Rivian Automotive, Inc.

Good day. Thank you for standing by. Welcome to Rivian's third quarter 2024 earnings conference call. At this time, all participants are in listen-only mode. After this speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automatic message advising your hand is raised. Please note that today's conference is being recorded. I will now hand the conference over to your speaker host, Tim Bates, Vice President of Investillations. Please go ahead.

Good afternoon, and thank you for joining us for Rivian's third quarter 2024 earnings call. Today, I'm joined by RJ Scurringe, our CEO and founder, Claire McDonough, our CFO, and Javier Varela, our Chief Operations Officer. 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 results 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 R.J., who will begin with a few opening remarks.

Thank you, Tim, and thank you all for joining us today. I'm going to start by talking about the R1 and specifically the Gen 2 ramp-up. First, the material costs progress we've made, as well as the efficiency improvements within the plant, are really important and critical for our long-term profitability of business. Those changes, and a lot of the changes that went into Gen 2, were focused on cost. But we also introduced hundreds of other design and engineering changes that enhanced the performance of the customer experience in the vehicle. And one of those is the introduction of a new variant, what we call our tri-motor. This puts a single motor in the front and two motors in the back. and it delivers really exceptional performance. Performance that's better than our first-generation quad, but with a much lower cost in terms of what it takes to manufacture it, and also with a substantial improvement to efficiency. And we're seeing a lot of excitement around the tri, and we're excited to also be bringing the quad to market, the updated quad, in 2025. Now, with that We had a bunch of suppliers we brought on with the Gen 2. Around 50% of the bill of materials by cost is with new suppliers or with new contracts. And with that, there's been some challenges. And those have really impacted this quarter. And this has been a tough quarter for us because of some of those supply chain or supply ramp challenges. And one of those suppliers in particular has limited our production quite substantially and we're working very, very hard to address that. This is one of our highest priorities in terms of the business. And we're seeing this as really a short-term issue, but it certainly introduced challenges, as we saw in Q3. Now, a lot of the learnings that went into the Gen 2 ramp-up, the design of the components, the design of the systems, are underpinning what's going into R2. And the R2 program is advancing. From a timing point of view, it's on track. And the product itself is really exciting. It's delivering a level of performance and capability in a package that really looks and feels like Rivian, but it's doing it at a substantial reduction in terms of its overall cost. And a key part of this isn't just the design of the components. It's also all the supplier relationships that we've grown and built through R1. And today, as it stands, we've sourced about 85% of the bill of materials on the R2 program. And that 85% that's been sourced is within our aggressive cost targets we've set for the program. And we've talked about these at our investor day. But this is overall going to be what allows us to reduce the cost of R2 relative to R1 on sort of a like-for-like basis in terms of content by about 45%. Beyond just the cost focus that's gone into R2, this is also a program that's really been architected around creating something that's special and unique in the marketplace. And really, our key objective is to make sure we can capture the same level of market share and excitement that we've done with R1, where R1's one of the strongest market share players for flagship vehicles over $70,000. And our hope and, of course, what we're targeting is to capture that same level of excitement, but at a price point starting at $45,000 with R2. The key to delivering all this is, of course, the launch of our plant and the production line here at Normal. And the expansions we're making to the facility are well underway. The grading work at the site level is essentially done. This positions us to start deliveries of R2 in the first half of 2026. And so the progress that's being driven into the plant, the learnings from R1, and of course the supply chain relationships we've established and the contracts we're putting in place are really critical for both delivering on the timing but also the aggressive cost targets we've set for this program. Now, we also announced today the sourcing of battery cells for the program. And we're using a cylindrical cell, a 4695 cell, so 46 millimeters in diameter, 95 millimeters tall. And that relationship with LG is something we've been working on for quite some time. And those cells go into a really uniquely designed pack where the modules and the pack, in conjunction with, of course, holding the cells, act as a core structural element of the vehicles. This is a structural battery pack where not just the structure of the pack is part of the body, but the top of the battery pack actually forms the floor of the vehicle. And so these are the types of decisions we're making across the R2 program to drive cost efficiency through part elimination or part consolidation, which is key for us delivering at the price point we've talked about with R2, but doing that with a healthy positive gross margin. Now, beyond body structure, battery sourcing, the vehicle architecture, some of the things we've talked about, one of the other really important elements of R2 is leveraging the electrical architecture, our topology VCUs, and the software stack we've developed, and put that into the Gen 2 of R1, is that that platform underpins R2. It's also core for our joint venture with Volkswagen. And the joint venture with Volkswagen continues to progress well. We remain really excited about this. Our teams are passionate about the impact we can drive through leveraging and seeing our technology make its way into so many different vehicles. We have a drivable demonstrator where we've put our hardware and our software into a Volkswagen Group product. And the investments from Volkswagen as part of this joint venture, which we've talked about in the past, these are really important for us. These allow us to not only fund the continued growth of Rivian and through the launch of R2 and Normal, but also allow us to launch our production plant in Georgia where that will not only produce R2, but other vehicles on this midsize platform. And ultimately, the capital we have plus the capital provided by the joint venture will take us through positive free cash flow. Now, I said it before, and I do want to end by just restating the importance of creating highly compelling product in driving the transition to electrification. We've seen that with R1. The R1S is the most popular SGV over $70,000 in California, and that's not just the most popular electric SGV. It's the most popular SGV sold in California. We're hoping to see that level of excitement continue and carry through with R2, as I said. And ultimately, that's what's going to help pull customers out of combustion vehicles, internal combustion vehicles, and then TVs, as the features and the capabilities of the vehicle being so exciting that it helps draw customers in. And so that's our focus. That's what has us incredibly optimistic around the future. And we'd like to thank all those that continue to support this vision. This is our employees, our customers, partners, suppliers, of course, our communities, and lastly, our shareholders. So with that, I'll pass the call to Claire.