Rivian Automotive, Inc.

Good day, and thank you for standing by. Welcome to Rivian's second quarter 2023 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To remove yourself from the queue, please press star 1-1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to Tim Bay. Vice President of Strategic Finance and Investor Relations. Please go ahead.

Good afternoon, and thank you for joining us for Rivian's second quarter 2023 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 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 around some of the items we'll cover on today's call. With that, I'll turn the call over to RJ, who will begin with a few opening remarks.

Thanks, Tim. Hello, everyone, and thanks for joining us today. During our call, I will highlight key developments during the second quarter and provide an update on the progress we are making against our core value drivers. Production continues to ramp, which is translating into improved profitability and capital efficiency. We are also driving material cost reductions through commercial and engineering design updates, including the integration of our in-house dual motor into the R1 product line. We remain focused on the customer experience as we expand our physical, digital, and mobile footprint, and took important steps during the quarter to improve our charging experience. Importantly, prior to getting into the quarter's details, I'd like to thank our employees, customers, partners, suppliers, communities, and shareholders for their continued support of our vision. Consistent with our last earnings call, Claire and I will be inviting different leaders to join us each quarter, For this call, I've asked Waseem Bin-Sayed, our Senior Vice President of Software Development, to join, given the critical role software plays in enabling our business and the ever-improving and expanding capabilities and features of our vehicles. During the second quarter, we produced 13,992 vehicles, which represents a 50% increase compared to the first quarter. Importantly, approximately 70% of the R1 units produced during the second quarter were R1S vehicles. This represents the first time R1S quarterly production was higher than R1T production. Our team at Normal has made strong progress through the first half of the year, maturing the manufacturing process of the R1S to the point where the build efficiency is essentially equal to the R1T. It's also important to note the R1S is more profitable than the R1T. The ramp of our in-house Enduro motor line remains a key enabler to near-term production performance. Due to our progress during the first half of the year, we are increasing our 2023 production guidance to 52,000 total units. Building on the successful launch of the in-house Endura motors for our commercial vans last quarter, we successfully integrated this motor into the dual motor variant of the R1 platform during the second quarter. This is an important milestone from a cost perspective and will also be instrumental in expanding the consumer market opportunity for our R1 vehicles. We believe the majority of our long-term R1 demand will come from our dual motor variants. These variants have pricing that starts at just over $70,000, extend up to 400 miles of range, reach zero to 60 miles per hour in as quick as three and a half seconds, tow up to 11,000 pounds, and generate over 800 foot pounds of torque and 650 horsepower. We believe the dual motor variants offer great value while providing high on and off-road performance. The technology and clean sheet approach we've taken with the R1 product line has really enabled the uniquely differentiated product, the features, the attributes, the way the vehicle feels so special. And, you know, this is the result of thousands and thousands of trade-offs we're making between different pieces of content, the way we think about design, the way we think about technology integrating with that design. And of course the R1 product line was intended and is our handshake with the world. It's our flagship product. And so as we've now been thinking a lot about how does that brand position that we've created from a product point of view integrate across the mosaic of all the other touch points we have as a company. And then, of course, into R2, that same mindset and that same ethos is being applied, of course, in a smaller form factor and a lower price point. And having spent a lot of time with the teams and closely coordinating all these different trade-offs and sort of thinking about how does Rivian manifest at this lower price point with a smaller form factor, I can say we've We couldn't possibly be more excited about what's to come with R2 and really looking forward to showing that product in the early part of 2024. It represents in much the same way that R1 rethought a segment, rethought a space. R2 takes that even further and stretches our ideology and our brand ethos really into such a great segment and such a large adjustable market. Now on to our second quarter results, which reflect our continued extreme focus on cost efficiency as we accelerate our drive towards profitability. On a quarter-over-quarter basis, delivered vehicles grew by 60 percent, while gross profit per vehicle improved by about $35,000. We achieved meaningful reductions in both R1 and EDV vehicle unit costs across the key components, including material costs, manufacturing labor, overhead, and logistics. Maintaining our cost reduction efforts through consistent focus and collaboration across all levels of the company is a core part of the culture we're building. I also want to take this opportunity to highlight some of the progress we're making through our partnership with Amazon. When designing the electric delivery van, we set out to develop a delivery van which offers a step change in safety, innovation, technology, and, of course, driver comfort. As of early July, there were EDVs in operation across over 800 cities in the United States. In addition, we recently initiated deliveries of EDVs to Amazon in Europe. It was a strong quarter, and we remain focused on ramping production, driving cost efficiencies, developing future technologies, and creating an amazing customer experience. With that, I'll pass the call to Wassim to discuss our software development strategy.