment is certainly.

Speaker Change #190: Certainly very strong right now.

You know, and practically speaking, that that means we have the potential to generate more revenue around our credits market than what we'd originally planned or anticipated. But I think more importantly is the fact that the credits market is so strong is a reflection of the, I'd say, the decision that we see a number of companies that are going to be investing less into electrification or have less product and electrified product across multiple segments and across different price points. And so that void of products actually creates this strong credit environment. And for us, I think that the most important read-through is the demand environment we see, you know, coming into 2026, 2027, is going to be very, very advantageous for us where there's a lot of latent demand.

Robert Scaringe: Yeah, and practically speaking, that means we have the potential to generate more revenue from our credits market than we'd originally planned or anticipated. But I think more importantly is that the fact that the credit market is so strong is a reflection of. The, I'd say that the decision that we see a number of companies that are going to be investing less in electrification or have less product, electrified product across multiple segments and then across, Kalliwala, David Walsh, J.G. Law, D.R.

Speaker Change #190: Yes.

Speaker Change #190: Practically speaking that that means we have the potential to generate more revenue.

Speaker Change #190: Around our credit market than what we'd originally planned or anticipated, but I think more importantly.

Speaker Change #190: Is the fact that the credits market is so strong.

Speaker Change #190: As a reflection of.

Speaker Change #190: The.

The I'd say the decision that we see a number of companies that are going to be investing less into electrification or have less product and electric <unk>.

Speaker Change #190: <unk> product <unk>.

Speaker Change #190: Across multiple segments and across.

Speaker Change #190: Different price points.

Robert Scaringe: But, you know, folks have been sitting waiting for that product to show up but haven't seen it, so they continue to buy an internal combustion vehicle or continue to buy a hybrid vehicle. We see this really large pool of demand under the surface that's just waiting, and we believe it's waiting for something that's very much like what an R2 is. Okay, great.

Speaker Change #190: And so that void of.

Robert Scaringe: G. L. W. L. M. M. M. M. M. M. M. M. M. M. M. M. M. M. M. M. M. M. M. M. M. M. M. M. M. M. M. M. M. M. M. M. M. M. M. M. M. M. M. M. M. M. M. M. M. M. And for us, I think the most important read through is the demand environment we see, you know, coming into 2026, 2027 is going to be very, very advantageous for us, where there's a lot of latent demand; there's a lot of demand that's sitting waiting for the right type of product, product that has the right form factor, product positioning, attributes, and features.

Speaker Change #190: Products actually creates this.

Speaker Change #190: This strong credit environment.

Speaker Change #190: And for US I think the most important read through as the demand environment, we see coming into 2026 2027 is going to be very very advantageous for us where there is a lot of latent demand. There is a lot of demand that's sitting waiting for the right type of product a product that has the right form factor product positioning attributes.

There's a lot of demand that's sitting waiting for the right type of product, the product that has the right form factor, product positioning, attributes, and features. But, you know, folks have been sitting waiting for that practice show, but haven't seen it, so they continue to buy an internal combustion vehicle or continue to buy a hybrid vehicle. We see this, this really large pool of demand on the surface that's just waiting. And we believe waiting for something that's very much like what in R2 is.

Speaker Change #190: Features.

Speaker Change #190: But folks have been sitting waiting for that practice show up but haven't seen it. So they continue to buy an internal combustion vehicle or continue to buy a hybrid vehicle.

Speaker Change #190: We see this this really.

Speaker Change #190: Large pool of demand on the surface that's just waiting.

Speaker Change #192: We believe waiting for something that's very much like what <unk>.

Okay, great. And my second question is, in thinking about your software architecture, one of the defining elements is that it is almost entirely built in house, from the baseline operating system to the middle layer, hypervisor application layers. You've talked to, before about legacy automakers, not really having this level of vertical integration. So, currently this is a big competitive advantage. But with VW now able to access the software platform, I'm curious how you think about the long-term advantage in software. Do you see? Do you still think that may want to replicate your approach? Or do you feel that the industry will eventually catch up and essentially, this is, essentially, this is now an opportunity for you to monetize and how the industry made the transition to software to find vehicles.

Robert Scaringe: And my second question is, in thinking about your software architecture, one of the defining elements is that it is almost entirely built in-house, from the baseline operating system to the middle layer hypervisor application. You've talked before about legacy automakers not really having this level of vertical integration. Clearly, this is a big competitive advantage. But with VW now able to access the software platform, I'm curious how you think about the Long-Term Advantage in software. Do you still see potential to maintain an edge here over most legacy OEMs, even those that may want to replicate your approach? Or do you feel that the industry will eventually catch up?

Speaker Change #192: Okay great.

Speaker Change #192: My second question is.

Speaker Change #192: Thinking about.

Speaker Change #193: Your software architecture, one of the defining elements is that it is almost entirely built in house.

Speaker Change #194: From the baseline operating system to the middleware hypervisor application layers, you've talked before about legacy automakers not.

Not really having this level of vertical integration. So clearly this is a big competitive advantage.

Speaker Change #195: But with BW now able to access the software platform Im curious how you think about.

Speaker Change #196: The long term advantage in software do you see do you still see potential to maintain an edge here over most legacy Oems, even those that need want to replicate your approach or do you feel that the industry will eventually catch up and essentially this is.

Robert Scaringe: Essentially, this is now an opportunity for you to monetize this asset and help the industry make the transition to IBM.

Speaker Change #197: Essentially this is now an opportunity for you to monetize this asset.

Speaker Change #197: The industry make the transition to a software defined vehicles.

There's a few ways to speak to this. I think first, before we get to product differentiation or customer facing advantages, building a network architecture and a social electronics stack that allows for significant consolidation of ECUs and therefore simplification not only of the number of ECUs, but also of the harness and the social wiring infrastructure within the vehicle. That creates meaningful cost advantages relative to a traditional platform, which will have, call it 50 to 100 ECUs within the vehicle. And so we've talked about this: our Gen1 vehicle, at 17 in-house ECUs, we reduce that down to seven.

Robert Scaringe: There are a few ways to speak to this. I think first, before we get to product differentiation or customer-facing advantages, building a network architecture and associated electronic stack that allows for significant consolidation of ECUs and, therefore, simplification not only of the number of VCUs but also of the harness and associated wiring, you know, infrastructure within the vehicle that creates meaningful cost advantages relative to a traditional platform, which will have, call it, 50 to 100 ECUs within the vehicle.

Speaker Change #197: Okay.

Speaker Change #197: If you wish.

Speaker Change #198: To speak to this I think first.

Speaker Change #198: Before we get to product differentiation or customer facing advantages.

Speaker Change #198: And building.

Speaker Change #198: And network architecture, and associate electronic stack that allows for significant consolidation of its use.

Speaker Change #198: And therefore simplification not only of the number of Skus, but also of the harness and associated wiring infrastructure within the vehicle.

Speaker Change #198: That creates meaningful cost advantages relative to a traditional platform, which will have.

Speaker Change #198: All at 50 to 100 Skus within the vehicle and so we've talked about this our gen. One vehicle at 17.

Speaker Change #198: And how Cpus, we reduced that down to seven and so it is a significant multi thousand dollar a structural cost advantage to have.

And so it is a significant multi-thousand dollar structural cost advantage to have a network architecture and topology of computers that's far simpler and far lower cost than the traditional approach. So first and foremost, there's a real cost advantage. Now, of course, our partnership with Volkswagen will extend that cost advantage into their respective products as well. And bring with it scale and volume, which will in turn allow us to source those components and systems at a lower cost. But from a consumer-facing point of view, what it represents owning, not just the hardware, but owning the software and owning it around a really optimized architecture, as I described, is the ability to continue to make the software a lot better.

Speaker Change #198: Our network architecture and in topology of Av computers.

Speaker Change #198: Far simpler and far lower cost than than traditional approach. So first and foremost there is a real cost advantage now of course, our partnership with Volkswagen will extend that cost advantage into their respective products as well.

Robert Scaringe: So, first and foremost, there's a real cost advantage. Now, of course, our partnership with Volkswagen will extend that cost advantage into their respective products as well, and bring with it scale and volume, which will, in turn, allow us to source those components and systems at a lower cost. But from a consumer point of view, what it represents, owning not just the hardware but owning the software, and running it around a really optimized architecture, as I described, is the ability to continue to make the software a lot better.

Speaker Change #199: And bring with it scale and volume, which will in turn allow us to source those components and systems at a lower cost.

Speaker Change #199: But from a consumer facing point of view, what it represents owning not just the hardware, but owning the software.

Speaker Change #199: And owning it around a really optimized architecture as Ive described is the ability to continue to make the software a lot better.

Robert Scaringe: So the features can not only become more rich and more robust, but they can truly improve more than just surface-level skins on, let's say, your, you know, your cluster or your center information display, but deep into the vehicle and changing the way the vehicle performs dynamically changing the way, you know, its charging profile is set up, changing battery management system characteristics, so you can have the vehicle get better and better and better over time. In a way, that's very difficult when you rely on third parties to produce this complex labyrinth of ECUs and all the associated software, where even small changes require coordination amongst many different players. And so things that can take us minutes can take months with a traditional approach.

So the features can not only become more rich and more robust, but they can truly improve more than just surface level skins on, let's say, your cost or your center information display, but into like deeply into the vehicle in changing the way the vehicle performs dynamically, changing the way it's charging profile, set up, changing battery management system characteristics. So you can have the vehicle get better and better and better over time in a way that's very difficult when you rely on third parties to produce this complex labyrinth of ECUs and all the associated software, where even small changes require coordination amongst many different players.

Speaker Change #199: So the features can not only become more rich and more robust, but they can truly improve more than just surface level skins on let's say your your cluster or your center information display but into deeply into the vehicle and changing the way the vehicle performs dynamically changing the way it is charging.

Speaker Change #199: I'll set up changing.

Battery management system characteristics. So you can have the vehicle get better and better and better over time.

Speaker Change #199: In a way that's very difficult when you rely on.

Speaker Change #199: On third parties to produce.

Speaker Change #199: Complex labyrinth of Ecu's.

And all of the associated software, where even small changes require coordination amongst many different players.

And so, things that can take us minutes can take months for a traditional approach. And so all that being said, with the customer experiences, of course, beyond the vehicle performance and the way it drives behaves is what they see that the digital environment. It's also something that the UI framework, the approach to digital design, the approach to user experience design, something that we've spent an enormous amount of time on and we believe will continue to be differentiated and is facilitated and enabled by our platform. But it requires both, and we hope that by bringing this strong platform to our joint venture with folks that allows them to create products that are also really compelling and answer some of the points I made before around.

And so things that can take us minutes can take months for Attritional approach.

Robert Scaringe: And so, all that being said... What the customer experiences, of course, beyond the vehicle performance and the way it drives and behaves, is what they see in the digital environment. It's also something that the UI framework, the approach to digital design, the approach to user experience design, something that we've spent an enormous amount of time on, and we believe will continue to be differentiated, and is facilitated and enabled by our platform. But it requires both. And we hope that by bringing this strong platform to our joint venture with Volkswagen, it allows them to create products that are also really compelling and answer some of the points I made before about how there is a real lack of choice. There's what I would characterize as a pretty extreme lack of consumer choice around EVs and products in the space.

And so all that being said.

Speaker Change #199: <unk>.

Speaker Change #200: What the customer experiences of course beyond the vehicle performance and the way it drives behaves as what they see that the digital environment. It's also something that the UI framework the approach to digital design and the approach to user experience design something that we spend an enormous amount of time on and we believe we will continue to be differentiated.

Speaker Change #200: And is facilitated and enabled by our platform, but it requires both and we hope that by bringing the strong platform through our joint venture with Volkswagen and it allows them to of.

Speaker Change #201: Great products are also really compelling and answer some of the points I made before around there is a real lack of choice.

There is a real lack of choice. I would characterize as like a pretty extreme lack of consumer choice around EVs and products in the space. and in order for us to really scale towards 100% electrification, we need to have more than just a couple of highly compelling vehicles.

Speaker Change #201: I would characterize as like a pretty extreme lack of consumer choice around.

<unk> and <unk> products in this space.

Robert Scaringe: And in order for us to really scale towards 100% electrification, we need more than just a couple of highly compelling vehicles; there needs to be, essentially, the amount of choice that we have in the combustion world, which we're not even remotely near in the EV space today. Thank you. Our next question comes from Ron Jewsikow with Guggenheim Securities. You may proceed. Good evening, and thanks for taking my questions.

Speaker Change #201: And in order for us to really scale towards 100% electrification, we need to have more than just a couple of highly compelling vehicles there needs to be.

There needs to be essentially mirror the amount of choice that we have in the combustion world, which we're not even remotely near in the EV space today.

Speaker Change #201: Essentially mirror the amount of choice that we have in the combustion world, which we're now.

Speaker Change #201: Not even remotely near and.

Speaker Change #201: In the EV space today.

All right, great. Thanks. Thank you.

Speaker Change #201: Alright, great. Thanks.

Speaker Change #202: Thank you.

Our next question goes from Ron Jewsikow, with Guggenheim Securities. You may proceed. Yeah, good evening, and thanks for taking my questions. RJ, you've talked in the past about as Rivian opens new spaces, order intake in those geographies accelerates.

Speaker Change #202: Our next question comes from Ron <unk> with Guggenheim Securities You May proceed.

Speaker Change #203: Yes, good evening and thanks for taking my questions.

Operator: RJ, you've talked in the past about as Rivian opens new spaces, order intakes in those geographies accelerate. I know you've laid out the plan to 2025 for spaces, but is there any way to think about what is launching? Coming quarter or the second half of this year just to think about demand being an important part of your bridge to gross profit. Yes, we have, as you called out, a number of spaces that are going to be launching over the next six to 12 months, and those spaces are great ways for consumers to get a chance to experience our vehicles firsthand, to sit in them, to touch them, and play with all the, you know, all the features.

Speaker Change #204: RJ you've talked in the past about as Arabian opens new spaces order intake in those geographies accelerates.

I know, I know you've laid out the plan to 2025 for spaces, but is there any way to think about what is launching in the coming quarter or the second half of this year, just to think about demand being an important part of your bridge to growth profit in the fourth quarter? Yes, we have, as you called out, we have a number of spaces that are going to be launching over the next six to twelve months, and those spaces are great ways for consumers to get a chance to experience our vehicles firsthand, to sit and then to touch them and play with all the, you know, all the features. But beyond just our spaces, we've also really, over the last six months, begun activating.

Speaker Change #205: I know you've laid out the plan to 2025 for spaces, but is there any way to think about.

Speaker Change #206: What is launching in the coming quarter or the second half of this year just to think about demand being an important part of.

Speaker Change #207: Your bridge to gross profit in the fourth quarter.

Speaker Change #207: Yes, we have.

Speaker Change #207: As you called out we have.

A number of spaces that are going to be launching over the next six to 12 months in those spaces are great ways for consumers to get a chance to experience our vehicles firsthand.

Sitting them to touch them in <unk>.

Speaker Change #207: With all the all the features.

Operator: But beyond just our spaces, we've also really begun activating our service infrastructure to support the expansion of our Demo Drives program over the last six months. And so we have over 60 service locations that, uh, month over month, quarter over quarter, we're growing the number of those locations that do more than just service. And they not only provide service, but they support test drives and demo drives as well as, of course, delivery and other sales-related activities.

Speaker Change #207: But beyond just our spaces. We've also really over the last six months have begun activating our service infrastructure to support expansion of our demo drives program.

Our service infrastructure to support expansion of our demo drives program, and so we have, you know, over 60 service locations that, you know, month of a month, quarter of a quarter, we're growing a number of those locations that do more than just service, and they don't like provide service, but they support test drive and demo drives, as well as, of course, delivery and other sales really activities. And then, beyond our spaces, our service infrastructure, we're also continuing to build out our Rivian Adventure Network; that's our DC fast charge network, and that's another touch point for customers to experience the brand.

Speaker Change #207: And so we have over 60 service locations that.

Speaker Change #208: Month over month quarter over quarter, we're growing the number of those locations that do more than just service and they don't provide service, but they support test drive and demo drives.

Speaker Change #208: As well as of course delivery and other sales related activities.

Operator: And then beyond our spaces, our service infrastructure, we're also continuing to build out our Rivian Adventure Network. That's our DC fast charge network, and that's another touch point for customers to experience the brand. Today, that network is closed to being for Rivian only.

Speaker Change #209: And then it beyond our spaces. Our service infrastructure. We are also continuing to build out our <unk> adventure network, that's our DC fast charge network.

Speaker Change #209: That's another touch point for customers to.

Today, that network is close to being for Rivian only, but later this summer, we'll be opening our network up so it'll allow non-Rivian customers to use the network as well, which is a great way for folks to experience Rivian as a brand. And, and, and get exposure to the products; you mean, exposure to us as a company. Yeah, thanks for that.

Speaker Change #209: <unk> experienced the brand today that network is close to being for <unk> only but later this summer we'll be opening our network up so it'll allow non repeating customers to use the network as well, which is a great way.

Speaker Change #209: For folks to experience repayments of Brandon.

Speaker Change #209: And.

Robert Scaringe: But later this summer, we'll be opening up our network, so it'll allow non-Rivier customers to use the network as well, which is a great way for folks to experience Rivian as a brand and get exposure to the products and the exposure tests of the company. Thanks for that. And maybe I just want to follow up on Shreyas's question on credit revenues. Do you feel like the 17 million this quarter, or I suppose you probably know that? 17 million this quarter, kind of fully.

And get exposure to the products I mean exposure to us as a company.

Yes, thanks for that and maybe just a follow up Andreas question on credit revenues.

And maybe just a follow-up on Trace's question on credit revenues, if you feel like the 17 million this quarter, or I suppose you probably know this, if the 17 million this quarter kind of fully encapsulates or values of your zero mission vehicles, or is there kind of more to come as we move on? So, we're going to move on to the model sports, the back half of this year and gross profit break even. Yeah, Ron, as we mentioned at that investor day, we have over 200 million of regulatory credits under contracts right now for 2024 itself, and there are additional contracts in place for 25 and beyond as well.

Speaker Change #210: Is do you feel like the $17 million this quarter or I suppose you'd probably know this.

Speaker Change #211: The $17 million this quarter kind of fully.

Speaker Change #212: Encapsulates our values.

Claire McDonough: Is this your zero-emission vehicle, or is there something more to come as we model towards the back half of the world? Yeah, Ron, as we mentioned at Investor Day, we have over 200 million regulatory credits under contract right now for 2024 itself. And there are additional contracts in place for, you know, 25 and beyond as well.

Speaker Change #213: Zero emission vehicles or is there kind of more to come as we model towards the back half of this year and gross profit breakeven.

Speaker Change #214: Yeah, Ron as we mentioned at Investor Day, we.

Speaker Change #215: We have over $200 million of regulatory credits under contract right now for 2020 for itself.

Speaker Change #216: Are there additional contracts in place for 25 and beyond as well so $17 million is really just the tip of the iceberg as we think about the opportunity for 2024 and the sale of our regulatory credits.

Claire McDonough: So 17 million is really just the tip of the iceberg as we think about the opportunity for 2024 and the sale of our regulatory credits. Thanks. Thank you. And our next question comes from Stephen Gengaro with People. You may proceed. Thanks. Good afternoon, everybody.

So, 17 million is really just the tip of the iceberg as we think about the opportunity for 2024 and the sale of our regulatory credits.

Thank you for taking my question. Thank you.

Thanks for taking my questions.

Speaker Change #217: Thank you.

Our next question comes from Stephen Gengaro. With people, you may proceed. Thanks, good afternoon, everybody. I think, too, for me, when we talk about the gross profit progression and the expectations for the fourth quarter and beyond, the three kind of key points that were laid out, Claire, can you just talk about, are there any that you have more or less confidence in or are more or less visible at this point? Sure, if we think about the visibility that we have into the three drivers, which for everyone's benefit is variable cost improvement, fixed cost leverage, and increase in revenue per delivered unit on the first piece.

Stephen <unk>: And our next question comes from Stephen <unk> with Stifel. You May proceed.

Operator: I think, too, for me, the first thing to say when we talk about the gross profit progression and the expectations for the fourth quarter and beyond. The three kind of key points that were laid out, Claire, can you just talk about them? Are there any that you have more or less confidence in or are more or less visible at this point? Sure, as we think about the visibility that we have into the three drivers, which for everyone's benefit is variable cost improvement, fixed cost leverage, and increase in revenue per delivery unit on the first piece.

Hi, Thanks, good afternoon everybody.

I think two from me the first when we when we talk about the gross profit progression in the expectations for for the fourth quarter and beyond.

Speaker Change #218: The the three kind of key points that were laid out clear can you just talk about.

Speaker Change #219: Are there any that you have more or less confidence in <unk> are more or less visible at this point.

Operator: And that one, as we sit here today, the contracts with our supplier partners are under contract. So we have clear visibility into the cost-down efforts that we'll see from a material cost trajectory there. Similarly, as we think about the fixed cost leverage, that will be enabled by our production ramp in the second half of the year as we increase volumes. And then the other component is the reduction in depreciation expense.

Speaker Change #220: Sure as we think about the visibility that we have into the three drivers, which for everyones benefit as variable cost improvement fixed cost leverage and increase in revenue per deliver unit on the first piece and that one is.

And that one, as we sit here today, the contracts with our supplier partners are under contract. So we have clear visibility into the cost down efforts that we'll see from a material cost trajectory there. Similarly, as we think about the fixed cost leverage, that will be enabled by our production ramp. In the second half of the year, as we increase volumes, and then the other component is at the reduction in depreciation expense, as alluded to earlier in the call, we're now anniversary our three years post-starter production, and so part of the reduction in our ad depreciation expenses is related to fully depreciating some of our initial tooling associated with our launch.

Speaker Change #220: We sit here today the contracts with our supplier partners are under contract.

Speaker Change #220: Clear visibility into the cost down efforts that we'll see from a material cost trajectory. There. Similarly, as we think about the fixed cost leverage and that will be enabled by our production ramp in the second half of the year as we increase volumes and then the other component is at a reduction in depreciation expense.

Operator: As RJ alluded to earlier in the call, we're now anniversarying our three years of post-starter production, and so part of the reduction in our depreciation expenses is related to fully depreciating some of our initial tooling associated with our launch.

Speaker Change #220: And as David alluded to earlier in the call. We're now Anniversarying, our three years post startup production and so part of the reduction in our depreciation expenses is related to fully.

David: Eating some of our initial tooling.

So again, we have clear visibility into the trajectory on that component of it as well. And then the final component, as you think about the increase in revenue per delivered unit, on this end, again, we're ramping right now, or sent drive unit line that will enable sales of our trimotor that allow us to skew a little bit higher from a mixed perspective, and then I just reference the regulatory credits that, again, that are under contract for this year as well.

Claire McDonough: So, again, we have clear visibility into the trajectory of that component of it as well. And then, the final component, as we think about the increase in revenue per delivered unit on this end, again, we're ramping right now. We have a 50% drive unit line that will enable sales of our tri-motor that allows us to skew a little bit higher from a mixed perspective. And then I just referenced the regulatory credits again that are under contract for this year as well. So we have a lot of visibility as we look into the second half performance.

Speaker Change #222: Stated with our launch so again, we have clear visibility into the trajectory on that component of it as well.

Speaker Change #222: And then the final component as you think about the increase in revenue per delivered unit.

Speaker Change #223: On this end.

Speaker Change #224: Again, we're ramping right now are sent drive unit line that will enable sales in our tri motor that allow us to skew a little bit higher from a mix perspective.

Speaker Change #224: And then I just referenced the regulatory credits again that are under contracts.

So have a lot of visibility as we look into the second half performance. Great. Now, thanks. That's good color. I appreciate that.

Speaker Change #224: For the serious as well so we'll have a lot of visibility as we look into the second half outperformance.

Operator: Great. No, thanks. That's a good color. I appreciate that. And the other quick one, and I'm not sure if you'll comment on this or not, CapEx for 25, any parameters we should be thinking about?

Speaker Change #224: Great no. Thanks, that's good color I appreciate that and the other quick one and I'm not sure if you'll comment on this or not.

And the other clip one, and I'm not sure if you'll comment on this or not. CapEx for 25, any parameters we should be thinking about? Yes, as we think about CapEx for 2025, as we mentioned in the past, we estimate spend to be roughly in the, you know, one and a half billion dollar area. Okay.

Speaker Change #225: Capex for 'twenty five any parameters, we should be thinking about.

Claire McDonough: Yes, as we think about CapEx for 2025, as we mentioned in the past, we estimate spending to be roughly in the one and a half billion dollar area. Okay, great. Thank you. Thank you. I would now like to turn the call back over to R.J. Scaringe for any closing remarks. Thank you, everyone, for joining us today. We were really excited with the progress we're making with the transition to our second generation R1 vehicles and the associated cost structure that that drives both at the building materials level but also within our operations within our plant. It is a really important stepping stone for us as a business, and the efficacy through which that launch occurred really reflects the growing capability for us as a business.

Speaker Change #225: Yes.

Speaker Change #226: We think about Capex for 2025, as we mentioned in the past week, we estimate that spend to be roughly in the $1 5 billion area.

Great. Thank you.

Speaker Change #226: Okay, great. Thank you.

Claire McDonough: I'm also really excited to see how customers have continued to react to the product, and seeing how favorably this second generation R1 has been seen and continues to be seen really sets up well for us with what's to come with R2, where R2 leverages a lot of the content, particularly around the network architecture, the ECU topology, the software stack, and even beyond that into some of the componentry architecture that we've laid out with the updates to So again, thanks everyone for joining us. We're looking forward to continued progress and continued efforts on our drive to profitability and look forward to speaking to everybody soon. Thank you. This concludes the conference. Thank you for your participation. You may now disconnect.

I would not like to turn the call back over to R.J.

Speaker Change #228: Thank you I would now like to turn the call back over to RJ screen for any closing remarks.

Scarinj for any closing remarks. You know, thank you everyone for joining us today. We were really excited with the progress we're making. The transition to our second generation R1 vehicles and the associated cost structure that that drives both at the bill and material level, but also within our operations, within our plant, is a really important stepping stone for us as a business. And the efficacy through which that launch occurred really reflects the growing capability for us as a business. I'm also really excited to see what we're, how customers have continued to interact with the product.

Speaker Change #231: Thank you everyone for joining us today.

Speaker Change #227: We're really excited with the progress we're making.

Speaker Change #228: The transition to our second generation <unk> vehicles, and the associated cost structure that that drives both at the bill of materials level, but also within our operations within our plants.

Speaker Change #227: As a really important stepping stone for us as a business.

Speaker Change #227: And the efficacy through which that launch occurred really reflects the growing.

Speaker Change #227: Capability for us as a business.

Speaker Change #227: I'm also really.

Speaker Change #227: Excited to see what we are.

Speaker Change #227: How customers have continued to add to the product.

And, you know, seeing how favorably this second generation R1 was seen and continues to be seen, really sets up well for us with what's to come with R2, where R2 leverages a lot of the content, particularly around the network architecture of the ECU topology, the software stack, and even beyond that into some of the componentry architecture that we've laid out with the updates of the R1 platform.

Speaker Change #227: And seeing.

Speaker Change #227: Seeing how favorably. This second generation are one was was seen and continues to be seen.

Speaker Change #227: Really sets up well for us with what's to come with our two where our two leverages a lot of our content, particularly around the network architecture of issue topology the software stack.

Speaker Change #227: And even beyond that into some of the componentry architecture that we've laid out with the update to the <unk> platform.

So, again, thanks everyone for joining. We're looking forward to continued progress and continued efforts on our drive to profitability, and look forward to speaking to everybody soon.

Speaker Change #227: So.

Speaker Change #227: Again, thanks, everyone for joining we're looking forward to continued progress and continued.

Speaker Change #227: Efforts on our drive to profitability and look forward to speaking everybody soon.

Thank you.

This concludes the conference. Thank you for your participation. You may not disconnect.

Speaker Change #230: Thank you. This concludes the conference. Thank you for your participation you may now disconnect.

Q2 2024 Rivian Automotive Inc Earnings Call

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