Rivian Automotive (RIVN) 21 Feb 242023 Q4 Earnings call transcript

Good day, and thank you for standing by. Welcome to the Rivian Fourth Quarter and Full Year 2023 Earnings Conference Call. [Operator Instructions]. Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your speaker today, Tim Bei, Vice President of Investor Relations.

you Year us XXXX thank Quarter Rivian's and Full and Earnings afternoon, for for joining Fourth Good Call.

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

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

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

over call, shareholder encourage an Just I which cover for before you to our published read call. today's we we'll details the the items recent of the around it on some months. our letter, progress additional includes overview of

call with remarks. RJ I'll to who turn that, begin the will With opening over few a

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

During against conditions our update we're to taking market developments adapt progress during industry. on our and the I provide making key fourth to quarter, the value steps Rivian an drivers evolving discuss is will in our call, highlight

These as us driving discuss, as we a decisions, our to part impact XX%. Before the the I dive among have in, we plan ongoing cost focus other maximize I enable announced decision reduce difficult company. of employees amount the approximately salaried can by on to efficiency, initiatives difficult today internally to of number of

passenger across to with Rivian's customers. of an the goal billion long that next was the the a over industry, to the RX term. brand as of major transition. planet entire resonates means, accelerate decades. We build automotive cars hold over deeply combustion A industry the that X.X is with the replacing internal launch roughly mission this electrify deep This conviction couple will

we priced U.S. in automotive with to owner survey being brand the showed over conducted the the satisfaction top-selling essence the harness reports We for active unveiling the massive brand by #X brand intend RX, while the of owner RXS represents likelihood and on groups strength compelling the our which midsized be our consumer customers X. $XX,XXX, highest Beyond EV market an as March launch again. SUV purchase segment, RX Rivian EV targeting to beyond will limited significant with options a Tesla. this as

has been and RX user with create experience. software developed an electronics platforms, integrated incredible vertically propulsion to

Rivian's driving laser the deliveries, is strong differentiating team a on drive cost within These value. factors maintaining will optimizing focused Our our efficiency, include and customer control experience technologies, long-term the sheet. production Rivian that enhancing our balance in investing

greater progress we've made efficiency was significant and cost ramping The production XXXX. in driving

variants our deliveries LFP exceeded such vehicle initial managing integration During production and EDV more guidance the The as for X,XXX doubled this units more of than we and design Max and new and than battery engineering full pack. production both the drive including also for our vehicles. successfully complex our changes, packs in-house new achieved RX by platforms, EDV team year, while

vehicle time compressed new we in learnings be against foundational frame. Ramping This multiple gained will has technologies as introducing production XXXX platforms team significant challenges, our and our presented importantly, a plan. across experience but has execute

by efficiency quarter XXXX. of greater the fourth of We profit approximately fourth XXXX. to when driving steps in XXXX improved towards the took significant comparing Gross $XX,XXX per vehicle quarter

in urgency the I XXXX, team's efficiency start driving ownership sense organization. throughout we further continued mindset our and emphasize As to want of

steps deliver manufacturing design and to further the commodity of flow-through engineering position profit quarter capture with our of believe further achieve price second RX our reductions, of shutdown, we to cost downs quarter and in fourth improvements these incorporate platform, XXXX. in modest optimize plan integration supplier the the additional During the us material cost changes gross expenses. new We

context, to broader As to the address I which want referred I during we call. our XXXX, start industry third quarter

Our uncertainties, demand. the notably to interest of has In business high which visibility in negatively historically demand environment, the impact investment economic appreciate is from most expressed rates, existing impact and this not we geopolitical immune fluid interest community. the

conversion orders readiness. order, delivery factors, be sales The and location of can customer several to impacted of payments timing, including by monthly

the more impact Our doubled order time deliveries XXXX, along as reduced the versus due environment over just notably both factors customer XXXX the and to than macro of have bank has cancellations I referenced. in with

as to backlog well XXXX, our derived as be deliveries generated from expect For the orders our new existing during year. we total

achieve is focus key Our targets. our on to delivery increasing XXXX demand

is go-to-market providing our more on experience opportunities vehicles award-winning and direct-to-consumer growing firsthand. strategy importantly, awareness, RXT to consumers enabling and experience Our for RXS built our brand

months. We across our open the sites America, equivalent Rivian which are are today, program, we North retail locations. of scaling X And spaces have XX which have in of opened last most

Complementing have visitors for customers experience first spaces consider and this footprint demand more XXXX. the far centers one over vehicles. location potential so service another our XXX,XXX provided our We our demo quarter key strategies. XX as XX,XXX These in over and already serve sites building in to garnered than to be of current are drives

standard encouraged of customers. provides the lineup more for We're and which vehicles accessible We've by also recently point results. variant, early an our expanded range the price Rivian potential our introduced

The continue capabilities partners, customers, continue in of building go-to-market employees, leader our additional efficiency and support I will drive we our is taking deliberate develop including significant. a be vision, communities thank shareholders. all taking who suppliers, our to and the to RX electrification. to we're platform. as to would We're in those steps foundational in positioning cost action The opportunity as transition ahead XXXX Rivian like

the Claire. call to that, I'll pass With

long-term Thanks, RJ. reiterate I'd like excitement Rivian. for the to our success of

in to experience. differentiated the greater driving continuing deliveries, production to XXXX, all Over efficiency, continuing made enhance the customer Rivian progress X technologies, and value of investing key significant course cost we optimize drivers: in and

vehicles, revenue we for vehicles of billion revenue the quarter, Total million of quarter fourth driver $XX the sale included produced credits. of generated. we from which XX,XXX regulatory of the the the During $X.X and proceeds primary delivered XX,XXX was

over sale credits regulatory time, to to increase quarter-to-quarter. of the vary expect We but

For year XX,XXX XX,XXX delivered above the Total full XXXX, and than was for approximately of negative $XXX vehicles XXXX million. was which the gross produced more profit negative vehicles, our profit production. vehicle quarter was guidance initial double significantly per Gross $XX,XXX. we

going approximately sold new to with technology These the During depreciation goods vehicle associated of accelerated quarter, costs per and shutdown fourth costs delivered. include changes the $X,XXX cost platform. RX savings cost primarily supplier-related $XX million planned by the expenses negatively of were were related our XXXX expenses, other and into impacted design

costs our in shutdown term, design longer to and incur the in course additional business in we with anticipate associated part of changes we While not planned the term. be of normal costs could do these technology near the

Amazon's During due the we delivered higher seasonality. fourth quarter, also to expected consumer of a vehicles proportion

Amazon of proportion revenue attributed to XXXX. fourth X% of third our For XX% of the context, total quarter the versus was XXXX the in quarter in

to vans negatively our technology during material lower XXXX, costs the in made gross due have Given changes the commercial margin. quarter impacted lower delivery our the

a difference in addition, the million by XXXX, delivered compared goods was fourth of quarter unit to increase vast to $X,XXX on sequential in of vans. XXXX LCNRV benefited the third quarter Changes losses per quarter quarter and to in firm fourth million $XXX as majority approximately In this the related $X on results commitments the of inventory basis. our in commercial finished due a purchase of dynamic,

our the profit to more to of in we plan where shutdown. cost through want reach on material which variable represents I per QX XXXX. fourth of largest XXXX is approximately we be this gross to expect our part as bridge, how help will Next, XXXX modest cost from of planned reduce the The our driver, XX% The majority quarter fourth unit. provide reductions of clarity bridge our results to quarter accomplished

and engineering a as this contribution raw harness negotiated through reductions cost material commercially and As our ECU cost is reminder, downs lower simplification wire from such through costs. our

second of our focus XX% through driving production efficiency our The is representing driver, through greater the on facility. bridge, approximately

more line produce approximately our we increasing efficiently of part RX vehicles. shutdown, As the by XX% planned rate to are

also from and in see purchase balances a firm declining benefit We XXXX. to expect LCNRV commitment

represents we software-enabled remarketing Rivians With nonvehicle and are revenue of The to areas increased these opportunity services. credits, approximately such continue and service, we in the have drive our final regulatory revenues These we grows expect to drivers recurring XX%, car targets, and our offerings. for of long-term areas park is our XX,XXX core road, expand the margin to as as revenue. the bridge, the accessories, which piece over on the scaling

Our adjusted fourth $XXX the million. operating expenses quarter were for

expenses delivery full versus volumes represented production over operating the the $X.X despite same than doubling more year, of adjusted X.X% period. and our growth For XXXX billion our

by operating of employees. along approximately process the limited in are reducing we earlier, a mentioned our employees of expenditures nonmanufacturing our by RJ salaried with number optimizing hourly As XX%,

was quarter Our $X.X adjusted the negative billion. EBITDA for

$X just For the EBITDA our billion. year, negative under full guidance was our of

outlook remain business across our to for We efficiency driving greater the Turning company. cost focused XXXX. on

We guiding to Compared to vehicle by grow low the consumer produced we XXXX, to digits. total for single deliveries XX,XXX are year. vehicles and commercial anticipate

introduce As believe expect much the position to earnings quarter down reduce we our discussed weeks a XXXX Rivian normal costs the cost RX meaningfully on to profile. commercial changes the with technologies and platform. consumer during shut several margin to material we to We our in lines quarter's last second for call, plant will both improved these savings vehicle in and exit

as be will of over work impact QX, vehicle this facility the all prepare of the individually shutdown. ramp we for downtime a to as each well the output the portion chain While X then we as direct following anticipate quarters variant supply our and

the of changes units new first expect of with chain managing introduction quarter due As for our factory-gate the associated XX,XXX we quarter. to approximately for the supply XXXX, to materials, in

anticipate be updated will quarter receive but approximately fourth below factory-gated quarter deliveries. in vehicles, we expect be We wait as XXXX XX% delivery there part to are thousand built first not April. they the the an that few We to XX% more expect total a which to

Rivian incorporation more the are positions we new long impact profitable it changes over of While the confident term. better near-term competitive and be design to production,

expect negotiated RX, build-out on to and the design of while efficient also as cost go-to-market integration optimizing supplier We new expense development changes, engineering $X.X we a operating downs EBITDA our infrastructure driven the billion XXXX by of and our focus be more structure. negative technology costs continuing and key

focus build-out greater due our $X.XX be expenditures facilities, go-to-market billion, a the in to continued by on Recently, technologies expenditures XXXX taken expected investments our operations. production rationalize and capital we our to additional our are Capital measures driven next-generation of business. core to in have

capital the through We vehicle remain strong economics markets efficiencies aim our equivalents while ranging fund short-term operations confident unit that capital structure. and our drive We XXXX. opportunistically to to sheet and available evaluating cash, investments position of maintain Rivian a our cost across continuing to by balance cash a can improve variety

see gross long to the to margin our margin high teens target. approximately and target, free flow term, adjusted Over approximately we target continue XX% clear a cash XX% margin path EBITDA

the back line With the that, me operator to open over turn to the let for call Q&A.

Our John Instructions] of question America. [Operator first Murphy with from Bank comes

RX RX. dollars And same both that Just at the focus back a to forward -- Is pull to with just the of happen RJ, tinkering question better up pulling and misguided that it kind and just possible? kind all? on to capital, downtime that the of of and forward of and maybe on the RX RX on and on circling there RX high-volume maybe can or as versus opposed to program the leader? is the the that human and for forward the to getting at relative is pulling line the launch RX you Or constraints can't these launch and committing running time things the both curious, line

working hard program. RX Yes. Thanks, we certainly to the any extent deliver and time out very can sure of John. on possible, We're we to time make the

RX at a into I and the is top-selling the the price terms excited the the success which a in brand into of course, for RX EV look markets what has us of segment, think but just product, responded very is translate has strength point product with market. demonstrated hope, that to much and to about brand of we've of price we lower a how so Rivian And the if it's with $XX,XXX. large the RX our RX to over

the recognizing the back in RX. your think actually QX to that's to just key thing, translates shutdown content much question, is though, into I going of come the RX, how to

a ECUs there's of massive the So our in consolidation vehicle.

RX. vehicle, closely about is the them. very ECU in and in So that's what's design We consolidated the in all and the engineer computers We've which to related reduced XX%. that of number topology network computers we And architecture house. associated by

only of not with product. it derisks the so process development development and RX, that but launch And associated it's of part the sequence

have changing that just of we're to hundreds that, with a also engagements the components these RX. RX the and to to of And the that a that brings pricing number aggressive with with those associated regards corresponds of on with volume overall components those making that allows RX to we suppliers program. suppliers in to are changes Along number be supplier us linked that RX more out of

bill are very with as we X the which the updates our interlinked. ramp-up with business, the focus materials is to X sort the along production. really and for it much launch of line rapid of the And of the the and as business, the that part said, in with and think us focus of RX a major is successful So our about associated shutdown

follow-up. one just And

you you cadence kind product think with improvement is you're more a appropriate do the to life direction we Or relatively sparse X like of something ultimately product as that's XX look sort you the think product launch cycle about product, spacing the tack of the constant closer to to typical you're but of a products taking in is years to that in If heading? going sort interspersed way do many X-year of of land feel in Tesla the is future? X-

vehicle we When updates. stream of -- and making think a it customer the a valued that is sure we allows continuous things see architecture from most of view, for Yes. one of the the is platform about point platform

the the of so the with equity, brand us is level the a high. out repurchase that our over updates having And the software improvements. brand. high, where strength year customer making of satisfaction RX product, is for through we're continued the as highest consumer of The And extremely reports is in the of rates brand the if of is likelihood highest will, lot borne you

the And we a look dramatic think sort cycle. RXT, through in of shift of what RX. RX, learning And with launch translate, how just course, limited ramp-up we rapid the really supply trim on also we as so in into life overall launching, product vans RXS and with of that commercial in parallel, driving an went all we the vehicle launching number products the combinations RX vehicle RX emphasis where and simplified and combinations cadence we've plan. is efficiency we're build portfolio single a that's from will the really and think That into chain very with there's the RX operational about at managing of of

Jonas Our from next Stanley. Morgan comes question Adam with

sold question My of have I would what this first year to forecast is be of you volume the for preordered you follow-up. is how versus out And a expect that inventory? much

the around we Thanks, know that Adam. backlog something The our that questions does -- been like? there's just look What's is of what it. topology

in. a recognize delivery front speak, someone to ready of can what things there that they're to they're result, the we're moment. expectations moment backlog for them as to of of gets line, vehicle, it's so of situation coordination of delivery play those ready that make of not the -- our they number is of in need been at to take financing a factors are in have around all a we that on And that if to the the a the as and to terms new are, a their Life when customers the take One lot years.

delivering from will course be parallel happening are delivering about exist vehicles this through also this remainder And to But the our orders vehicles orders, backlog, will backlog year. recognize way we'll this to of so is that our newer -- be over to to from this the the year. in continue of think that

that backlog so is that a help that business And new created and transition, a make easier. structures facilitate we that to And demand where happen having for quicker. in, as go us that deliveries a having from from we've a transition delivering are little folks much few purely coming customer-facing to those

in shop, We've get vehicles be this is how created customers to the common still, to to of which more to from And the something questions can we get get access I build of my allow most more to put we call common day, RX quickly. quickly the there combinations those some one vehicle. allows customers

balance been the of that manage customers the years. to has managing expect along so we're wanting that or of buy to week have cases, dynamic customers learning year. it in of they X to get over have to something waiting And they within X vehicle, immediate to have course That balance navigate been the we a and continue that X, with gratification a for, some or do

just changed in so a much, environment more follow-up, the the as a IPO demand ways, and RJ, pretty And EV moderated competitiveness economic a Okay. in of lot and boot. since world XXXX has uncertain to

that the adjustments wondering just or the into $X right Or Georgia whether committed your 'XX. terms go to to has going strategy the on in Georgia, greenfield in still you that own management partner? units, integrated, how board fully now you're at go option with XXXX to is strategy? pretty billion alternative team, in with I'm XXX,XXX and So some are the vertical for any Board ahead the the consider of size a kind much least it of you or Or

out Georgia The our Adam. is phases. the to across Thanks, plant approached build X facility way we've

rather So single two a it's block unit not XXX,XXX blocks. XXX,XXX but unit

price EV you $XX,XXX. was to vehicle to transaction the United average electric interesting compelling in I electric recognizing highly do we of the the transitions in $XX,XXX price last we're a raised that in of is in new around around think a fast States year point just where for lack think moment very vehicles, products that there demand broader of range, overall market the vehicles, a choice time $XX,XXX how

of into so recognize directly what's look buying And EV the get exists, the with the often we're electrified, like competition drawn X% to to when the Tesla. the talking meaning really, that's that we -- for technology the look the interesting configuration, we Rivian bullish unique seen an demand the think, strong package, resonated immediately very at product. only recognizing competition we market and product. we've creates do really we consumers need we course, And XX% not a how we're content, has RX the and what very get there. RX that layout about in competing get of how market about the But of the the has configuration that And excited in with vehicle, of

bullish We very segment on the itself. product RX RX and the remain

the the engaged laying scale I see we suppliers production we measured, out course over of scale across as map, thoughtful that so of with road as of well effectively And as been opportunity that described the ensure our and transition happening decade. phases, ramp albeit much X that way we've to can this the of this very the has the

comes Spak with question next from UBS. Joseph Our

reduction, I stock a of XX% sort it's 'XX, Tesla workforce But because different you're sort under and back billion sort Claire of sort a like know workforce OpEx how focus now get is world. still where a at but if the of if really in been I similar little RJ, at and it's of sales that the because ex if here, level you've is look on the above this comp But you right on was I of -- tough bit even you're we the XXXX, know, XX% like level just -- just some could that in that -- Just and comfortable -- cutting by sort that. But gross understand do profitability. obviously decisions. I focused on maybe of $X

just plans on could a maybe color So forward. us there little you the going of OpEx sort bit give more and

Thanks, of Joe. when we Yes, think number a OpEx, about here. there's components

on if look internally apart first So to If recognize at it break we SG&A, category at to look side, the of certainly R&D when have against as we big R&D -- just comparing while We're to all. XXXX. at -- Tesla we and types between R&D well. the competing not at others and XXXX, against in in we Tesla these useful We're and look of in competing Tesla metrics XXXX.

incredible driving we're and so develop efficiency on focus our And products. we how

spending internally there's long-term course, high-voltage electronic structural we've computers in-house capital of talk does also significant core that's to really for ECU appropriately be the advantages, that efficient the and running The to to a few develop about And areas across the architecture. the the us, and it turning into in We in topology require those stack believe areas. at vertically amazing made so computer But most the being create vehicle. around on we vehicle, throughout products. our decision software, that's and what us be the vehicle then the to

control So way provides that sourced computers, high-voltage we the system, to experience consumer And will really of the areas it of those topology of the But that's to opportunity differentiation in the we also through do because vehicle. our and technical to seamlessly compute the stack computers ECU the allows markedly what have ECU unit us the And that. that's believe battery smaller than that a is run course, driveline, out a wheels. And we ability third-party and in creates advantages. drive design that the so and much rest number consolidation through strategy more those a different cost deliver. the all and front, much it here better it's see both biggest meaningful

a the into on I first on efficiency focus, as that's So been said, R&D driving front, big has that.

associated with, of a or RX. program RX of for the spending the R&D headlights for but within do is this our with portion also employee costs let's the as entirely base, it supplier seat suppliers. And say, with big has Now development a to think we

suppliers feed driven, long-term linked referenced negotiations into And are I we're much RX supply RX, asking to this that around where the also strategic more so earlier, a lot being that with suppliers will those to of relationships which of instead suppliers much like have. to we the those lot with we've what historically where so to partners a seeing suppliers that of treat recognizing having clearly is market upfront, dealt the and us much strength more pay our

all of lot. dominant from competitors, And relative seeing market completely view. position point I a That's these and our RX volumes suppliers are to our competitors, especially it's of see share changing they a really mean those nature of prelaunch -- which the with about we lot OpEx on really suppliers, impact about in costs. the us it discussions We of course, of the talk think side COGS, but context through development it. our does with helped a the providing

that in recognized all just OpEx, said, today the course. part want business. network. the SG&A I moment We're network. with other ultimately we're where of the good And fact, distribution be But sales here COGS of and a Now costs And particular, do over driver it's to of a this building we're as because spend areas And time, front, out service of on building OpEx. number these In structure. a this a profitable service become big service side, our out will a of is at our course, point almost OpEx. of our on are part of service on

certainly of our this, it SG&A minimizing here. as scale We're referenced not the Claire the focused to business. so we And we and can continue to on very spend more growth speak

a becoming in of the over SG&A said, years, we're of are of very the and costs I in while of tailwind profitable. the So vehicles the supporting field couple of the really and hard scaling a is next dramatically as today, organization, embedded has the that maintain we're becoming to grows lot COGS number business that those side and SG&A lean actually working

Okay. And on maybe then just CapEx.

'XX $X billion of it's about that's 'XX, below true, with guidance. but now guess And billion. below I think I significantly talked sort a last quarter, $X you XXX average, pretty the technically

there spending? there that so, if to? is was shift And in further So what -- sort a does of relate capital

Sure.

broader about focused we As first driving on and as think foremost, about, RJ the heard company you efficiency across a whole. as we're entire the context, talk

across given required what the to shift achieve, the CapEx these reduce And been it's us allowed so but company, look able we a as us as or within out efforts dramatically to we've the CapEx, whole. business not at enabled just

able it's, that's invest RJ out around investment, there, areas mentioned, our we're and CapEx and by with in the of locations the between our as pressurizing infrastructure it's some rerate in activities of And to as to engaging around how well. taking all efficient continuing so go-to-market normal whether it's of well suppliers product whether logistics investments service enterprise tooling tweak as tech the as efficiency investments, whether operations' and of all of sales

just but is, I drive so And think efficiency of really efficiency continuing of just seeing to you're and mentality our across that from culture what we're expenses, cost us managing the key which we're and sold it's well, not CapEx, really operating the inventory our equally we'll of which through are as as our thinking goods manage in balances our way X focuses across how business.

Rod from comes question with Lache Research. Wolfe next Our

current standard the word XX,XXX out get day. to some little from you're of improvement Is around your XXX said that going you in a kind or the you're run an of And that about projecting reflective XXXX it be strategies. driven the to here forecast requiring offering? is that. the of about what or go-to-market strategies rate release impact comment advertise rates, about in ask variance order that talk bit There's deliveries unveiled you've reasonable What to is can assume I the a going you're it's order how seeing planned you the wanted in like and QX a you're the to by the leasing?

by it's the that you we've but early terms it, Rod. encouraged does available read the referenced customers. ultimately, through launched thanks, demand to which our but that of important just some long about, really now generation. Well, and note just what talked it's to Sure. we're recently And here, Yes, we've on in Standard reaction pack of to variant,

really in is for as driven seen for question our to links but which Center the Large it's demand an in awareness key that and has noting demand increase our pack customers, is It's increased. here, not implicit building. only what Quad well. element We've and also your actually continued growth we're pack worth a And the for more price-sensitive

driving And our for so how significantly brand has of customers up. the we the the really terms knowledge product auto think the products driving like industry. and been entire across being likelihood It's strong knowledge when key of us with for brands, the by the customers of repurchase the high a and in how of about element excitement highest awareness

to so that of a the go-to-market do And our investment my in opening lot has building more letter infrastructure. referring that to said, I the comments in and with of was with out

spaces. XX have we Today,

over offering We vehicle service in our not those but experience getting spaces, orders of test our effective the -- to locations We're most far, actual way by customers drives locations. brand -- sales. way convert along but vehicles into that vehicle to the is XX awareness brand through drive only that have and some just now with service

And so interaction up a associated within the lot the building supporting with going course these the be with functional infrastructure products. to months over playing the physical to also of next of continue out few activity is business capabilities and the

And any the right Okay. behind just Amazon? demand you year? seeing -- can what by outside on rationale of and given capacity update of the expanding end now, you're the this EDV at discuss XX%

lot clarity. repeat we coming just in Yes. of shutdown said to happening it quarter And tends plant. around for within before, the what's to have drive here second next in the a the but thinking think quarter, I -- I plant, And towards the the that

our most what's chain. is the the parts actually of supply important of within happening One shutdown

of means scale supplier coordination changes, changes existing multiweek that bringing requires change of are making that to plant our down very through a a winding of chain of the in component in that material want of multiweek supply and changes inventory, And to up So restart of line that do And to lead bill inventory and and with making significant cost. of new that reductions of the make clear. I the our number the the shutdown, shutdown. we're materials well. with number our supplier the amount along improvements as we

within year. that And more the -- a rate post the through the at run a we and costs, on plant line this hours operating rate per and look ultimately manner. ability conversion line in increased And translate line at really reduced unit to therefore, a of improvements higher lower focused are rest the more as to will speed the efficient shutdown

Okay. And demand? EDV the

programs. have Yes, to really is the something We're we've customers this in running past. excited talked pilot new about

We commercial frame. pilot more we have these of with spotted in with transitioning fleets side. coming as past, fleet, and on the with to course of logos start we've online. larger And time said electric more associated XXXX programs orders. our guide images we'll complexities the associated more significant next then the to in an And careful year, customers, transition There's of the vehicle been -- these as scale see and don't in But the we large this demand to the really over non-Amazon say these into for being expect vans anticipate. And different we've year pilots. step-up that to that

comes next question from Canaccord Our with George Gianarikas Genuity.

previous questions. back like one just to to of I'd the go

-- XX% anything down with the the there of do sequentially. by QX reasons to Is just you supply? Or the you informed of you that? that behind made understand us Can just delivery around cadence said to down understand demand? help was XX% the to it kind Just comments

her opening referenced remarks. Claire this George. in Thanks,

thousand won't accumulated deliverable several lot onetime the to vehicles to the supplier And with a quarter, that working some charges we're changeovers we going QX. We're we're that this already in During of And we're -- along of them. be that on, more in of that going to the feel to to building saw the QX. it some we consumers. of feel in start that, of going impact be

those we won't factor-gating vehicles be QX. in So

QX we in And the in it than achieved lower QX. what was the you what than see so reason guide production that's

while are translate be And as the that we in won't to shut plant that the the of our deliveries we're scale to changeover is making. feel And going into impacts down so going ultimately QX, supplier start of well. to the

get said, can those the and quickly quarter. in So parts can as available, then to built to to, second we be we're once make as with that everything going vehicles doing deliveries those are we the

just as Maybe to a follow-up understand.

cars informed road, think, What going I you're that road collection. to collection XX,XXX you lot maybe learned from and sure data product has a what to on have, of the being over date, lot them you've into data You RX? put I'm about on a performance and the the

Yes, lot. there's a

us with track of watching things I access and in are to digital and app and vehicle. interacting within surprising And just that's mobile experience use work the the of customers been overall experience with of One the to is we vehicle. the how should the vehicle the of the say, interacting digital or most the vehicle -- the the ecosystem translates app how into closely really and mobile

of it, goes usability, the that And terms to experience look so continuing element and even terms this together functions seamless. features at a the there's road at enhance you the we vehicles, of vehicle of of the make around let's the those software easier to so some And do that everything activities our as long around more interactions it's puzzles some in build in entertainment the coming looks year, that capability some are and can the in. dynamics, in around we strategic, form that way call in in map, how of partnerships, digital

the said, spending, lot around have vehicles the on then how played out sold RX us the weeks and to of placed used, being that all excitement only around we a are points lot that groups drop the there's drivability, but X, goods notes really into how of we're importance not learnings that that go we're on beyond that around you if where comes and address feedback with to we prioritizing of on into every feedback software I get customers of a active the that. what's also cost forms, other shape With RX show out product. we're user And every release update very helping joy RX. safety we will, the excited of then gone But and X dialogue send our with with those. have very a And active

Rivian-ness, the much the price smaller But around a package important a trade-offs brand lower the if vehicle sort what in to months it We or at content of had same price of lots over that it's as point. form will, time and and, to elements the we've that Rivian, a XX the really at debates in course, and to a product, a certain the needs last most lots deliver captures achieve point. factor you need and very lower be think still as the to while but essence recognizing of on be of Rivian made

Barclays. question comes next Levy Dan with from Our

a question to commentary the to on margin would wanted breakeven. improvement cost just with a the gross wanted a half from I different. points bridge from and I versus -- absorption; from that given But volume volume, which your to start recognize I a And or come some maybe targeted. seemingly a that just think breakeven the quarter fourth believe improvements; than to what price. environment, you maybe cost starting second, Is cost prior the you've still And margin quarter enable and gave, you're contrast on I something breakeven? weaker the is breakthroughs gross are of that further that anticipated? get just on reached margin offsets in you just incremental improvements pricing, price variable previously are if if to I on this comment it questions the that you RX previously the quarter what seeing you could for from just you

Thanks, Dan.

'XX bridge As be of lasts modestly to piece which we you largest the from QX heard gross bridge variable in my in to QX cost. profit XXXX, positive is in prepared remarks, expect -- the the

so RJ about by heard the as that with to have continued enabled prices suppliers. opportunity And speak renegotiate you we is

is have enabler now from which an has board for to We coming material care us get took next, the RX, costs across lower context. which of been to a commercial

design the part the that drive ample largely of is product planned which shutdown. cost have, engineering go into will as QX efficiency also that the changes unchanged, We

year the commodities incremental XXXX areas in is a today have our on relative more board continued from opportunity last prices that across the seen bridge we then well. this what a we've And really have the the lithium seen to where call of a where to ago and been tailwind board across as we've QX context provided earnings bridge soften

lever you rightfully for the elements, as look us absorption at cost other right? The of today. noted, smaller fixed bucket a As we is

As versus associated of we in think driving XXXX massive the change with efficiency about as underlying guidance. more the a step the continuation our lever, volumes operational

delivered ASP, you've seen the take us last vehicle per XXXX XXXX. element revenue of QX-over-QX to an then And on from incremental $XX,XXX

the lot a of already side And made equation. of the so we've ASP very progress significant against

directed remarks more what our prepared And really was of so on we the services revenue some non-vehicle-related opportunity. in indicated

of sales So regulatory of that's credits. continuation

continue for ASP that us will for Rivian business future build opportunity software-related to to broader streams and in to starts the driver car RJ add as or well, as we the about revenue is enabler a what additional expense, more that's service sitting the whole. in And warranty as the of COGS spoke as that key offer to now SG&A park. just another opportunity today become will the within

close we impacts by is line in your were the and see of the driven of QX achieving as as reductions question the shutdown will continuation to On our future have to very in profit QX. the in contribution sight, vehicles. current by our We gross second direct that of evidenced committing positive margin vehicles around positive contribution priced to the material look cost QX and our for

And a limit Great. that, from volume if would side. the think then and you you doesn't think you I beyond of some the Are the as on is the do planned, do go-to-market coming how that about how about specifically, volume And think most maybe strategy. get you're that price the materialize of elasticity upside? be pricing potential if Or pricing? on that hold maybe looking to But there beyond actions? firm order have here? follow-up for do looking demand demand book it we incremental just the And of at could you the

seen thanks, variant the to very we've like -- and as environment Dan our environment ]. that. the at launched is (sic) and date, George reaction of we're that. how RX looking pricing indicated, really And Yes, encouraging looking overall and we've monitoring understanding what macro [ just pack. Standard to I the manage The -- to with recently We're lowest constantly price

that is and behaving. there this again, this wide how on of and as elasticity feel the pack function of of pricing environment, a open in demand -- and sure. the we is But recognize this and to with the something point, for So price, Standard the this reacting at comfortable go the is is we market how eyes rest rest have but market

Our Delaney next Sachs. comes from question with Goldman Mark

Yes.

software I hoping I services was the to think, business. of understand and the your around drivers first, part better

quarter this fourth I software the XX% of think is and the year improvement profit by from of gross services. about coming

the credit terms number that things for can order like rank offerings of some year? regulatory of are this charging, there from about, you services that you've what you of XX% drivers us in getting see You've largest maybe spoken a sales, insurance, got to coming software

there driven the by driver regulatory credits The Sure. increases we in aggregate. biggest in that is saw

we driver. see But we us, beyond $XX had of continue for year resale value from million. entire for the important overall. was business driver the the is sell and service repairs $XX an in to as Rivian the sales so opportunity a across longer well, that, our standpoint; regulatory had think in and and for continued the largest the alone And QX efforts in million which credits; to maintenance market That over the growth term, we remarketing;

type Rivian a as capture we're second about of the both rates which key We've business greater November vehicles, our launched think by as of now ongoing evidenced new customers to to penetration the which for addition the in us been financing financing existing also year, also able as to very significant of this that's we've renewal across leasing, enabler been a customers all the sold introduction And has share we annuity are encouraged of their well. that insurance year, well. our financing business, in while by of revenue entering we straight streams for driving an as strong as portion seen equally,

we're board each to more drivers And are software-enabled the these future. tailwinds the of a have strong continuing in the broader across map so of key to from and see road services of excited

My how second be cost point. the fixed this for input might to understand at question XXXX trying environment was

like have on price. in of already changes some certain either and year. lithium firm about move spoke there's a that get a order And some I mean can gotten to you in suppliers, materials? oftentimes, similarly, things these around mean I throughout you You requirement volume with commitments little bit the battery a pricing.

there opportunities spoke around But volumes paying be of some XX,XXX approach are cost to the extent wanting You to what partnership with terms and taking Rivian. some risk that the the with than production is less the the suppliers a target, longer-term be are? involved the you'll as of input RX up in end well your around

you the $XX by have just I already, about a over Mark, dramatically the lithium Yes, referenced but changed hydroxide mean supply chain kilogram specifically battery the is year, within costs of kilogram to from down in today. raw a last material Xx $XX north

overall a has on our very that structure. significant impact So cost

contracts went in commitments industry a making place in in are where was us. those XXXX, and those off off operating a suppliers contracts in different of XXXX, that be we've been to Rivian very us was operating health and different with environment of that just date, the where into RX, of previously. overall sort thinking of materials the seeing about sourcing different we're billing and And for about think a the than supply had dramatically we what when we source lot we overall when we've getting just for to the very to position negotiating position been a chain material and costs, But

what really see customer, or negotiating and relative a those leverage. experienced some engaged, now other the supplying about they've they done as have they us the some and looking Fast RX firsthand would those with to OEMs established other large are products what us, nearly And well forward what's much those they they large of thought not of they basis, as to a manufacturers gives highly at product. same the and on it And that as products, meaningful see very would. a from comparing very challenges suppliers coming enthusiastic thought and today, of us

with on remove we our price that meaningful And company. have to that we've cases, before But reductions in able supplier on to suppliers of able in and been have us we've new a on where cost negotiate premium bring suppliers goods relationships with our many existing would very been associated we resourcing sold focus down new active ending been -- we haven't and a been do those any cost cases the And driving relentless paying being of on that, through activities. suppliers. bringing

if time; not changing a where supplier, bring changing both either we tooling out the the Now the in we set press cases happens we've as immediately. there's part I button, can and there's as then, single by this production. coordination and of started the the the There's that the a be chain design up it said, or consolidated transition. it's far largest had of supplier; the of shutdown, since will And supply changes we're

we this similar And material making a EDV we're we the here changes is we the we shutdown set down, components planning that line made quarter of cost on that, shut But on we're XXXX when of and of of had achieved bigger RX early with part of of of terms changes a and year. out reduction the XX%. the in number second suppliers of in of scale meaningfully number the

comes Our Deutsche question Emmanuel next with from Bank. Rosner

how understand better and can strategy. was the me helps hoping your the you help introduction Standard of I with packs targets

now, savings to the incorporate that with is battery probably Large not I chance had to but it cetera. perhaps like shared and pack plan, lower previous price pack, was of doing like you've smaller, point I the by But is think once some guess XX-kilowatt potentially may much efficiencies, you a I et actually packs or us, the below the cost the $X,XXX it and smaller. battery have think introduce

like of without of cost it much cost it's to a price it. bill material feels large of So a

curious, volume getting breakeven And that help you fit gross in in scale I'm to the with does margin? Where terms of it so equation? it does

a use of able battery But lot a X We has you we strategy price-sensitive also curve. the with access really most the it forward Emmanuel, sizes. a been our customer pulled are part demand and real understand as into what long seeing Standard answering quarter said, to were to intent overall customers that to we of request chance Yes. this us configuration. different pack helps looking as really to as it pack And have the of better the ultimately, the this customers.

configurations we we look then really our we we pack our our at when had recently, that had and Quad Max with different up motor And the -- offer, until pack. Large

we've the -- the of price affordable hadn't variants built in our we but brought high were more we out of So side portfolio, RX.

the And fact excitement so that customers, only really that what may encouraged said, immediately not it's we're our by obvious. not be as which driving is the most awareness, somewhat I price-sensitive around for, but

it more well. pack is motor what driving But demand our for as is Large Quad

quad aware seen becoming we've by the supported the becoming in that Quad folks step-up the orders or in pack Large to of by or the Motor. the new upgraded recognizing the Large, vehicle range the So getting but comes a actually for then performance Standard for pack, or are which that that they'd either drawn aware willing is upgraded of be brand, with pay

only on topic risk from this like as a pricing gross there And follow-up towards the in If piece breakeven vehicle? existing is a is the at obviously, revenue pricing. Understood. any I'm sort your the don't on staying walk -- then, there then of and quarter, of looking one. pricing of it's about adjacent risk positive downside fourth I margin

I about were is specifically the selling cheaper obviously the mean pack. before. the of thinking introduction This vehicles I'm Standard you than

a on that extent, else equal, to pressure And put certain so some would all pricing.

not of the that why So any reason part be would walk?

course Emmanuel, our ramp. year, throughout lever the of as mirror production we'll see we will that think the about the ASP fluctuations

across we'll our vehicles board. of shutdown QX, So production Standard start, with following our in pack the

And ASPs packs But available park streams, as a spoke a that the within by were that a that equal drive is a QX, of is driven which RX about, whole as offerings revenue fluctuations within period, in higher suite year, year. many to XXXX in the the of throughout increase servicing portfolio market. some get that to time us see see whole, from So we're while concentration you next that by allows we'll which of additive nonvehicle on the car course of I really embedded of full will there QX the of as driven by have QX levels aggregate the Max higher then bridge. you'll larger in we be more as ASP the

to closing like remarks. turn call the RJ back to I would now over for any

we're spending excitement incredibly and today for a to everyone, discussion questions were building able excited with brand continue progress with the on company, our we for the as thanks, for of towards ramping the RX of Well, our component that, available really time us today. the talked launching fits customer looking will forward of fits that's a really strength an that We're business. think and March of drive what that and thoughtful And we've is, the as have. to largest and about showing we market and and a profitability to in of X. a about of the course, and product segment embody important our that on will the in unveiling which line, And context be that RX, learnings showing of lot product demand the make

So for call. and to that, the time forward everyone, you, look thank with our next

your you participation. for Thank

now You disconnect. may