Rivian Automotive (RIVN) 7 Nov 232023 Q3 Earnings call transcript

Good day, and thank you for standing by. Welcome to the Rivian Third Quarter 2023 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to turn the conference over to your speaker today, Tim Bei, Vice President of Investor Relations. Please go ahead.

Good afternoon, and thank you for joining us for Rivian's Third Quarter 2023 Earnings Call.

discussed reflect call, today. management's matters responses comments begin, questions, to views we on including this and Before as of

letter. will and could may and in statements and making Such These statements under also risks our and laws. today's results We operations uncertainties our to risks business materially. that federal related securities described financial actual considered SEC uncertainties be to that shareholder are involve filings forward-looking cause statements performance be differ

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

additional call, Just around items the cover the the begin an months. to some overview on shareholder our we'll that, few I'll will who today's we over before with for letter, remarks. call recent which a to includes turn opening details published our RJ you the I of over progress encourage call. With of it read

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

highlight I'll the progress our drivers. value call, update third core we're making our the an provide key on During and against quarter during developments

We've will take EV to want emphatically a go-to-market and this computers, software and lot approach that decades. We've to and team state lot platform, made our noise built direct-to-consumer along to benefit be our recently broader our and stack perspective with first RX just to integrating in substantial provide want be platform. I on We There's the of our we ensure integration competitive this how I around generational Importantly, a are business a will from designed the but opportunity. X profitably, only dialogue designed to of a RX, deeply been efficient we've adoption. some our And convicted EV around advantage space. way represent opportunity not global industry in vertical help the stack, is our the transition. will our to approach leader technology automotive we're this over investments positioned strategy. entire X we to propulsion structure, believe transitioning vertically to scale next business to our in-vehicle electric

Additionally, learnings has compressed introduction a and vehicle time Illinois significant provided ramp Rivian's platforms of plant, in our frame. in production multiple

our will apply goal in lower manufacturing this facility team Our structure. experience of to with new a the Georgia, cost considerably achieving

control: rates. efficiency, and maintaining acknowledge Now pressures the and to remain impacting in on short continue notably Rivian I cost and balance context, focused our continuing we most want the ramp businesses, interest enhance greater in geopolitical production, technologies, to the customer In term, sheet. laser consumers driving strong the increase macroeconomic the experience investing this within factors in to a differentiated

during third fronts. Our quarter financial of and the operating represent of each these on progress results XXXX

and on quarter's into the Before wanted important released. which was just to an milestones third touch I get development, I performance,

seeing EDVs We their have delivered other opportunity provide than the initial impact and more to rollout. we conditions, XX,XXX sell emissions. With reduce amended companies COX already road, to from our Amazon agreement packages, vans meaningful helping which more with customers, on million terms are XXX commercial the and our

of of Pack offerings It's of pilot profitability active new large in our per the our to set with with vehicle, diverse confident work deliver a vans pilot of commercial for commercial We're order excited in Max new along infrastructure vehicles. cycle miles launch variant, to appreciate the customers. focused expanding quarter fleet recent enhance updates most rollout customers, with customer typically lower investment the growth, over-the-year are continue programs. support to of with programs. The further with experience of of and potential vans, discussions improvement and range, XXX,XXX services We are up to their fleet sales to multiple in fleet volume software vehicles, on a on important demonstrated to provide production commercial introduction customers begins and our XXX that can sequential initial Amazon value of number a to our

the XX,XXX vehicles produced continued Enduro quarter plant, progress production continue to and across see lines. line. ramp we our Within driving third during We the to our

feedback offering to leasing We be the platform forward a of our into the simplified support new efficiency. along our Rivian's RXT now vehicles discussed have service of great These this additional in delivery harness, to vehicles. over to new implemented have we to on engineering XXXX, as offering unit the of These provides of with customer As our we pack. platform, select Over certain to a significantly quality, second across the units. Later different This we vehicles pushed new software body which to towing It's a perform centers quarter level updates, gross available. cost They plan builds, earnings look way mobile engagement enhanced and this downtime greater result vehicle drive of different in to in for structure areas, of to currently which and of electronic over-the-year will to great driven including across features month, a this, customers driving include way incorporation Rivian days XX% million guidance with and contribute for planned expand our for us changes our technology year we RX launch vehicles cost the drive it the with or week lease quarter, call. to update continued towards regions. XXX targets. Rivian improved the on take matures. We total X which experience in raising this added variety as battery to the downtime plan are the software. Later interact will vehicles represent how within can enhanced topology, production in validation what customers XX changes modes. XX,XXX becoming past with about see reductions Rivian's plan customers and to our margin service design emphasis control major which be and the long-term of experience. miles, environments, data technologies driving a take last the on our of improve quarter, offer this regions our more we their program and XXX

In recently and Vancouver, of addition, we opened Nashville, our Brooklyn, Spaces, retail in Atlanta stores version Rivian Chicago, Seattle, Denver.

to great Rivian have just which I there the to well support DC direct on future communities local the I starting Our We see result quarter of continued our goals. Rivian. site It partners, for the on as like to network and financial to shareholders community pass collaboration thank a XX was operational the between also continued of is as strong suppliers, fast and It's a the few their strong take vision. With we weeks to Network our sites. Progress charging customers, charging I'll expand. the RX was in continues that, continue the a of platform, development as Georgia. would state, employees, form, preparing currently Claire. our site deliver and production Adventure call to ago.

differentiated team experience. like drivers: continuing focused ramp X that investing efficiency, to technologies customer Thanks, in and greater key Rivian driving our reiterate on the to to continuing enhance cost RJ. value production, I would is

demonstrate these in business. each results Third quarter of our aspects of advancement

generated. the our delivered which XX,XXX During negative gross We on million. $X.X XX,XXX the was per profit focused vehicles, revenue of delivered. we profit of the primary vehicle remain quarter and improving driver $XXX third billion Total quarter, we the produced vehicles was for gross

the quarter. the loss second During better, purchase improved by This approximately in improvement change $X,XXX losses gross the commitments. third impact versus and vehicle been of on $XX,XXX approximately the LCNRV per quarter, would have our firm excluding

of LCNRV as and compared highlighting during gross contributed significantly the to more second we made our vehicles. reducing material quarter the ramping therefore, the losses commitments improvement production the purchase third So in the improvements have on firm and in profit to quarter, cost

balance a on contributes firm when losses our of cost LCNRV purchase commitments As reduces gross it and positively goods declines, profit. reminder, sold to and

longer XXXX, positive our the charges with we gross by expect material plant LCNRV at as reached we end will inventory no associated profit. Illinois the have production We of

well the our a negative of XXXX. sheet raise XXXX billion we $X.X in we're In platform the after early positioned plant balance next we offering Georgia approach balance EBITDA of The year, RX cash billion. of $X.XX construction included start ending convertible as our expected the sheet, the the billion we the adjusted QX start October not in green to production strong $XXX was of proceeds of was balance year. By maintaining until Our raised a end. our as note, strengthens from was not further Accordingly, completed quarter for look of million. this $X.X which quarter net

our Based company. our are on focused driving across outlook of process, seen across our XXXX. down XXXX and aspect business the guidance. we've on each efficiency for remain our greater efforts, to cost the we Turning manufacturing and annual ramping year-to-date cost production progress We raising

We are production to XX,XXX driven is our units, CapEx guidance by to improving of our negative $X.X billion spend lowering and raising billion. estimated business. $X and CapEx to guidance improvement our reduce by mostly guidance EBITDA the in The to timing costs efforts across

holiday new As periods. during deliveries Amazon its in production gap significant prior the we commercial expect intake a QX, vans delivery of between limits more relative peak a to reminder, because and period,

facility consumer we much a expect of and with will to lines a second the in our the and introduce new believe platform. on number exit material earnings quarter these both XXXX, As we Illinois We changes call, meaningfully position technologies mentioned, as down and to profile. Rivian to discussed reduce RJ last and RX our quarter's the costs shut XXXX margin improved commercial vehicle of in to

whereby XX,XXX rate EDV, for We XX,XXX at for production be XXX,XXX total are for of capacity the units facility to the RX an adjust planned annual the of capacity and will units. lines, annual keeping the units planning

gross approximately our for a and high expected impact line target. With continue over operator open production, Our free XX% teens of the is better we incorporation near-term XXXX design new let are Rivian quarters long in turn cash impact to competitive more that, production, changes target to QX the downtime term. Overall, margin adjusted and in QX the X Q&A. we XXXX flow profitable me to see positions to approximately path of target, and and call roughly it while clear the margin margin ramp-up QX back confident EBITDA be to the XX% associated to

question with [Operator comes first Lache Instructions] Wolfe the line of from Research. Our Rod

on I cost and have on a a question question demand.

you that price my the because impression RX. is helping by you're LCNRV. I making didn't average just on yet loss on costs, just you gotten and to any isn't progress contribution improvement Just better-than-expected presumably volume simply improved because your you haven't see gross positive first, ex margin $XX,XXX

the all other that the correct? that into new since is it of interesting are Pack Because coming So things from is benefited yet architecture and XXXX. haven't the you

Thanks question, Rod. for the

about saw increase saw you delivery and key margin quarter, As drivers that the that it was improvement driven in the volumes. think we the we last the over XX% by

fixed cost driven So volumes. delivery there greater material leverage. But we concentration was both shift significant also was EDV some mix by a which improvements saw of to costs in

our that roughly vehicle to about margin, team well the of which material we material sales for the consumers already also of So it supply EDV, motor is, EDV as RX, the our you as well higher a the of the procurement beyond our saw cost dual then also our continued of of of for many Rivian sales us. But QX savings And is contribution renegotiating itself, significant costs. as early XX% we've was revenue by reduction platform in some in been for mentioned, the incorporated from agreements. benefited driven as work positive margin

the space. logistics those X in key broader we saw also and to levers, addition market continued In softening

And basis that to saw improvement per a so for also QX. was a that unit we the contributor on

That's helpful.

So the be RCVs. margin the contribution must yes, on

at quickly the talk think XXXX capacity RCV What's at the these planning you're will need seeing XXX into XXXX? And XX,XXX customers? how could But you'd process about meet convergence to of be a the of bit side, you're could how on you orders? that with like currently kind trajectory on whether you sales at per we the with expand to On orders a to understand I the seeing XX,XXX just units, next other any at pilots RCV you can and presumably, about fleets. RX, about that -- there's demand of number. you a talk or year little on can in current units your the that demand end capacity. average you're least day thoughts Maybe

your Rod, question vehicle thanks on for RX. commercial the and

Amazon been this we've earnings of Just agreement in side. on to for talked the commercial speak about with first exclusivity course, a while, vehicle working We we've calls. past the on -- and

last the charging diverse, to procedure necessity very those that's standard infrastructure, running the in to we element system with fleets diverse which morning. as set and been a require cases that business changes prep of the way commercial these of not network the by or terms are one operators, industrial to require relationships as is that from -- of it's use and vans. And this retail, a for were as well building its of as the with And and common commercial of or completely surprised different variety respective we've operating type wide for large a the commercial need that's for mile So that, vehicle while pilots if a everything fleet the to cases to ingest prep businesses businesses. the

range what these we'll start large that larger electrification orders, perceive programs different the will announcing so of a to fleets is of pilot their infrastructure. And as soon much plan be

it RX, market numbers As the operates. at price in RX share you for position course, to the can of pertains see we we, platform at extremely an which strong to the maintain points continue QX,

at electric So is as you translate pricing. only strong for share let's incredibly volume continued in of consumers. a We're And really very that over not values see but manifest with vehicle market about seeing that well as $XX,XXX the price used to and really brand, we're particular, we brand residual vehicles point. really strong excitement say, the significant connected think sold, that player, vehicles,

the search So used will robust Rivian for and of products just just are. therefore, how the reveal RXS demand pricing these Google

and launching later this that be is the said, select early trim going launched heard additional But a way access them the to launching configuration. with be even starting an models which customers year, in We'll be variants to now next program, of I coming importantly, We've just So pack. battery model opening in on before Pack. launched leasing going creates a Claire program interest that launching, we're additional is standard is environment rates We've we've starting for recently see we'll different month, product, that number described today. really online. this the Dual-Motor. helpful And Max as statements, are as a with select our be and to leasing you launched or we

very our as its best very into fleet of, I and So think the bullish working really of any hard van sort several the we platform over program programs referred and of remain to on next to pilot option translate the commercial RX with in for indicated, I I long-term view, demand, these is, that that volume platform, large at start. quarters fleet, RCV available and course our we're the the commercial van

line of next Bank Our the from comes John question America. of Murphy of

curious, a third of on you production. I'm question what's of bit? fair Amazon this just is the what fourth it the in the in I volumes. on a else like plan? they're on did the than a what you might you Just the days a on quick question looks deliveries amount the mentioned quarter Or quarter It implied lower EDV going is on where there in downshift little sort going calendar? there? something mean is Is

approximately reduction a longer the costs to QX. changes whole XXXX, to that's a And shutdown less X-week down lead statements, implement operations opening changes have to the vehicle. Preceding requires QX second this platform. some quarter plant those also spoke host for in -- planned of RX our changes dramatic do but to all and the and building in produce week. longer we're we a of and XXXX, in per less the of in a in with the vehicles for vehicle, shut that in improve plant, But per materials therefore, shutdown planning shutdown to material us that of have the allow labor cost us introduced it a Claire we production of

the that seeing Christmas in days say Holiday. around we're Year I'd recognizing also New broadly, some the certainly the of And with numbers. holidays course, you're then So and, of associated the lost

follow-up you're what's deciding that I locating, are customer then And moment? cost Okay. network RJ, the mean needs at obviously service physical something getting there. ahead way How those? Because one just the how sizing that the of on of you are the build-out. that's those? on how you're sizing And locations, you

Yes.

know, mobile both by that U.S. that past, performing our think, is service at -- is we've beauty building you the vehicle locations, grow. And a mobile in fleet, this relies brick-and-mortar I supplementing service start a about than and XX as As of service majority past more have it's the XXX it's much of a vehicles. a and strategy year. we'll it talked are of of, -- XXX, from are to as easier And week, footprint the those of we've it's the earnings But point this but calls, service our customer view, the I on this service-first physical mobile process. we today, vehicles, end said, in continues service actually of about in that

that business, operations, X/X of of over or So having the well than place all performed of an the vehicle if to service. mobile, service deal to site. dropped into mobile than the shift we taken will we perform the there, as of come a and off come operations simply service being expect come on you, service with we customer all And there's center, half issue service to our greater to your -- with more than your rather vehicle to be house, half you to we on

for infrastructure. growing that network, in that's activities. and why locations to to physical for service we And as The continue need of the demand. more and see pools we'll large have since relieve we is service where completely said, large that -- or physical grow we put invest significant where closest doesn't important that I pockets Now infrastructure

line comes Spak question the Joseph from of next Our with UBS.

a right and I a Claire, But you're of into bit at you year. $XX,XXX sort little the about talked run this takes puts next some running know now quarter. of rate

the total about level in be and XX% that year's for about planning are right So $XXX,XXX next guys we context downtime thinking of run potential? should rate you the Is the capacity, how sort the year? next of

briefly and important but to nature, spoke benefits in as it's takes you puts be to as that And -- of a be the in note into So there a RX just true step that there's our margin of for year the are the gross technology number the map, impacts that future, and RJ will us changes be temporary shutdown change magnitude for overall. material cost road going mentioned, of deposit a profit creates will and past the whole. the vehicles introduced to next

I a you right, in be quarters well. into as where about QX And standpoint, course weeks think the take up mentioned we'll ramping and be heavily cadence of of of variance RX, existing QX prepared as So again, start QX. multiple we'll will year, downtime of the as And the both then impacted our current in to QX then from production my QX, the QX throughout respective we'll and all rate. remarks, and run of

as up Rivian volumes we've about becomes RX, for And production a continuing as talked rate standpoint where then past, commercial from our volumes. the for you'll that see the our ramp business run in as to well QX potential both

that the down see the percentage of have we well. us hitting each of with also that a significant of costs, impacts our full of technologies, front opportunity coincides the material cost in as commercial You'll new

which of connection of our well in our those period fulfilling a elements results step vehicle so as pre-X/X/XXXX average And as preorders, with well. in price also time the that Rivian selling together over change in come

and So that's next puts volume year how year certainly think a the takes, about is I directionally different of but would cadence.

higher RJ -- And this about you've helpful. Claire, That's danced the talked -- auto And into next in out some the headlines. as the concerns sort I'd well, there ASPs question at my or I on nicely say, you in past EVs, of the but that mean, in really, in least broader actually, Okay. about RJ, the with mentioned in backlog. of affordability

the But you you of sight a for backlog you of clearly, good you on affordability thinking if business a of margin do your -- line cost environment? have are out once like visibility go pricing 'XX. other about the initiatives might to greater for profile reduction is through efforts how or sort help when what past a planning be So enough have you or concern, bit balance tougher that, on little

bit configuration. about middle-sized think as Large Pack, this in the launched build that. over one Yes, months but and above Quad-Motor RX beyond we've introduce about additional last few when what the we our past, and we've trim that's talked platform, a pack we start we to with combinations done the And

the So platform. which battery Dual-Motor, we that's around of is our largest motor Pack, introduced course, We, built introduced Enduro pack. our our Max

spread that, the lower to balance look on from it price, it benefit and as priced, in at vehicles we margin us vehicles and higher lower ASP, the is different content be buy look allows what full is is that customers lens our a higher at profile both still trim see with these what the are the content contributor content next still along sort combinations the customers, of course it of XXXX big effectively year. And with of with start broader have consumers accretive or of as a going as price-sensitive that standard to well we'll overall that to on we pack, be pricing on which looking that alluded loaded a introducing build over year, which ASP we'll able is, us And does and our to to an does that's the and we pricing, be RX maximum to it battery platform pre-March and to effect newer Next the also grow variety ASP. to smallest provides in vehicle. over blend X, past introducing the the as Claire target time. prices And for most choices price essentially fully of pack, move

from just The of we're the across in that keep to of demand of pools And of represent and scale point thing course, space segments large those other view, very The pools mind of large us, range prices, just demand, and of overall is much really the and we're there lots there's recognizing increased but is for potential is, demand a element that how for this SUV a segment the of seeing the X-door a important translate new is lots brand pickup excitement customers. operating EV demand. in. with and awareness to

which in The bill material bringing quarter-over-quarter. the worth is changes I've set of had and we're some performance like staircase we've other this is thing of RX, just that and described are up negotiations cost the seeing, to of going which of along but see we're being context them start the layer with in these that the significant, we've of year. suppliers But excitement will of costs materials that. been what bill a for our big with step to QX, X in comes to lower able that in even in to quarter with leverage achieve quarter-over-quarter, beyond next RX reductions comes materially

will price our customers, for to translate RX And some brands, established well demand the suppliers lower course, of that just other the they and that, products, quarters is our at variety the and a much lower we're this just a but is brand, points. And and clear, brand for last to so suppliers. are brand the to is of excitement is how package captures there and for X the And that's recognize things volume essence wide carat also relative of of in of much smaller point. sort a price our particularly how to become much to Rivian delivering relative X RX very one the recognizing how incredible resonating, of

Our comes Goldman Sachs. question line from the of Mark with Delaney next

also given view to will industry Rivian, recently, your in there, to as Rivian how in so but broadly in reiterated changed understand if you've positive much views You own I'm cost better falling described, the vehicle prices, volatility you're be have cutting more the on XXXX, at competitors EV get hoping with in margin costs making its gross progress but all structure.

ultimately, spoke let important jump I'll a just a to And this it just topic. few as I This an such major there's well. Claire levers. is but Mark. on Thanks, -- in there's bit,

the facility absorption first as we continued cost that ramp-up seeing to benefits the and of fixed ramp. The of We're our comes continue the production that with being, that. quarter-over-quarter

So to it's numerically understand. very easy

in of have bundling changes. design HVAC all second both maybe less of to body supplier without those system -- to but is negotiations which allow quarter progress discussions our with it's of our XXXX, contractually of as terms the of past, next all not this a we're of our easy see having redefining into look second, ECU making and our is The us significant structure, of resourcing to achieve costs harness, year material the massive will or design reductions. material suppliers, large through build vehicle. the suppliers, new changes, simplification or with of And massive that negotiations costs in in implement a the of simplification lot part component the changes suppliers, system cost through through shutdown topology, of or in a about changes, component consolidation simplification to I've we of those the talked

that reduction XX% to noting had changes we shutdown. that the this we we when EDV, the with as So are our with changes there's -- shutdown. And big going with part it's earlier made of had be vehicle, saw in a material consolidated associated similar year, shutdown coming worth with that set the costs of we commercial the

feathering be costs us introduction And going then are I be trim pricing, out to our the XXXX, And that. which due with grow of to in the anticipating year just the see is and change post-March more trim a in is level more meaning ASP. of the new following ASP. help expecting step as these in we're coming of pricing, of or spoke both that similar through some some shutdown. And configurations we'll our the quarter-over-quarter and deliveries we So lastly, to Max to packages, in new will new then moment layering which a material that's ago we of again, going next new as work have growth associated example, also X, is Pack, other an

very of So of business. combination us it's a for give material our ASP degree long-term a high that cost the ramp, and gross confidence margin in

And topic a quarter, exiting about be your related expectation follow-up spoke to for Last contribution still positive your margins. RX Is year. my this expectation? on on margin was that you

we be expect positive Mark, contribution exiting units. this newly priced RX still year to margin for

McNally comes Chris Our next question line from Evercore. with of the

at of gross topic. same Sorry to about on that as profit But wanted think the to progression sort year. the shape next we follow if -- of look I the we

in think XX we linearly and minus XXXX then paraphrasing, better -- And just so per sort a in step getting QX of change. vehicle, as big about there's obviously, And this could QX?

all talked architecture You in about massive the QX. of the improvements of

have in QX. re-ramp You some

be more the that a of QX, So architecture QX into Does should shape obviously, have costs of a get -- where sound that's profit QX well the to I QX, big that gross amount want large see really into out then, because include the to targets it's don't out positive you of that's we ramp a because start put gross like you out? in number. But XXXX where going to a complex probably coming through where profit. double-digit change change QX

Yes.

about margin significant was think our I mentioned you one to as to a itself. Rob's Chris, QX question, as improvement call So just cadence, area wanted contributor is, near-term out in EDV the I

given QX, they to the seasonality that look that of a in Amazon's you took fraction will as volume of this the QX so business, year. of be And

per the just won't linear see you from of shift. And in profit terms the QX this losses given are unit, gross of QX to path they mix some so

of more you'll dynamics, seeing you're greater of contributing Max the second the we XXXX, have you look will Drive of to start see to technologies types Pack units, you'll ramp you'll map our for. And as some go as half introductions the road and RX, then of new production course at that are of that's to cost volumes material you in be well. introducing trajectory, see of similar down throughout each the Enduro QX, just where to up significant technology cost benefits especially see QX new in where into the that well, line as the As we'll of to the that the QX, as start change, step if mentioned, the you were as really in look you

change And to improvement. step be that so of margin in gross going terms that's

that change rates mitigated be step given will QX impacts some for volume-related by However, and QX. our production

run And potential within so shutdown the downs the coming material of itself, full themselves. of complement cost you'll the included the see of rate and QX more is vehicles where out

sense. Makes

there's there's EDV we basically, clean quarter, about then. a and parts. there again, basically, QX. QX be moving lot a year, obviously, the of it out will So if of But QX, issues comes next clean, think all But

that So sense. all terms shape, makes the okay, of in

just been to we areas do the as of really have One do you've build rate to 'XX. I'm year, we upon think start for some side. be OpEx into in to the been on have about I if And an in capitalized. obviously when start curious But to investment build we also Georgia how some think for improving we can next OpEx run OpEx do has about going prework,

about 'XX. as the more to that, think the see up material OpEx technology. you'll introduce shutdown XXXX you approach you'll we beyond drivers, start investments in new Georgia also pick As see to But

our shutdown of engineering, with of of a as little development those today of level the this and throughout tick So building first longer increases certainly we're see We'll maintain across the that increasing supply board, that some the continue partners bit increasing of slight sort expect a itself. But in seen increase. of the see advance that and we year we're half technology into term. the level of of R&D to a design for our team introductions, next but the over don't seeing we'll new year number continued doing prototypes half work aggregate, and late the is you're material the up of we've you'll in second increased

Bank. Deutsche comes line question with Emmanuel Rosner from next Our the of

can and hear vehicles with a you'll be of customers. and us So Amazon the if try between exciting that sell directional I and sense able also volume help one, to that was timing. to other the wondering to split commercial you it's

line I between time that to the in you'll So the think, capacity or next capacity do for fill have, XX,XXX of reweight after and around think -- How the that what one? your units vehicles. current quickly be any commercial essentially would able year, customers new you you

are relatively customers fleet is will to their programs, the idiosyncrasies before, large view. And operators case, spoke that wasn't an changes pilot I originally often As run unique for understand process a lot commercial the is of but where for the out of designed to time necessary from process point to understand the really, whereby sales what infrastructure based be of of both lead "hub", the power. as also long sort it's to these with vehicles important vehicle, of

to So the to with the charging time of that converting or our install through challenges existing to it the with this doesn't facilities that. associated quickly. night takes support We've power large charging lens We've EV daily support learned of And fleets. some Amazon very vehicles. necessarily have of learned -- this relationship

off, pilot programs, will some that to right programs to careful time. be volumes, kicking want the which in shortly, take will lead announcing those number to so way larger we expectations we'll will And be them pilot just these set of but be a

some the to following as this of pilot but starts customers at orders volume larger pilots both in development. and associated think scale we these pilots XXXX, from so opportunity come XXXX, as significant transition the And in, that kick in really the to with

Okay. That's second CapEx. then question helpful. is my on And

big guidance. a to quite obviously, cut again So year's this

are for cost? factors, you framework? few in of there at CapEx quarters something I should regular higher increase or other timing Like, the you end, CapEx we what among was about real at no periods. contemplated over going previously next guess mentioned it But to in so, you've CapEx delays. think year than see particular or leave historically last lowered terms this how in the your the think when I you've future the

been trajectory improvements of that's that some this the slightly about had Emmanuel, I'd average, 'XX surrounding 'XX. predominantly in production between had if driven that introduction or average, be the and has will longer-dated XXXX early billion by that we've just the on you shutdown really both made of been significance cuts average, facility hit of on we've technologies well we've contributor 'XX. our we're of below that we've to investments, the It's that position within part to purchases, terms in in think that approximately a some in of about So our $X of in and the payment what and past as itself. talked as say our that of doing be the we'll that with equipment really largest new some work terms, the year nature the reductions the and episodic below

from comes with the Colin line Langan question Fargo. next Wells Our of

kind certain at this from at leverage, sort it that the lot get or? Or mostly leverage think, certain how percent the to think certain look sort LCNRV, close to gap If improved price, mean main are some downs. has still of I QX, where of you point? think of to ], from framework $XX,XXX in I service gross a ex $XX,XXX it [ I sort we vehicle, what engineering, big profit. I to trending, today was still price of drivers here? engineering the close gross a pricing I it's like Is XX,XXX a profit from but breakeven, QX, framed the a the the was quite to and there is and get Any

X get cost price think to we'll as average the of you fixed the leverage in 'XX, end material current So improvements about and cost remain as state the from increased whole. well a from as that being as selling them trajectory drivers down volume the .

been against, our that progress, improvements had then the as the by and seen that we've as we technologies on in of in introduced as the introduction visibility itself, beyond given that, are technologies the fixed in in RX. And Dual-Motor come business in this we've the improvement as over of cost well with the continued course the RJ at the material have continuing as material cost in that EDV, to the we've today in from look largely that the our see production referenced, been EDV also such the contractual both look both introductions you As in future. new partners ramp, the which down mentioned, progress we've to RJ progress we've making resulted supplier continued agreements then leverage in made that we that to driven we've year, progress that's XX% costs, a

in around materials commodities seeing to the The some raw you're other cell reflected the backdrop. not are key key date, environment and our softness that has the in been we've of seen results. And really battery current

trajectory as into this of that impacts about some you of to come still XXXX So for as end the is well. year and think

data driving that things and involve example, but going I involve ECUs us our think of hoping down. contracts. massive completely to going of Claire by like, the already that's on supplier material not out, that's let's and going able on for to XX% prior negotiations, larger were in supplier, engineering by of we've QX These isn't part and a spoke the to XXXX. But we say, change this changes this, that supplier to new detailed come harness about say, like, a this BOM happening pulling to over important I both the just contractual sitting significant for let's that happened are consolidation where the negotiation length contractual, here, accelerate the new of suppliers not to pure be to to takes supply some have effectivity changes harness the shutdown roughly These been date or call is part meaning, down, to some overall the are and cost out. it's, effectivity part, of and or refactoring that change, in or a Those it's reductions these talk when costs

of tie we big Those word the changes new those components. -- But here clearly, effectivity the contractual bundling using those date I'm these agreements when contractual an agreements. to start -- going we is with April, production it's again, XXX% to and have dates the multi-thousand confidence are they again, that some the in occur. so are, dollar of And those effectivity have are have

just all at numerics we with as side, it's this the of absorption. understanding what as transition, just cost contractual we see, on we've you obligations hard earlier, our all that's the of -- BOM And said see -- fixed continued to ramp, the for the very understand So of for that's look cost negotiated clear that but it's I -- us suppliers. to understand the I

and is was think supplier have and you quarter like price, then already leverage of X/X had in cut and items? guess should size At those half gap X trying to I gap? the then of half, it that it X/X, what's closing of kind that X/X I where how engineering. between in point I was you now QX, equally mean indicated going this guess to I it was drive of Is each think left. I we the what's a gauge

to fixed date update in we're has going in on. driven some specifically progress an cost-down had we the ramp But we've material as by progress the from the that leverage really provide significance Colin, commented to the our to trajectory. bridge I seen not and production that mentioned, of cost been

X those can sort key relative understand extrapolate that drivers those of us. for reweighting to you So of

the Jordan Truth comes Securities. question next line of from Levy Our with

It's for here. Jordan Henry on

your Just for quick changes rolls launch thinking et of in the due improved time substantially to be get around do EV this? one backdrop some of just is, EV out the micro news of the think sense on I had the timing, cetera, XXXX? RX, current small in demand. want a Or you it to a around by any

we but overreaction world. the And I'd X, anytime those being the aren't course, medium-term headwinds at over or Ultimately, this the there to just going the in drop of short even space, time, interest at, is that look will have beyond short-term as down recover at between some month we or something of to say, headwinds, I levels. an is we and across see rates RX, some record the that think geopolitical next challenges high of broadly

United brand. capture So of its if at We're -- our in size and at ability in RX at and factor, confidence price from segment RX launching RX XXXX, to everything largest enormously that's of deep view, than its in of sort but that in what we product, makes it addressable form a our a considerably do a States. to excited it fit market the the point terms of an look about ability to the the you fit essence our have point in about lower

for as also the think vacuum We with beautifully, the buildup couldn't of of product such And this There's market driving on it Tesla, off we is And experience, need RX, of a alternatives, need software interface, of with be brand more developed, feel electronics excited with back and developing works be it product. we're There's out choice. course, of that that RX. alternatives bullish for give which timing but and terms very footprint, those we're what integrated and and to there's in of that seamless user in robustly vertically deeply customers user range in a and not as to $XX,XXX we have believe but is, a lot a concentrated very its see can terms just options. great as sort the that sized of of buyers priced choice well real SUVs. share of hearts we really minds price highly with to physically capture $XX,XXX result, an extreme the a the midsize we then

kind you just again in update of software software the opportunities space, the longer year all off some the And segment on us and into then kind of piggybacking of next just could see monetization then of term? kind you

we -- over how -- ability as but to be there's large-scale payment charge is of for that to I levels think well an the higher we that. over for in at access higher think is think really overestimated of ways to fit autonomy. We vehicle autonomy. going every for upfront can been charge been And the there's a manufacturers has most most the the can of monetize, much been this as of do it's level opportunities payments, done, to shown a monthly we and there's as around variety software feature. that And model believe fit about look the terms spoken We've before, to autonomy,

of of user interesting as charge we immersive some way have of autonomy some charging base the start off, AR, that, about the seats that the as think for feature the opportunities its a environment. the with or turning you and don't platform. But a beyond and a for the on like think idea heated ties experiences, lot is, a example much to vehicle the of we model a don't we for well a to an that's we heavy platforms. way those more land that, particularly and about be We it complexity represent lot We development X think of to development, what think interact that's much for sort think really of consumers, So X the or charging with going sustained binary complex, above software. incremental to it and think really like being that think going charging can of for more require -- that that features and great of

Alex is last question Our with from Potter Piper Sandler.

an Was on and strategy. I chemistry, update been historically, having us in-house, Perfect. potentially could working you've your own your if that you wondering own your know sell. give battery

your changes in forward about to You've what Any RX? now spoken also thinking favorably LFP. there you're about relatively and doing looking

long-term lens become very we rapidly raw that's the some over is of next the out that's And supply, but of materials. space look through one of we securing decade, clear policy, a if things upstream is of through lens this the both the evolving. supply of the also So as the

very of these implications graphite. also lithium lithium of around itself. thinking And each more and the raw upstream hydroxide, different nickel, manufacturing So much about course, has carbonate, recently materials cell

very integrate to like hydroxide little a something more tied downstream into course, bit and anode of easier chemistry, commoditized closely has to is supply. a whereas, lithium relation graphite, let's say, So the

we and the where been engage cell of building each so of upstream case effect the the in play, terms of with battery is to integrates an with those cell want the our credit those driving materials the really the strategy tax of the the in going and important cell we've each making a consumer given will RX, very that of relationships have of suppliers view, the and way also we've And point components of relationship spending is upstream suppliers, is behavior. that way from raw that to time that, around deals and robust with of advantaged this structured role pricing with lot a terms and upstream IRA in the sure of consumer-facing

the that some XXXX I incredibly overpaying on supply. are the of We upstream it inflating the are we're supply, XXXX, there's was, that of lot to of material do good made and would say, deals focused happened deals where in terms on challenging raw that have And some of and also lot sort deal. you table bad market of of beginning environment aftermath think think been the last rational So done in that, materials. some a into that exuberance, now I'd and watched out. really it I raw XX about months hard what in where particularly in play a more a in there of upstream the supply of if say that a of the upstream securing people

Great.

my to be next That Okay. going question. was

-- a many at So presumably, I to guess simple orders still them have you be is How left, in the one, be going last many maybe point do of backlog, cleaned? that Xst just what very one one. shouldn't completely there pre-March

the preorder well past, as feathered And Xst the whole. we've work orders base pre-March Xst as production units, originally, there's of we'll XXXX weren't in talked about they'll Xst Alex, introductions a pre-March especially variety and Dual-Motor as well. be the we a available include to to introduce will of course pre-March Max expand as to as new through consumers our and continue new in both orders, as more those Pack, which over

as as see continue well in feathered you'll pre-March to Xst So preorders together. orders, our both new

now to back to for the Scaringe, RJ turn I'd like call closing over remarks.

really us in to for last focus costs at up platform, the to importantly, say, but our excited commercial ASPs. material around of of we've point heard bill things really to, going looking the developing focus production call our spent the of to continue our our meaningful only demand, on We've to fixed part which, we're materials and building of achieving better year. today. from Well, cost working driving the go-to-market leverage, And out view, more to couldn't and said, quarter, on continue -- the volume achieving time, joining operations on us on a next thanks, to continue the not reductions over early allow and products on focused showing as RX we the driving forward next world you up driving be set in me about everyone,

out by the a building of As building and convicted customers long-term remain help points a our EV particularly around space, now the a love, of the around penetration, across course, resonate variety and price I want to transition saying, of the RX products we on. which, continues variety or factors, brand for form entirety that absolutely all and those in around building and platform -- look products we to that with the will deliver discussion transportation really committed to customers of we're just end penetration EV timing of our deeply

thank to that, with So joining. our Look you, next forward everyone, call. for

Thank concludes you today's conference participating. call. This for

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