Rivian Automotive, Inc.

Good afternoon, and thank you for joining us for Rivian's first quarter 2026 earnings call. Today I'm joined by RJ Scurringe, our CEO and founder, Claire McDonough, our chief financial officer, 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 law. 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 the earnings presentation we filed with the SEC today. During this call, we will discuss both GAAP and non-GAAP financial measures. A reconciliation of historical non-GAAP to GAAP financial measures is provided in our earnings presentation and press release. Just before the earnings call, we posted our earnings presentation, which includes an overview of our progress over the recent months and replaces our shareholder letter. I encourage you to read it for additional details around some of the items we will cover on today's call. Following our prepared remarks, we will be taking questions from sell-side analysts. In the interest of keeping our call to one hour, we would ask these analysts to limit any follow-on questions to one. With that, I'll turn the call over to R.J.,

Thanks, Chip. Good afternoon, everyone, and thanks for joining us for today's call. Last week, I was thrilled to celebrate the start of Sailwell R2 production with our team at our plant in Normal, Illinois. It's an exciting milestone in Rivian's history and the culmination of all the hard work and energy from so many people across the company. As I've said before, I believe the R2 will be a game changer for our customers and will be a key driver of our company's long-term growth and profitability. In an American automotive marketplace starved for high-quality EV choice, I believe R2 is an attractively priced option sized for everyday ventures from school pickups to weekend trips that is targeting the very popular five-passenger SUV and crossover segment. With R2, we are taking our design, performance, and technology and bringing it to a significantly broader audience without losing what makes Rivian unmistakably Rivian. We've started R2 deliveries to our employees, and I have to say I absolutely love having R2 as my daily driver. I could not be more excited to get this vehicle into the hands of lots of customers starting this spring. In developing R2, our team relentlessly focused on achieving structural cost reductions while maintaining the desirability of the product. For R2, our bill of materials is expected to be approximately half of our R1 platform. For non-bomb cost of goods sold, we expect to see a reduction of more than 50%, resulting from a focus on design for manufacturing and leverage fixed cost efficiencies through higher production volumes. This is how we expect to profitably deliver R2 at an accessible price point at scale without compromising performance and utility customers love from Rivian. Key design changes for R2 include part eliminations and reductions through the introduction of large die castings, a structural battery pack, a new highly efficient drive unit, the evolution of our next generation electrical architecture, which removes miles of copper wire, and the consolidation of our high voltage electronics into a single enclosure. We are also seeing significant sourcing leverage relative to R1 across a variety of components. Now, as we begin to scale our operations in normal with R2, we're very excited to partner with the U.S. Department of Energy to grow our manufacturing footprint in Georgia. R2 provides the opportunity to expand the Rivian brand to millions of drivers. As a result, we made the strategic decision to increase the production capacity for the first phase of our Georgia plant by 50%. bringing it to 300,000 units of annual production capacity for a midsize vehicle platform. This change is expected to boost cost efficiency while still providing significant room for future expansion in later phases and support thousands of jobs in Georgia as we grow American manufacturing and work to ensure the U.S. retains its leadership and innovation in technology and transportation. We remain on track for the production of our midsize vehicle platform to begin in Georgia in late 2028. Turning to our technology roadmap, in March, we were excited to announce a new strategic partnership with Uber to accelerate our shared autonomous vehicle goals. In the not-too-distant future, I believe advanced autonomy capabilities will be a key differentiator for customers and the driver of market share. At the core of our third-generation autonomy hardware is the Rivian Autonomy Processor, or RAP1. The development of our RAP1 chip is on track and we are progressing well on validation and reliability testing. Our integrated approach allows our hardware team to rapidly iterate with our software team and our autonomy feature development is progressing well and we continue to expect to begin rolling out point-to-point capabilities by the end of the year. Finally, in the coming weeks, we are excited to launch the Rivian Assistant on R1 and R2 vehicles. The Rivian Assistant is our new AI-powered voice assistant that is built to be a digital co-pilot with integration into the vehicle ecosystem and other external apps. In closing, this quarter our team has executed across many fronts, laying a strong foundation for the years ahead. As an American automotive technology company, we're building for a future that we believe will be fully electric, autonomous, and AI-defined. With our category-defining brand, the launch of R2, which is our first mass-market vehicle, vertically integrated and extensible technology, and a direct-to-consumer sales model, I couldn't be more excited about the opportunity ahead for our customers and for our business. With that, I'll pass the call over to Claire to discuss our financial results.

Thanks, RJ, and good afternoon, everyone. As RJ shared, the start of saleable R2 production and initial employee deliveries are a landmark moment for Rivian. By building R2 in normal, we are strategically leveraging our existing manufacturing footprint in Illinois to drive greater fixed cost absorption across our entire vehicle portfolio. As discussed previously, R2 production is starting with a single shift operation and we expect to scale to two shifts by the end of 2026 as we ramp towards our North Star target of profitably delivering 4,000 vehicles per week in normal. Delivering a strong 2026 exit rate for R2 production and deliveries is a key focus for our team as we believe it will directly translate into positive automotive gross profit for the business. Turning to the results for the first quarter, as depicted on slide 11 of the earnings presentation, our consolidated revenue in the first quarter was approximately $1.4 billion, an 11% increase over the same quarter last year. Consolidated gross profit was $119 million, and our gross margin was 9%. Gross profit included $122 million of depreciation and $27 million of stock-based compensation expense. Adjusted EBITDA losses for the first quarter were $472 million, driven by our $119 million of gross profit and increased adjusted operating expenses as we prepare to scale our two and invest in our autonomy roadmap. In the first quarter, we produced 10,236 vehicles and delivered 10,365 vehicles, which was the primary driver of our $908 million of automotive revenue. Automotive gross profit loss was $62 million compared to $92 million of gross profit for the same quarter last year, primarily driven by the $100 million decrease in sales of automotive regulatory credits and lower production volumes, which resulted in a $45 million increase in depreciation and stock-based compensation expense combined. While current macro and geopolitical factors are creating added complexity, cost, and uncertainty, our team continues to work hard to manage supply chain risks and offset elevated costs. Our software and services segment reported another strong quarter, as depicted on slide 13. During the first quarter, the segment generated $473 million of revenue, a 49% year-over-year increase, and $181 million of gross profit. $282 million, or approximately 60%, of software and services revenue was attributable to our joint venture with Volkswagen Group. We also experienced strong growth from remarketing and parts and service. During the quarter, we also recognized $506 million gain in other income in our financials related to the Series A capital raise and related deconsolidation of Mind Robotics from our financial statements. We currently own approximately 38% of Mind Robotics on a shares outstanding basis. Looking at our balance sheet, we ended the quarter with approximately $4.8 billion of cash, cash equivalents, and short-term investments. With regard to our funding roadmap, in 2026, we expect to receive a total of $2.55 billion of capital from our strategic partners. Today, we received $1 billion from Volkswagen Group in exchange for equity following successful completion of the winter testing milestone by RVTech. The testing program spans several months, utilizing reference vehicles from the Volkswagen, Audi, and Scout brands. Later this quarter, we expect to receive $300 million from Uber in exchange for equity related to the signing of our partnership agreement subject to certain conditions. And later this year, we expect to receive $1 billion in non-recourse debt from Volkswagen Group and an additional $250 million from Uber in exchange for equity, subject to the completion of certain milestones and conditions related to robotaxi development. As outlined on slide 14, this brings total available liquidity and expected capital in 2026 of nearly $8 billion. Additionally, we're very excited to partner with the U.S. Department of Energy to grow our U.S. manufacturing footprint. The up to $4.5 billion DOE loan, which consists of approximately $4 billion of principal and approximately $500 million of capitalized interest, provides low-cost financing for our 300,000-unit capacity greenfield expansion in Georgia, bringing Rivian to meaningful scale. We expect the 515,000 total units of capacity between our Illinois and Georgia plants will provide Rivian a path to free cash flow positive once fully ramped. We expect to draw on the loan by early 2027, subject to certain conditions. Two weeks ago, our normal factory sustained damage from a tornado. I'm proud of the way our teams have rallied together to get production back up and running while we repair the damages. Despite the weather impact, our 2026 guidance remains unchanged. We continue to expect full-year deliveries of between 62,000 and 67,000 total vehicles across R1, R2, and our commercial vans. We also continue to expect to deliver approximately 9,000 to 11,000 vehicles in Q2, as we expect the ramp of R2 deliveries will be back half-weighted. While we continue to believe our gross profit will increase year over year, we expect the complexity of a new vehicle launch will negatively impact our automotive gross profit in the second and third quarters before becoming a benefit for our overall operations in the fourth quarter as we ramp production and deliveries. As a reminder, we believe this is a transition year for the automotive segment's path towards long-term profitability as we scale our two. For 2026, we continue to expect an adjusted EBITDA loss of between $2.1 to $1.8 billion. While economic and geopolitical conditions, including supply chain and international conflicts pose risks, we remain steadfast in our plans to invest behind key growth drivers. We continue to progress our autonomy roadmap and the expansion of our sales and service footprint as we scale with our two. We believe these strategic investments will deliver long-term value to our shareholders. Finally, for 2026, we are maintaining our capital expenditure guidance of $1.95 to $2.05 billion. Our CapEx spend primarily relates to finalizing construction and tooling for R2 in Normal, the continued build-out of our sales, service, and charging infrastructure, and kicking off construction of our Greenfield plant in Georgia. In closing, I'd like to congratulate our teams again for the successful start of saleable R2 production and the strong execution in the first quarter. We continue to believe that R2 and our technology roadmap will be truly transformative for the growth and profitability of our business. I'd like to turn the call back over to the operator to open the line for Q&A.