Rivian Automotive, Inc.

platform is enabling some wonderfully unique products and we're looking forward to be able to show these to the world. I want to thank our dedicated team members, suppliers, and importantly our customers and communities for the tremendous support you continue to show us. With that, I'll pass the call over to Claire.

Thanks, RJ. I want to echo your excitement around the third quarter results and the progress the team is making. During the third quarter, we produced over 7,300 vehicles and delivered nearly 6,600 vehicles, which was the primary driver of the $536 million of revenue we generated. We recorded negative gross profit of $917 million in the third quarter. We continue to be impacted by the high fixed cost structure associated with running high volume production lines at low volumes while we ramp. We recorded a $696 million accounting adjustment in the third quarter related to LCNRV. As discussed on prior calls, the LCNRV adjustment writes down the value of certain inventory to the amount we anticipate receiving upon vehicle sale after considering the future costs necessary to ready the inventory for sale. The increase in our LCNRV charge represents the vast majority of the increase in cost of goods sold as compared to the second quarter of 2022. The increase in LCNRV compared to the second quarter is primarily due to an increase in overall inventory and firm purchase commitment values ahead of the start of our second manufacturing shift. In addition, similar to prior quarters, gross profit for the quarter was also impacted by the inflation of our raw materials as well as supply chain challenges, which caused the need for expedited shipping. operating expenses grew by an approximate $160 million as compared to the same quarter last year. The primary driver of this increase is stock-based compensation expense, which we did not recognize prior to our November 2021 IPO. When looking at our operating expense this past quarter versus the second quarter of 2022, we saw a nearly $150 million decrease. Our Q3 operating expenses reflect our ongoing prioritization of investment in our core in-vehicle technologies and customer experience while continuing to drive additional focus and cost optimization across the business. We continue to focus on deploying capital in the most efficient way and ensuring that every dollar spent helps us towards our long-term financial targets, which in turn helps accelerate the impact we can deliver. Our adjusted EBITDA for the third quarter was negative $1.3 billion, which is flat to the second quarter of 2022. We ended the third quarter with about $14 billion of cash on hand. We continue to monitor the economic environment and believe we have a high level of flexibility regarding the cadence of our growth investments. We remain confident in our ability to fund operations with cash on hand through 2025 excluding the impact of our investment in the contemplated joint venture with Mercedes-Benz. We continue to work with the State of Georgia and the Joint Development Authority on our second domestic production facility. We are adjusting the timeline for launching the R2 platform and expect it will launch in 2026. We expect the R2 platform will unlock a massive global market expansion opportunity for Rivian and are excited about the development work that's underway. We are also reaffirming our 2022 full-year guidance of 25,000 total vehicles produced. The supply chain continues to be our largest source of uncertainty as we continue to ramp production. We've experienced five days of production downtime in October and November due to a lack of supply of a key component which limited our quarter-to-date production. In the fourth quarter of 2022, we expect the in-transit time from rail shipments coupled with an increase in volumes from the ramp of our second shift towards the end of the quarter will cause a significant discrepancy between production and deliveries. In addition, we're reaffirming our 2022 adjusted EBITDA guidance of negative $5.45 billion. We're lowering our capital expenditure guidance to $1.75 billion due to our streamlined product roadmap and the shift of certain capital expenditures to 2023. As RJ mentioned, we have over 114,000 net R1 preorders as of November 7th. As we ramp our production and deliveries, we believe preorders will become an increasingly less important measure of our fundamental progress as a business. Going forward, we no longer plan to provide an updated preorder number during our quarterly earnings calls. In closing, I want to reiterate our confidence in our long-term financial targets. We see a clear path to our approximately 25% gross margin target, high-teens EBITDA target, and approximately 10% free cash flow margin target. With that, let me turn the call back to the operator to open the line for Q&A.

Thank you. As a reminder, to ask a question, you will need to press star 11 on your telephone. That's star 11 to ask the question. Please stand by while we compile the Q&A roster. Our first question comes from the line of John Murphy with Bank of America. Your line is open.