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Speaker 1: Shares a Rivian rose for a sixth straight day, and

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Speaker 1: they're now sitting at a five month high. So let's

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Speaker 1: take you out to Irvine, California, where Bloomberg's Ed Ludlow

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Speaker 1: is sitting down with Rivian CEO for an exclusive interview ed.

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Speaker 2: Yeah, thank you, Scarlett. We are here in southern California,

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Speaker 2: not in Normal, Illinois, where the main factory is. But

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Speaker 2: it's really important here because a lot of the R

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Speaker 2: and D and engineering work that goes on here then

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Speaker 2: gets translated to the assembly line in Normal and that

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Speaker 2: is kind of the story with this company. RG Scarrange.

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Speaker 3: Hello, Hey, goodness, see you. It's to see you.

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Speaker 2: The last quarter was a turning point for production, it

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Speaker 2: seems what did you fix?

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Speaker 4: Well, you know, we started production now about eighteen months ago,

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Speaker 4: and in the first twelve months we launched three different products,

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Speaker 4: the truck YESTERV and then a commercial band and the

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Speaker 4: complexity of launching any product is incredibly high. But to

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Speaker 4: launch three products in parallel with a complex apply chain,

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Speaker 4: we really felt that.

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Speaker 3: Last year we.

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Speaker 4: Saw it with shortages the parts, which then led to

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Speaker 4: shortages in terms of what we were planning to produce.

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Speaker 4: But what we saw in Q two is really the

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Speaker 4: beginnings of the supply chain now really running in a

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Speaker 4: healthy way. I joke that we had a board beating

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Speaker 4: a few weeks ago and it's the first time in

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Speaker 4: a board meeting where our supply chain slide had no

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Speaker 4: red on it. So supply chain is healthy, it's keeping

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Speaker 4: up with production. Importantly, it's not just what we saw

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Speaker 4: in this quarter, but what's to come. So the continued

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Speaker 4: growth in production output, which is one of the most

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Speaker 4: important levers for us in terms of driving over all.

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Speaker 2: The point is that you have visibility on the supply

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Speaker 2: chain and you see that you have enough parts coming

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Speaker 2: in to get the ramp you're expecting.

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Speaker 4: Well visibility the supply chain, and then really for us

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Speaker 4: running and operating the plant.

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Speaker 3: As intended.

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Speaker 4: So there's certainly tons of efficiency improvements that we know

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Speaker 4: that we can make throughout the plant, but we're now

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Speaker 4: a point where we can be much more predictable to

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Speaker 4: say we believe we're going to produce x number of

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Speaker 4: vehicles this week, this day, this month. And given that

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Speaker 4: the supply chain confidence is there, and given that our

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Speaker 4: operational sort of experiences is so much stronger, we're able

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Speaker 4: to have a level of predictability for the business that

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Speaker 4: in the first twelve months we really really didn't have.

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Speaker 2: Some are asking why didn't you raise guidance then, because

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Speaker 2: that plant on paper is capable of building many more

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Speaker 2: than fifty thousand units.

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Speaker 3: Yeah.

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Speaker 4: For you know, one of the other things we've gone

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Speaker 4: through is just being very much thoughtful in not wanting

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Speaker 4: to over promise. So we want to we want to

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Speaker 4: make sure that we over deliver on our numbers, over

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Speaker 4: deliver our targets. And you're knowing all the unknowns that

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Speaker 4: still exists in the system. The supply chain is much healthier,

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Speaker 4: but wanting to protect for just some of the unknowns

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Speaker 4: that could happen.

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Speaker 2: How much did the introduction of the Enduro motor had

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Speaker 2: to do with the ramp in the second quarter.

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Speaker 3: Yeah, So we have just as.

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Speaker 4: A point of context, we have a quad motor set

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Speaker 4: up in our our one vehicles. It's two motors per axile,

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Speaker 4: so four motors per vehicle, and we've just launched a

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Speaker 4: dual motor setup which leverages a new family, which we

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Speaker 4: call the Enduro Motor family. And that Enduro is completely

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Speaker 4: built in house. The rotor, the stator of course, just

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Speaker 4: like on the launch configuration. We build the inverter in house,

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Speaker 4: the yearboxing house. But when we sourced the power semis

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Speaker 4: for the inverter in Enduro, we sourced in a really

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Speaker 4: thoughtful way that gave us enough capacity and much more

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Speaker 4: confidence around that supply chain than some of the challenges

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Speaker 4: we've had on the launch configuration.

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Speaker 3: And so that not only.

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Speaker 4: Provides a high confidence production capacity on the Enduro, but

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Speaker 4: it also provides risk mitigation on any shortcomings in terms

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Speaker 4: of supply on the quad motor.

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Speaker 2: Yeah, the big news of the last five days is

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Speaker 2: that you have you're out of the United States. Yeah,

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Speaker 2: a small number of Amazon EDVS Electric delivery vans are

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Speaker 2: being shipped to Europe Germany in the first instance. Why

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Speaker 2: was that significant milestone?

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Speaker 4: Well, you know, it's important to get those vehicles. The

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Speaker 4: Amazon has a lot of business in Europe, but it

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Speaker 4: also represents not just turning on production of the calls

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Speaker 4: it a shipped overseas, but all the supporting infrastructure. So

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Speaker 4: we have parts, distribution capabilities, we have service capabilities, and

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Speaker 4: the EDED program is really a wonderful way for us

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Speaker 4: to open those markets with highly predictable and planned service

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Speaker 4: intervals and deliver intervals. So it's the beginnings of us

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Speaker 4: opening up the European market for our products.

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Speaker 2: As you know, I always ask Twitter, what would you

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Speaker 2: ask in this case? RJ scaring? Lots of people want

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Speaker 2: to know about the Amazon relationship. You don't break down

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Speaker 2: production by product type are one to and S or

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Speaker 2: eDV but a lot of people want a sense of

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Speaker 2: how many vans you're building proportionately to your consumer products.

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Speaker 3: What is the main part of the business over if.

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Speaker 4: You think about over the full year we've guided to

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Speaker 4: roughly twenty percent of our production is the commercial vans.

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Speaker 4: You know, as we think about the business going forward,

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Speaker 4: the consumer side of the business will grow disproportionately relative

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Speaker 4: to the commercial side, especially as we bring in our

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Speaker 4: nextion products, with the R two and the R two

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Speaker 4: platform representing a significant stuff up and volume and a

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Speaker 4: much lower price point, much larger adjustble market with that

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Speaker 4: with that product.

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Speaker 2: What is the status of the relationship with Amazon? They

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Speaker 2: have exclusivity, but you would like to sell vans others

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Speaker 2: in the future.

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Speaker 4: I mean, the relationship with Amazon is outstanding. The van

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Speaker 4: is loved by the drivers. There's lots of content all

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Speaker 4: over the web on just the creature comforts we built

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Speaker 4: in the ease of use, The operators of the vehicles

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Speaker 4: are feeling it, you know, with the increased efficiency. So

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Speaker 4: we've we've we've done I think a really nice job

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Speaker 4: of capturing that feedback as we went through the development

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Speaker 4: process to make sure the van delivered.

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Speaker 3: We're now in the final.

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Speaker 4: Hopeful stages of negotiating allowing us to sell the vehicle

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Speaker 4: outside of the Amazon relationship to others, so that the

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Speaker 4: exclusivity provisions that originally built into the contract accelerating when

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Speaker 4: we open that up to be able to sell to

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Speaker 4: non Amazon.

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Speaker 2: You are running a business and you're only delivering around

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Speaker 2: ninety percent of your production at the moment, nine percent

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Speaker 2: of your output. How sustainable is that for Rivian, Well, it's.

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Speaker 4: Just an artifact of I mean, long term, of course,

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Speaker 4: production and deliveries are going to be equal. Because we're

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Speaker 4: in a ramp curve, and because our plant is in

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Speaker 4: the middle of the US and a lot of our

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Speaker 4: demand is on the coast. We build the product, it

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Speaker 4: then has to either get loaded into a train or

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Speaker 4: loaded onto the truck and shipped out, so there's a

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Speaker 4: bit of a delay between the produced numbers. And then

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Speaker 4: the delivered numbers. But over time that becomes deminimus. It

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Speaker 4: becomes a very small difference between production and deliveries.

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Speaker 2: Would you consider a franchise dealer network or something outside

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Speaker 2: of the current Ribbean business plan or it's just not needed, No.

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Speaker 3: It's not needed.

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Speaker 4: We really just aret you know, our plants in normal Illinois,

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Speaker 4: and there's just not a lot of demand immediately adjacent

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Speaker 4: to normal Illinois. So the activity of moving vehicles to

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Speaker 4: the demand centers is always going to be present, and

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Speaker 4: that doesn't relate to direct or indirect in terms of

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Speaker 4: the sales process we.

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Speaker 2: Toal it's about in Duro in this sort of read

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Speaker 2: through benefit for power semes. What else are you seeing

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Speaker 2: in supply chain. There's a lot of talk at the

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Speaker 2: moment about metals and what China might do that will

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Speaker 2: impact the metals market. Are you seeing any of that

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Speaker 2: in your discussions with supplies right now?

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Speaker 4: Well, I mean, the probably the most significant that everyone's

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Speaker 4: watching is lithium hydroxide. And you know when we launched,

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Speaker 4: when we were planning the vehicle launches, you know, lithium

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Speaker 4: hydroxide was well under twenty dollars at kilogram and then

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Speaker 4: spiked up to close to eighty dollars at kilogram. It's

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Speaker 4: come back down a lot, which you know is great

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Speaker 4: news for us. I think it's great news for electrication.

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Speaker 4: So that's probably I think, not just for US, but

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Speaker 4: probably for most manufacturer. Has been a core focused point

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Speaker 4: just in terms of cost of an EB But that's

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Speaker 4: not to say we're not paying attention to nickel and

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Speaker 4: some of the other core materials that go into a battery,

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Speaker 4: especially in the context of ray oh Ja.

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Speaker 2: I want to take a pause in the sort of

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Speaker 2: minu shure of running a car company and ask about you.

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Speaker 2: You turned forty, you founded this company in two thousand

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Speaker 2: and nine, you're a founder. The uh you know, you

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Speaker 2: having fun.

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Speaker 3: I'm having a lot of fun.

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Speaker 2: Yeah, you really though, I mean, yeah, it's.

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Speaker 3: It's tough, but it's expectedly tough.

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Speaker 4: I think in starting a business and starting a car company, uh,

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Speaker 4: you don't do that expecting it to be easy. And

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Speaker 4: in some ways the challenges today are so different than

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Speaker 4: what they were ten years ago.

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Speaker 3: Ten years ago with very.

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Speaker 4: Small team, without enough capital, without a brand that people

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Speaker 4: were excited about. So we're sitting here today, customers are

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Speaker 4: really loving the product, you know, multiple multiple accolades just

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Speaker 4: around how well received the product has been. The brand's

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Speaker 4: really resonating with customers. We have demand this, you know,

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Speaker 4: beyond what we're able to produce today, which, while frustrating

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Speaker 4: for customers, is a is a good situation, you know,

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Speaker 4: good situation.

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Speaker 3: To be in.

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Speaker 4: And then what's coming next in terms of future technology,

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Speaker 4: both in our one but with our two is extraordinarily exciting,

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Speaker 4: you know. And I'm a product person, so you know,

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Speaker 4: for someone that's really folks products, it's it's always the

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Speaker 4: next thing we're developing that that really gets us excited.

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Speaker 2: One example of that was the decision to join the

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Speaker 2: North American Charging Standard and ACS. How big a decision

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Speaker 2: was that for you personally, Well.

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Speaker 4: It's interesting when we made the decision to use CCS

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Speaker 4: one write network, well, when we were developing our one

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Speaker 4: and planning us launch, that was at the time really

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Speaker 4: the leading solution. Every OEM and the charging networks were

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Speaker 4: sort of consolidating around that. But NACS chargers is of

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Speaker 4: course smaller and takes up less footprint in the vehicle.

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Speaker 4: It's an elegant solution, but we didn't really look at

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Speaker 4: that asn't as an option because it wasn't an open standard,

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Speaker 4: so in Tesla made the decision to open that up.

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Speaker 4: It obviously created some unique opportunities and we along with others,

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Speaker 4: were able to not only adopt that as the charging

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Speaker 4: board foot but importantly gain access to test the supercharger network, which,

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Speaker 4: in parallel to the build out of our Rivian Invention network,

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Speaker 4: provides customers and immediate access starting in twenty twenty four

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Speaker 4: to a very large and very well built network. Now

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Speaker 4: that doesn't take away from the importance of building riving

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Speaker 4: in venture network.

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Speaker 3: Is you see new sites are.

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Speaker 4: Coming online every week, and the ramp up of that

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Speaker 4: network is we're going to start to really feel that

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Speaker 4: in twenty twenty four. R. J.

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Speaker 2: Wool Street does have some questions. One is about profitability

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Speaker 2: and the path to get there, and the other is

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Speaker 2: about the need to raise more capital. How are you

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Speaker 2: thinking about both of those issues?

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Speaker 4: So on probability, this is like the number one focus

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Speaker 4: of the businessman, and you can think of it across

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Speaker 4: a couple of key levers, the most significant which is

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Speaker 4: production ramp.

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Speaker 3: So you've been to our planet. It's a very large facility.

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Speaker 4: It's designed for a lot of output when you run

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Speaker 4: a plant like that at low outputs, as we've done

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Speaker 4: really up until fairly recently, just the fixed cost absorption

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Speaker 4: of a facility like that, it's very challenging. So number

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Speaker 4: one priority across the whole business is production ramp, but

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Speaker 4: closer related to that is also working across every aspect

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Speaker 4: of our cost to get sold, so bill of materials,

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Speaker 4: you know, logistics and bound logistics, driving quality, and then

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Speaker 4: efficiency of line operations within the plant to drive cost

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Speaker 4: out to get to a point where the business is

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Speaker 4: only a gross margin positive but supports and carries the

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Speaker 4: op X load of the rest of the business.

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Speaker 3: It supports overall profitability.

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Speaker 2: With that in mind, why did you walk away from

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Speaker 2: the JV with Mercedes in Europe?

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Speaker 4: Ultimately for us, and we've seen this and I've talked

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Speaker 4: about this quite a bit since since startup production, we've

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Speaker 4: been really methodically looking at what we're doing and where

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Speaker 4: do we drive priority and focus and there are so

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Speaker 4: many cool, interesting, exciting things to do. You know, we

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Speaker 4: have the deepest respect for the team at Mercedes, but

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Speaker 4: it's so important for us to be hyper focused on

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Speaker 4: what are the key biggest levers within the business and

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Speaker 4: for us. It's ramping production of the R one platform

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Speaker 4: and EDD platform, and then of course what goes into

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Speaker 4: the R two vehicle end platform, which really introduced the

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Speaker 4: step change and volume for us as a business. And

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Speaker 4: that was the decision. We said, R two's got to

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Speaker 4: be the core focus for us. We've got to make

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Speaker 4: sure it's it's executed beautifully and ultimately that'll give us

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Speaker 4: a big step in overall output for the company.

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Speaker 2: R to the next generation of vehicle about three years away,

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Speaker 2: and we'll have to find another time to talk about that.

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Speaker 2: RJ scarrange there. The CEO of Rivian