1
00:00:00,280 --> 00:00:04,120
Speaker 1: Rivian CEO our Jay Screen says new orders are driving

2
00:00:04,200 --> 00:00:07,600
Speaker 1: up the average sales price of its electric vehicles, and

3
00:00:07,680 --> 00:00:10,080
Speaker 1: he spoke about how his firm is dealing with a

4
00:00:10,119 --> 00:00:14,000
Speaker 1: pipeline of potential new customers for its battery electric vans

5
00:00:14,280 --> 00:00:16,760
Speaker 1: and more with host ed Ludlow.

6
00:00:16,520 --> 00:00:19,520
Speaker 2: Being relinquished from the Amazon exclusivity is something that a

7
00:00:19,560 --> 00:00:21,439
Speaker 2: lot of people have been talking about for a while.

8
00:00:21,960 --> 00:00:25,599
Speaker 2: On the call, you know, you did discuss being in

9
00:00:25,640 --> 00:00:28,560
Speaker 2: talks with a number of fleet operators big and small,

10
00:00:29,680 --> 00:00:32,519
Speaker 2: and how that might look starting with pilots, you know,

11
00:00:32,640 --> 00:00:35,440
Speaker 2: slow and steady. But can you confirm in the first

12
00:00:35,479 --> 00:00:39,280
Speaker 2: instance that you already have any binding agreements to sell

13
00:00:39,800 --> 00:00:41,760
Speaker 2: eDV to someone other than Amazon.

14
00:00:43,920 --> 00:00:46,199
Speaker 3: Yes, as you heard me talk about yesterday in the

15
00:00:46,440 --> 00:00:50,479
Speaker 3: earning skull, we've It's not as if we woke up

16
00:00:50,560 --> 00:00:54,160
Speaker 3: yesterday and we signed the exclusivity that changed the exclusivity

17
00:00:54,160 --> 00:00:56,520
Speaker 3: agreement with the Amazon. It was a long, long process,

18
00:00:56,560 --> 00:00:59,200
Speaker 3: and through that process we're able to use that time

19
00:00:59,240 --> 00:01:03,960
Speaker 3: to build a pipeline of other customers and diverse customers.

20
00:01:04,720 --> 00:01:07,360
Speaker 4: We're not yet announcing any of those deals, but.

21
00:01:07,680 --> 00:01:11,800
Speaker 3: They'll start by large with pilot deployments where we have

22
00:01:13,240 --> 00:01:15,840
Speaker 3: sort of scaled the scaled number of vehicles that go

23
00:01:15,920 --> 00:01:18,520
Speaker 3: out and test the systems, understand how they fit within

24
00:01:18,560 --> 00:01:21,840
Speaker 3: the network. But what you'll see is it's very diverse

25
00:01:22,000 --> 00:01:25,639
Speaker 3: across everything from last mile to retail to of course

26
00:01:26,200 --> 00:01:29,200
Speaker 3: just more general purpose commercial applications of vans.

27
00:01:29,600 --> 00:01:32,640
Speaker 2: You have an announcement but have not announced them, but

28
00:01:32,720 --> 00:01:35,080
Speaker 2: there are deals, deals that are done, and you have

29
00:01:35,200 --> 00:01:39,720
Speaker 2: visibility on new customers on eDV. From this point on, what.

30
00:01:39,680 --> 00:01:43,240
Speaker 3: I'd say is we have very high visibility on customers

31
00:01:43,280 --> 00:01:46,640
Speaker 3: outside of Amazon and are excited to talk about those,

32
00:01:46,640 --> 00:01:50,760
Speaker 3: but we're not yet talking about those those other relationships

33
00:01:50,760 --> 00:01:51,440
Speaker 3: and partnerships.

34
00:01:51,560 --> 00:01:54,760
Speaker 2: So on paper, the normal Illinois plant is capable of

35
00:01:54,760 --> 00:01:57,200
Speaker 2: building one hundred and fifty thousand units a year, right,

36
00:01:57,200 --> 00:01:59,600
Speaker 2: And you talked about how for several weeks in twenty

37
00:01:59,640 --> 00:02:02,880
Speaker 2: twenty five or there will be downtime on the lines

38
00:02:03,080 --> 00:02:04,360
Speaker 2: to make tech upgrades.

39
00:02:04,880 --> 00:02:05,919
Speaker 4: But I wondered if.

40
00:02:05,800 --> 00:02:08,560
Speaker 2: You could give us some insight into overall in twenty

41
00:02:08,600 --> 00:02:13,120
Speaker 2: twenty four, what proportion of your output will be eDV

42
00:02:13,400 --> 00:02:14,400
Speaker 2: relative to our one.

43
00:02:16,560 --> 00:02:20,440
Speaker 3: Yeah, we've historically guided to talk about roughly twenty percent

44
00:02:20,520 --> 00:02:25,000
Speaker 3: of production, and the near term will be eDV. Over time,

45
00:02:25,919 --> 00:02:27,520
Speaker 3: the way the one hundred and fifty thousand units of

46
00:02:27,560 --> 00:02:30,200
Speaker 3: capacity is set up will be set up as eighty

47
00:02:30,200 --> 00:02:32,679
Speaker 3: five thousand for the R one platform and sixty five

48
00:02:32,720 --> 00:02:36,400
Speaker 3: thousand for the DV platform. But in the very near

49
00:02:36,440 --> 00:02:39,040
Speaker 3: future call it over the next certainly over the next year,

50
00:02:40,120 --> 00:02:43,600
Speaker 3: the mix will be more biased towards our one. And

51
00:02:43,639 --> 00:02:46,480
Speaker 3: this comes back to the points I made in the

52
00:02:46,520 --> 00:02:48,920
Speaker 3: public Earning School. Is just the nature of the sales

53
00:02:48,960 --> 00:02:52,360
Speaker 3: cycle for these large commercial fleets, these fleets that are

54
00:02:52,440 --> 00:02:55,239
Speaker 3: running tens of thousands of vans.

55
00:02:55,040 --> 00:02:56,200
Speaker 4: It's not as if they can.

56
00:02:56,120 --> 00:03:00,320
Speaker 3: Press a button and immediately ingest a new type of

57
00:03:00,400 --> 00:03:03,760
Speaker 3: vehicle with a completely different operating procedure. So this does

58
00:03:03,800 --> 00:03:06,080
Speaker 3: have time skills associate with and we've seen that very

59
00:03:06,160 --> 00:03:08,760
Speaker 3: much firsthand through the lens of Amazon, which runs one

60
00:03:08,760 --> 00:03:09,880
Speaker 3: of the largest fleets in the world.

61
00:03:10,480 --> 00:03:14,600
Speaker 2: Ah j Rivian is still losing thirty one thousand dollars

62
00:03:14,639 --> 00:03:17,960
Speaker 2: on every v that it makes. When will you start

63
00:03:17,960 --> 00:03:21,320
Speaker 2: making money on them?

64
00:03:21,600 --> 00:03:21,799
Speaker 4: Yeah?

65
00:03:21,880 --> 00:03:24,880
Speaker 3: This has been absolutely a core focus for us as

66
00:03:24,880 --> 00:03:28,720
Speaker 3: a business, and quarter of a quarter we've shown significant progress.

67
00:03:28,919 --> 00:03:31,200
Speaker 3: We certainly showed that as we went from Q two

68
00:03:31,240 --> 00:03:34,639
Speaker 3: to Q three and talked about those results yesterday and

69
00:03:35,440 --> 00:03:39,119
Speaker 3: these improvements that are driving us towards the long term

70
00:03:39,360 --> 00:03:42,800
Speaker 3: twenty five percent cross margin that we've talked about extensively

71
00:03:42,840 --> 00:03:45,600
Speaker 3: on our one. You can almost think of it as

72
00:03:45,600 --> 00:03:47,560
Speaker 3: a staircase. There's a whole host of changes that are

73
00:03:47,560 --> 00:03:49,880
Speaker 3: happening in our material costs. That's our bill of materials,

74
00:03:50,680 --> 00:03:54,280
Speaker 3: there's improvements in our plant. There's the fixed cost absorption

75
00:03:54,360 --> 00:03:57,280
Speaker 3: from running a higher volumes in the plant. And then

76
00:03:57,320 --> 00:04:00,520
Speaker 3: as of course, there's the evolution of our average only price,

77
00:04:00,560 --> 00:04:02,960
Speaker 3: which continues to trend upwards as we move into newer

78
00:04:03,080 --> 00:04:06,320
Speaker 3: orders and also launch things like our Max Pack, our

79
00:04:06,400 --> 00:04:09,960
Speaker 3: largest battery pack. But importantly, I do want to really

80
00:04:10,000 --> 00:04:13,200
Speaker 3: be clear here this staircase of steps that the biggest

81
00:04:13,200 --> 00:04:16,599
Speaker 3: step amongst those is what we'll be putting in place

82
00:04:16,760 --> 00:04:19,479
Speaker 3: in the plant in the second quarter twenty twenty four,

83
00:04:19,880 --> 00:04:22,120
Speaker 3: where there's a consolidated set of changes that go into

84
00:04:22,200 --> 00:04:25,159
Speaker 3: the vehicle that dramatically reduced the bill of materials and

85
00:04:25,240 --> 00:04:28,920
Speaker 3: also allow us to run the plant more efficiently. That's

86
00:04:28,960 --> 00:04:30,880
Speaker 3: not to say there's not improvements that are happening leading

87
00:04:30,960 --> 00:04:33,520
Speaker 3: up to that, but we had a similar shutdown that

88
00:04:33,520 --> 00:04:36,200
Speaker 3: we did on our commercial van early part of this year,

89
00:04:36,400 --> 00:04:38,800
Speaker 3: and coming out of that we had a thirty five

90
00:04:38,839 --> 00:04:40,800
Speaker 3: percent reduction in our material costs.

91
00:04:41,160 --> 00:04:42,279
Speaker 4: So that's the scale of.

92
00:04:43,480 --> 00:04:45,680
Speaker 3: Change that we're going to be driving with the shutdown

93
00:04:45,720 --> 00:04:48,360
Speaker 3: for R one in the second quarter twenty twenty four.

94
00:04:48,800 --> 00:04:50,000
Speaker 4: And these are contractual.

95
00:04:50,120 --> 00:04:53,600
Speaker 3: These are contractual changes, meaning bill of materials changes. Are

96
00:04:53,600 --> 00:04:56,320
Speaker 3: not like us hoping suppliers are going to charge us less.

97
00:04:56,320 --> 00:05:02,760
Speaker 3: These are part negotiations with suppliers contractually obligated, but there's

98
00:05:02,800 --> 00:05:05,560
Speaker 3: effectivity dates that have to be achieved. You know, they

99
00:05:05,560 --> 00:05:07,880
Speaker 3: don't all apply immediately, they come in over time.

100
00:05:08,440 --> 00:05:08,800
Speaker 4: Oh Ja.

101
00:05:08,960 --> 00:05:13,560
Speaker 2: Our audience has one common question, very straightforward, when will

102
00:05:13,600 --> 00:05:17,000
Speaker 2: they see an R two prototype? A prototype?

103
00:05:18,440 --> 00:05:23,279
Speaker 3: We absolutely can't wait to show it. We're going to

104
00:05:23,279 --> 00:05:26,520
Speaker 3: be showing the R two program in the first quarter

105
00:05:26,880 --> 00:05:29,200
Speaker 3: of this coming year, so early part of next year.

106
00:05:29,760 --> 00:05:34,159
Speaker 3: This is a absolutely vital program for us as a business.

107
00:05:34,880 --> 00:05:37,240
Speaker 3: It allows us to take our brand and what we

108
00:05:37,360 --> 00:05:39,960
Speaker 3: built as a company and put into a smaller package,

109
00:05:40,000 --> 00:05:43,680
Speaker 3: but importantly a much lower priced vehicle. But I've never

110
00:05:43,680 --> 00:05:45,760
Speaker 3: been this excited about a product as I am about

111
00:05:45,880 --> 00:05:49,160
Speaker 3: R two. It is that exciting, and I would say

112
00:05:49,200 --> 00:05:51,520
Speaker 3: it's that good. We think it's just exceptional.

113
00:05:51,680 --> 00:05:54,280
Speaker 2: But quickly, to be clear, you'll whip the canvas off

114
00:05:54,320 --> 00:05:56,920
Speaker 2: on stage or something in the first quarter of twenty

115
00:05:56,920 --> 00:05:58,640
Speaker 2: four on an R two prototype.

116
00:05:59,240 --> 00:06:00,520
Speaker 4: We're going to be showing it the early part of

117
00:06:00,560 --> 00:06:01,560
Speaker 4: next year. Yep, that's right.

118
00:06:02,240 --> 00:06:06,039
Speaker 2: You talked on the core about now presently they're being

119
00:06:06,120 --> 00:06:10,040
Speaker 2: more rational upstream deals on the table when it comes

120
00:06:10,120 --> 00:06:14,520
Speaker 2: to supply chain for battery and that got me thinking,

121
00:06:15,040 --> 00:06:19,120
Speaker 2: is Rivian still committed to a plan to eventually make

122
00:06:19,200 --> 00:06:21,120
Speaker 2: its own battery cells in house.

123
00:06:23,520 --> 00:06:25,600
Speaker 3: Yeah, the most what's what's really become clearer with the

124
00:06:25,680 --> 00:06:29,279
Speaker 3: last twelve months, but in particular the last six months,

125
00:06:29,279 --> 00:06:32,600
Speaker 3: with sort of a hyper focus, is just the importance

126
00:06:32,640 --> 00:06:35,560
Speaker 3: of the upstream supply chain. And so that's where we've

127
00:06:35,839 --> 00:06:39,000
Speaker 3: we've dedicated and focused a lot of our resources, both

128
00:06:39,000 --> 00:06:41,520
Speaker 3: in terms of capital but also in terms of our

129
00:06:41,560 --> 00:06:47,560
Speaker 3: engineering resources, and that's securing upstream lithium supply, upstream nickel supply,

130
00:06:48,160 --> 00:06:52,200
Speaker 3: working closely with our battery cell suppliers.

131
00:06:52,040 --> 00:06:53,640
Speaker 4: To technically integrate that in.

132
00:06:55,520 --> 00:06:57,760
Speaker 3: And these are these are complex efforts that do take

133
00:06:59,080 --> 00:07:02,400
Speaker 3: you take a folks highly technical team to play an

134
00:07:02,440 --> 00:07:05,400
Speaker 3: active role in sourcing those raw materials, and this is

135
00:07:05,400 --> 00:07:08,479
Speaker 3: important not only from the perspective of IRA, but it's

136
00:07:08,480 --> 00:07:12,320
Speaker 3: increasingly important in an environment and in a global economy

137
00:07:12,360 --> 00:07:18,440
Speaker 3: where trade frictions are rising and we need to be

138
00:07:18,480 --> 00:07:21,800
Speaker 3: aware of the challenges of supply chains that are built

139
00:07:23,240 --> 00:07:29,720
Speaker 3: around sort of components or systems for which there's potential

140
00:07:30,160 --> 00:07:33,160
Speaker 3: limitations around those supply graph it's a great example with

141
00:07:33,320 --> 00:07:35,560
Speaker 3: the vast majority i should say, nearly one hundred percent

142
00:07:35,640 --> 00:07:38,640
Speaker 3: of the world synthetic graphit coming out of China. This

143
00:07:38,680 --> 00:07:40,400
Speaker 3: is an area we have to be very thoughtful of

144
00:07:40,520 --> 00:07:42,440
Speaker 3: to make sure that in the long term we have

145
00:07:42,520 --> 00:07:43,880
Speaker 3: enough supply to support our growth.

146
00:07:44,000 --> 00:07:46,400
Speaker 2: But you still plan to make your own cells rather

147
00:07:46,480 --> 00:07:48,080
Speaker 2: than buying them in Eventually.

148
00:07:49,280 --> 00:07:52,280
Speaker 3: Eventually, when we think about cells, we look at it

149
00:07:52,280 --> 00:07:55,200
Speaker 3: through the lens of there's going to be source cells

150
00:07:55,240 --> 00:07:57,040
Speaker 3: that we develop in partnership, but there's going to be

151
00:07:57,040 --> 00:07:58,440
Speaker 3: cells where we take a more active role in the

152
00:07:58,440 --> 00:08:01,080
Speaker 3: development and in the long long term, we do think

153
00:08:01,160 --> 00:08:04,040
Speaker 3: that there's a role to play for manufacturers to be

154
00:08:04,160 --> 00:08:07,120
Speaker 3: very active in the production of the cell as well,

155
00:08:07,480 --> 00:08:09,560
Speaker 3: but that's that's down the road.

156
00:08:09,720 --> 00:08:10,000
Speaker 4: Oh Ja.

157
00:08:10,080 --> 00:08:13,080
Speaker 2: The other big question from our audience around the world

158
00:08:13,280 --> 00:08:17,120
Speaker 2: is about revenues from software and in particular autonomy. You

159
00:08:17,160 --> 00:08:19,560
Speaker 2: did go into detail on the call, but the question

160
00:08:19,680 --> 00:08:22,840
Speaker 2: is very simple, when do those revenues tied to autonomy

161
00:08:23,280 --> 00:08:25,600
Speaker 2: show up in your financials?

162
00:08:27,960 --> 00:08:33,079
Speaker 3: Yeah, the when you think about autonomy, this represents one

163
00:08:33,080 --> 00:08:36,800
Speaker 3: of the more complex software and hardware development efforts in

164
00:08:36,840 --> 00:08:39,920
Speaker 3: the vehicle, and as a result, it presents, we believe,

165
00:08:40,400 --> 00:08:46,240
Speaker 3: a real opportunity to have essentially tiered payment tiered pricing structure,

166
00:08:46,240 --> 00:08:50,760
Speaker 3: whereby the fullest set of features is something that there's

167
00:08:50,920 --> 00:08:53,120
Speaker 3: an extra payment associated with it, you know, to costs

168
00:08:53,120 --> 00:08:57,760
Speaker 3: more upfront and there's potentially an ongoing recurring fee associated

169
00:08:57,800 --> 00:09:00,400
Speaker 3: with it. That's something that we're planning to launch as

170
00:09:00,440 --> 00:09:02,360
Speaker 3: we go into next year, as we launch some new

171
00:09:02,400 --> 00:09:07,200
Speaker 3: features that we're developing today. But in addition to that,

172
00:09:07,280 --> 00:09:13,319
Speaker 3: we also see opportunities for other really uh immersive software

173
00:09:13,360 --> 00:09:16,920
Speaker 3: features that incrementally create value above and beyond what customers

174
00:09:16,920 --> 00:09:20,840
Speaker 3: even expect or believe as possible today that will be

175
00:09:21,480 --> 00:09:23,959
Speaker 3: offering as well. So we see that playing out over

176
00:09:24,000 --> 00:09:27,640
Speaker 3: the next year where we see software revenue first with autonomy,

177
00:09:27,800 --> 00:09:31,480
Speaker 3: later with with some other really immersive experience based offerings

178
00:09:31,880 --> 00:09:32,320
Speaker 3: and then.

179
00:09:32,320 --> 00:09:35,600
Speaker 2: Our j Finally, you said that there's been an overreaction

180
00:09:36,080 --> 00:09:38,960
Speaker 2: of the impact of high interest rates and geopolitics on

181
00:09:39,000 --> 00:09:45,160
Speaker 2: the EV industry. Does that overreaction tangibly impact present demand

182
00:09:45,360 --> 00:09:47,480
Speaker 2: or is the demand consistent right now?

183
00:09:49,640 --> 00:09:49,880
Speaker 4: Yeah?

184
00:09:49,960 --> 00:09:51,520
Speaker 3: When when I when I look at this and I

185
00:09:51,559 --> 00:09:56,760
Speaker 3: say there's an overreaction, it's more reflection on just the

186
00:09:56,760 --> 00:10:01,520
Speaker 3: the absolute certainty that that we fielder is around the

187
00:10:01,559 --> 00:10:07,440
Speaker 3: electrification of transportation, meaning there's zero doubt that one hundred

188
00:10:07,480 --> 00:10:10,040
Speaker 3: percent of our vehicles will be electric in the not

189
00:10:10,080 --> 00:10:11,920
Speaker 3: too distant future. Now we can debate whether that's ten

190
00:10:12,000 --> 00:10:14,200
Speaker 3: years away, twenty years away, twenty five years away, but

191
00:10:14,200 --> 00:10:20,160
Speaker 3: but it's it's it's an absolute certainty. And so to

192
00:10:20,280 --> 00:10:23,840
Speaker 3: see so many folks pulling back on investment and therefore,

193
00:10:24,200 --> 00:10:26,280
Speaker 3: you know, creating and the investment we have today is

194
00:10:26,600 --> 00:10:28,560
Speaker 3: leading to products we're going to have as an industry

195
00:10:28,559 --> 00:10:31,400
Speaker 3: in two three years. So creating what we believe is

196
00:10:31,400 --> 00:10:34,920
Speaker 3: going to be avoid of products in the twenty twenty six,

197
00:10:35,000 --> 00:10:39,400
Speaker 3: twenty seven to twenty eight timeframe, we think. I'm frankly

198
00:10:39,440 --> 00:10:44,880
Speaker 3: surprised by that that reaction. Ultimately, the speed at which

199
00:10:44,920 --> 00:10:47,480
Speaker 3: we electrify as an industry is going to require consumers

200
00:10:47,520 --> 00:10:49,880
Speaker 3: to be excited about the products, and we need lots

201
00:10:49,880 --> 00:10:53,439
Speaker 3: of products. We need lots of choices form factors, price points,

202
00:10:53,800 --> 00:10:58,440
Speaker 3: brand and product positions. And you know, we won't electrify

203
00:10:59,160 --> 00:11:01,319
Speaker 3: one hundred percent if there's one or two brands that

204
00:11:01,400 --> 00:11:04,719
Speaker 3: have that are producing a handful of vehicles. We need

205
00:11:04,800 --> 00:11:08,320
Speaker 3: lots of brands producing a lot of choices. And so certainly,

206
00:11:09,040 --> 00:11:11,720
Speaker 3: when we think about the R two, I couldn't be

207
00:11:11,760 --> 00:11:14,480
Speaker 3: more excited about the market opportunity. That demand for something

208
00:11:14,480 --> 00:11:18,320
Speaker 3: in that mid sized suv space, you know, call it

209
00:11:18,360 --> 00:11:23,320
Speaker 3: forty to fifty five thousand dollars price range is extraordinarily large.

210
00:11:23,760 --> 00:11:27,000
Speaker 3: There's very few good choices in that price range today,

211
00:11:28,240 --> 00:11:30,360
Speaker 3: and we can see it. There's a dominant you know,

212
00:11:30,720 --> 00:11:33,360
Speaker 3: Tessa's dominant market share position is a reflection of just

213
00:11:33,480 --> 00:11:37,920
Speaker 3: the lack of choice that exists there. And we see,

214
00:11:38,200 --> 00:11:40,880
Speaker 3: you know, the potential pulling a lot of ice internal

215
00:11:40,880 --> 00:11:45,640
Speaker 3: combustion customers into electric vehicles requires a variety of choices

216
00:11:45,679 --> 00:11:48,200
Speaker 3: in those price ranges. And of course that's also true

217
00:11:48,240 --> 00:11:51,120
Speaker 3: for lower price points. It's true for different segments. But

218
00:11:51,840 --> 00:11:53,320
Speaker 3: you know, what we'll need to see over the next

219
00:11:53,320 --> 00:11:56,079
Speaker 3: decade is the proliferation of lots and lots of different offerings,

220
00:11:56,280 --> 00:12:01,440
Speaker 3: and so pulling back investments today certainly to create a

221
00:12:01,720 --> 00:12:04,560
Speaker 3: uh AN environment in which there's there's there's fewer, fewer

222
00:12:04,640 --> 00:12:06,600
Speaker 3: choices and in some ways you look at it's almost

223
00:12:06,640 --> 00:12:07,400
Speaker 3: less competition.

224
00:12:07,880 --> 00:12:12,360
Speaker 1: That's Rivian CEO R J. Scurringe speaking with host Ed Ludlow.

225
00:12:12,720 --> 00:12:16,359
Speaker 1: For more conversations like this one, subscribe to the Bloomberg

226
00:12:16,440 --> 00:12:20,320
Speaker 1: Talks podcast. I'm Charlie Pealaton. This is Bloomberg