Good day, and thank you for standing by. Welcome to the Rivian Q3 2022 E arnings Conference Call. At this time, all participants are in listen only mode. After the speaker's presentation, there will be a question and answer session. To ask the question during the session, you will need to press star one one on your telephone. I would now like to hand the conference over to your speaker for today. Tim Bei, you may begin. Good afternoon, and thank you for joining us for Rivian's Q3 2022 Earnings Call. Joining us on today's call, we have RJ Scaringe, our Founder, Chairman, and Chief Executive Officer, and Claire McDonough, our Chief Financial Officer. A copy of today's shareholder letter is available on our investor relations website. Before we begin, I would like to remind you that during the course of this conference call, our comments and responses to your questions reflect management's views as of today only and will include statements related to our business that are forward-looking statements under Federal Securities Laws, including, without limitation, statements regarding our market opportunity, industry trends, business operations, strategy and goals, our production ramp and manufacturing capacity expansion, our proposed joint venture with Mercedes-Benz, our future products and product enhancements, including R2, and our expectations regarding vehicle deliveries. Actual results may differ materially from those contained in or implied by these forward-looking statements due to risks and uncertainties associated with our business, which are described in our SEC filings and today's shareholder letter. During this call, we will discuss both GAAP and non-GAAP financial measures. A reconciliation of GAAP to non-GAAP financial measures is provided in today's shareholder letter. With that, I'll turn the call over to RJ, who will begin with a few opening remarks. Thanks, Tim. Hello, everyone, and thank you for joining us today. Just before the call, we published our shareholder letter, which includes an overview of our progress over the recent months. I encourage you to read it for additional details around some of the items we'll cover on today's call. Having just passed the one-year anniversary of the start of production for the R1T, I want to take this opportunity to highlight the progress our team has made this past year. We launched four variants across our consumer and commercial vehicle platforms. We are awarded MotorTrend's Truck of the Year, along with other media accolades. We produced more than 15,000 vehicles as of 30 September, and we continue to ramp our production to fully utilize our Normal facility. In addition, we also launched our go-to-market operations and services, which include our physical service centers and mobile service vehicles, delivery operations, Fleet OS, financing, insurance, remarketing, and the Rivian Adventure Network, our in-house developed and produced network of DC fast chargers. It's been rewarding to see the excitement and enthusiasm for our first generation of products. We believe we're in a unique position during a transformational time for the auto industry. Production of our designed and developed products continues to ramp at our large scale, vertically integrated production facility in Normal. We have significant demand visibility as evidenced by our consumer and commercial backlog. We have a strong balance sheet with $14 billion of cash that offers us the flexibility to navigate these uncertain economic times and look for capital efficient methods to drive growth. We remain focused on ramping production in a cost-efficient manner, and we've seen improvement across our cost of goods sold, operating expenses, and capital expenditures over the past quarter. The Q3 was another record for the Rivian team. We produced over 7,300 vehicles across the R1T, R1S, and EDV product lines. Our key focus remains ramping our Normal facility to achieve the targeted annual capacity. As part of this progress, we reached a key milestone recently as our second manufacturing shift started producing vehicles. It takes extraordinary coordination to ramp a highly vertically integrated facility of this size, and I'm grateful for all the hard work that's gone into it. We continue to see strong demand for our products. As of November seventh, we had over 114,000 net pre-orders and reservations for our R1 vehicles. As a reminder, these orders are from the U.S. and Canada only and are net of deliveries and cancellations. The Q3 was also important for our commercial business. In early September, we announced the signing of an MOU with Mercedes-Benz for a strategic partnership for commercial electric vans in Europe, the world's largest van market. We continue to deliver EDVs to Amazon and expand our Fleet OS offering. Amazon has delivered over five million packages with EDVs and is now making deliveries in over 100 cities. Every two weeks, I spend a few days driving the EDV as my daily driver. It's a great way for me to personally experience what the drivers of these vans actually experience. Everything from the seating position to the unique pocket door to the overall vehicle dynamics. It's a really exciting package. At stoplights or parking lots, the enthusiasm I get to see firsthand from folks that are seeing it for the first time or asking questions about it's really exciting and we're happy to be able to help raise the bar for electrifying logistics. As we continue to look for opportunities to scale our platforms, production, and technologies in capital efficient ways, we're strategically investing in our in-house technologies, which will enable differentiated product performance and capabilities while also delivering structural cost advantages. Our in-house software capabilities allow us to be agile and provide customers with an improved experience. On the hardware side, we're excited to ramp production of our fully in-house drive unit. The Enduro production lines are coming to life now. It's great to see not only the vertically integrated motor, but also the design of our manufacturing lines. In early 2023, we plan to introduce the Enduro motor and our first LFP battery pack into the commercial van line in Normal. These changes will enable optimized performance at a significantly lower cost. It's imperative that we get the introduction of these new technologies right, so we've allocated meaningful time to quality loops and process checks in the Q1. We are excited about the progress our teams are making across future vehicles and technologies, as well as improving the performance and cost of our current offerings. While we haven't shown any of our future products yet, I couldn't be more excited about the work happening on our next platform. The smaller size of this platform is enabling some wonderfully unique products, and we are looking forward to be able to show these to the world. I wanna thank our dedicated team members, suppliers, and importantly, our customers and communities for the tremendous support you continue to show us. With that, I'll pass the call over to Claire. Thanks, RJ. I wanna echo your excitement around the Q3 results and the progress the team is making. During the Q3, we produced over 7,300 vehicles and delivered nearly 6,600 vehicles, which was the primary driver of the $536 million of revenue we generated. We recorded negative gross profit of $917 million in the Q3. We continue to be impacted by the high fixed cost structure associated with running high volume production lines at low volumes while we ramp. We recorded a $696 million accounting adjustment in the Q3 related to LCNRV. As discussed on prior calls, the LCNRV adjustment writes down the value of certain inventory to the amount we anticipate receiving upon vehicle sale after considering the future costs necessary to ready the inventory for sale. The increase in our LCNRV charge represents the vast majority of the increase in cost of goods sold as compared to the Q2 of 2022. The increase in LCNRV compared to the Q2 pri marily due to an increase in overall inventory and firm purchase commitment values ahead of the start of our second manufacturing shift. In addition, similar to prior quarters, gross profit for the quarter was also impacted by the inflation of our raw materials as well as supply chain challenges, which caused the need for expedited shipping. Operating expenses grew by an approximate $160 million as compared to the same quarter last year. The primary driver of this increase is stock-based compensation expense, which we did not recognize prior to our November 2021 IPO. When looking at our operating expense this past quarter versus the Q2 of 2022, we saw a nearly $150 million decrease. Our Q3 operating expenses reflect our ongoing prioritization of investment in our core in-vehicle technologies and customer experience while continuing to drive additional focus and cost optimization across the business. We continue to focus on deploying capital in the most efficient way and ensuring that every dollar spent helps us towards our long-term financial targets, which in turn helps accelerate the impact we can deliver. Our adjusted EBITDA for the Q3 was negative $1.3 billion, which is flat to the Q2 of 2022. We ended the Q3 with about $14 billion of cash on hand. We continue to monitor the economic environment and believe we have a high level of flexibility regarding the cadence of our growth investments. We remain confident in our ability to fund operations with cash on hand through 2025, excluding the impact of our investment in the contemplated joint venture with Mercedes-Benz. We continue to work with the state of Georgia and the Joint Development Authority on our second domestic production facility. We are adjusting the timeline for launching the R2 platform and expect it will launch in 2026. We expect the R2 platform will unlock a massive global market expansion opportunity for Rivian and are excited about the development work that's underway. We are also reaffirming our 2022 full year guidance of 25,000 total vehicles produced. The supply chain continues to be our largest source of uncertainty as we continue to ramp production. We've experienced five days of production downtime in October and November due to a lack of supply of a key component, which limited our quarter to date production. In the Q4 of 2022, we expect the in-transit time from rail shipments, coupled with an increase in volumes from the ramp of our second shift towards the end of the quarter, will cause a significant discrepancy between production and deliveries. In addition, we're reaffirming our 2022 adjusted EBITDA guidance of -$5.45 billion. We're lowering our capital expenditure guidance to $1.75 billion due to our streamlined product roadmap and the shift of certain capital expenditures to 2023. As RJ mentioned, we have over 114,000 net R1 pre-orders as of November seventh. As we ramp our production and deliveries, we believe pre-orders will become an increasingly less important measure of our fundamental progress as a business. Going forward, we no longer plan to provide an updated pre-order number during our quarterly earnings calls. In closing, I wanna reiterate our confidence in our long-term financial targets. We see a clear path to our approximately 25% gross margin target, high teens EBITDA target, and approximately 10% free cash flow margin target. With that, let me turn the call back to the operator to open the line for Q&A. Thank you. As a reminder, to ask a question, you will need to press star one one on your telephone. That's star one one to ask a question. Please stand by while we compile the Q&A roster. Our first question comes from the line of John Murphy with Bank of America. Your line is open. Good afternoon, guys. Thanks for all the info. Just a couple of quick ones. That announcement that you're not going to provide the pre-orders anymore, I'm just curious what the motivation is for that. Are we getting to a point where the pre-orders are getting so robust or long that ebbs and flows in those relative to production might not actually be that informative? I mean, what's kind of the driving factor in that change in communication? Thanks, John. This is Claire. As it pertains to the pre-orders, our sentiment was more so that we're, you know, one year post our start of production as an organization. We're starting to really ramp up our production and the deliveries associated with our R1 platform. So don't feel like it's really a meaningful metric for us to continue to provide overall to the market. Obviously, given the 114,000 unit backlog that we currently have that extends us into 2024 as well, it's a robust backlog of demand that we have, you know, for our vehicles. This is going to be, you know, consistent with what you'll see from us on a go-forward basis as it pertains to additional new product launches as well. Okay, that's helpful. Then, RJ, on the Mercedes, you know, JV, I just wonder if you give us an update there. I mean, I think a skeptic could say, "Hey, listen, you know, you would've been able to enter and be successful in the European market ultimately on your own over time, just given your product." An optimist might say, "Hey, listen, that opens up that market that much faster and provides, you know, more robust growth, you know, sooner." You know, just curious if you can kinda maybe, you know, couch the direction there on optimist versus skeptic and any other updates you might be able to give us there. Sure, John. Yeah, Mercedes-Benz is in terms of a partner and someone to be looking at how do we accelerate electrification, you know, faster. There's very much aligned mentality. Aligned mentality around the need to electrify, aligned mentality on how we think about products and the position of products and the execution of products. It's a relationship and a partnership that we're working towards that we think can allow both sides to accomplish more together. Ultimately, as we think about this and as we look at this market, it is an important and large space for the commercial van space in Europe, and we felt Mercedes-Benz was a great partner to be looking at this with. Okay. If I could just sneak one more in. The delta in deliveries versus production, Claire, will that continue to expand over time, or are we kind of looking at sort of a one-time gap opening up here in the Q4? I'm just trying to gauge the revenue recognition versus the production, so we can think about that for our models go forward. The Q4 gap will be exacerbated here in particular because we have the second shift that's coming online and really ramping from a production perspective that backweights the volumes from a production perspective in the second half of the quarter. Then that coupled obviously with the shipment that we've had to rail and then the holiday period where customers are a little bit harder to find in that last week of December, that will be a driver of that Q4 shift for us. Obviously, what we don't deliver in Q4 rolls into the upcoming quarter, so you start to normalize over time as we ramp closer to the installed capacity within the plant in Normal. The gap should, you know, narrow on a percent basis on a go-forward basis. That's very helpful. Thank you very much, guys. Thank you. Please stand by for our next question. Our next question comes from the line of Adam Jonas with Morgan Stanley. Your line is open. Hey, everybody. My first question, Claire, is if I do the calculation quarter-on-quarter sequentially from Q2 to Q3, your revenue increased $172 million and your gross loss, if you will, improved by $182 million if you exclude LCNRV. Okay? Which is substantial, more substantial this quarter than last quarter. On my math, your improvement in gross profit ex LCNRV was actually greater than your change of revenue. Now, there may be some stuff going on sequentially, and maybe there was some really unusual other knocks on gross profit last quarter, but I just wanna kinda make sure my math is right and to see if there was what you could highlight sequentially that got a lot better underlying, excluding the LCNRV to draw that improvement of gross profit that actually exceeded the change in revenue. Thanks. Thanks, Adam. Unpacking the question first about LCNRV itself, it's important to understand there are different components. The way your calculation, which is, you know, entirely excluding it, is not necessarily the way that I would direct you to look at it. The thing that you may wanna look at instead is really looking in particular at the change in increase in LCNRV versus the complete exclusion of it. The way to think about it is LCNRV is really accelerating the recognition of losses as we take in, right, raw materials and have our firm commitments, which we're then grossing up to say what is the cost for us to turn these materials into that end-state vehicle themselves. As it pertains to the quarter, we get both, you know, the benefit of a reduction in bill of materials and conversion costs associated with, you know, sort of the baselining of inventory levels if inventory were held constant within those two quarters. That's why we look to that increase, as you look at that calculation in particular. If you're looking, based off of your own metrics there, right, it's more of an 11% increase in that cost of goods sold, on a comparable basis versus a 47% increase in deliveries in aggregate. We've made meaningful progress to sort of close the loop on that front, but wanted to just direct you to some of those nuances. Okay. I appreciate that. Thanks. Just as a follow-up on reservations, give us an update on where you're getting your customers from? What they currently drive? And then same thing for your deliveries, just to kind of get a sense how many are coming from Tesla or truck or SUV owners, any other color there would be great. Thanks. Sure, Adam. You know, one of the things we targeted in developing the products, you know, in thinking about R1T and R1S, these are really flagship products that introduce the brand, really open the brand umbrella for us to, over time, add additional products. Because of that, we wanted them to be pulling the target state, I should say, was to be pulling customers from a broad spectrum of vehicle formats and form factors as well as brands. Sitting here today, we now have the actuals to look at how we did relative to target state. We're really pleased that we do have a really diverse set of customers. Certainly customers are coming out of, you know, some customers are coming out of Teslas, but really there's no single brand that represents a significant percentage of our overall demand. I would wanna add a couple of really important metrics. The first of which is the vast majority of our customers, you know, close to 90%, do not currently own an EV. Meaning most of our customers are new EV customers, which is really important from a mission point of view because it means the brand, the products we've created, you know, we're helping to create new EV customers. We're driving that transition. The second is the number of customers that, you know, are buying an R1T that haven't owned a pickup before. That's well over a majority of the customers haven't owned a pickup before, and they're being introduced to it through a very different type of pickup, of course, something that's very lifestyle focused. In a similar sense, the R1S is in many cases folks are moving into it as a three-row SUV, as something they've aspired to but haven't been able to make that jump before. In many cases because of desires around efficiency and what we can deliver in a full-size, you know, three-row SUV with something that's great on-road and off-road. It's really pulling in a broad spectrum of customers. Thanks, RJ. Please stand by for our next question. Our next question comes from the line of Joseph Spak with RBC. Your line is open. Thanks so much, everyone. Claire, I wanna go back to Adam's question 'cause I was sort of pulling on a similar thread here, and I'm trying to sort of update real-time for what you just said. If I just look at auto COGS divided by deliveries in the Q2, no adjustments, and then I do the same thing in the Q3, but adjust for the increase in the inventory adjustment, as you just suggested, it still seems like that COGS per unit, while still obviously above what you're selling the vehicle for, did improve like over 30%. Can you just help us understand, like, is that not right? Like, is there something with the accounting that does not allow you to do that calculation? No, that's absolutely right. As I had mentioned, right, as you factor, you know, the sort of apples to apples comparison of the way that you're looking at it, Joe, you would see a, you know, 33% plus improvement on a quarter sequential basis. Okay. Maybe I misheard. I thought I heard 11%. Okay. Is that? The cost in dollars is 11% growth of dollars. Okay. That is off of, right, the fact that we're also increasing 47% on a deliveries basis. You're really netting the two of those. That's sort of the leverage you're seeing in the plant or is there anything with mix between, you know, R1s and the vans in the quarter that impact is that? The biggest driver that we've seen on a quarter sequential basis is just some of the cost efficiency that we're driving within the plant, as also moving beyond some of the startup related costs as well. That's a key enabler for us as we've seen and continue to moderate down that cost of goods sold per vehicle. The other thing, just to jump in here, Joe, that we have is we've launched multiple vehicles in parallel. The startup costs that Claire referred to, we were seeing all of those stacked up on top of each other, four different vehicles, you know, launching and ramping, you know, largely at the same time. Okay. Thanks for that. RJ, I guess just a second question. You know, a couple of quarters ago, you talked about the, you know, the revised plans, some changes to CapEx timing, et cetera. I'm just wondering in light of IRA and can appreciate you're still probably evaluating that, but like, does that cause you to reevaluate the plans again and maybe accelerating or re-accelerating some of that in-house cell development? Because, you know, I think that was one of the things that maybe had a sort of slight push up, but the return profile on that investment seems to be, you know, greatly accelerated versus what you were thinking at the time. It obviously also then directly impacts the financials of the rest of your business. Just wanted to get your thoughts on that. Yeah, I mean, as you know, there's still some moving pieces with IRA, but, you know, we think this is a really powerful step and an important step by the U.S. government to really both create strong tailwinds not only for electrification but also for the build out of a domestic supply base around battery cells. This is, you know, we couldn't be more excited about this. It's certainly driving shifts in how we think about the overall battery supply chain. It's not just the cells, it's also the core materials that go into the cells. You know, lithium hydroxide, lithium carbonate. Some of the key precursor materials are areas we're spending a lot of time focusing on. Not only making sure we have secure supply, you know, as we think ahead through the end of the decade, but making sure that supply qualifies for, you know, all the benefits associated with the IRA bill. Now, at the cell level, particularly important for us as we think about our two platform vehicles. This is something that has long been the plan to have domestically produced cells that would go into the vehicle. This just puts greater emphasis and importance on achieving that as quickly as possible. Okay. Thank you. Thank you. Please stand by for our next question. Our next question comes from the line of Rod Lache with Wolfe Research. Your line is open. Hi, everybody. You mentioned again that you have the funding through late 2025 with cash on hand, excluding this JV plan. Just wanted to confirm what that means. By late 2025, you will have ramped up normal and presumably funded most of Georgia assembly. I just wanted to make sure that that's correct. You didn't mention anything new, at least, about vertical integration into batteries or cathode active material. Is that part of your funding plan, just, you know, to the extent that it's important, particularly for the R2? Thanks, Rod. As we've talked about in the past, right, we remain confident in our, you know, cash on hand through 2025. As we've also spoken about, we will opportunistically evaluate, right, opportunities for us to invest in, you know, high growth, high return, options for Rivian on a go-forward basis. As you heard from RJ's, you know, last comments there around a lot of the work that our team is doing across the board as it pertains to securing that cell raw materials and the R&D and build out and capabilities that we have in-house here. Those are all things that we're currently evaluating and working on as an organization as well. The embedded guidance that we do have, you know, does certainly consider some meaningful investments in that cell roadmap, as we sit here today and look out at the building blocks for that, you know, future state opportunity. What the guidance doesn't include today is really much more of the large scale manufacturing build out of our cells, which would follow obviously the development and build out of our R2 platform, as we've spoken about in the past. So those are our core items that I just wanted to call out as you think about the building blocks and roadmap to that cash on hand through 2025. Okay. All right. That's helpful. Is it possible that that can change prior to the ramp of the R2, or is that something that just it takes a longer time to kind of get that pulled together? Yeah, Rod, as Claire said, a lot of what's already built into our plan is the development and pilot funding for all the development and pilot activities associated with our domestic cells, as well as building out some of the raw material, cathode active material supply chain. Above and beyond that, as we think about what the future lines look like, part of that planning exercise is to create opportunities for us to take a decision with enough time in advance to have impact in that, you know, 2026 and beyond timeframe. Those are decisions we'll take, and we look at them through the lens of, you know, recognizing the need to raise capital for things that we believe have very strong return profiles. Building domestic battery cells is one of those, certainly. I'd also say that this is something that we view as a must-have over time. It's just a question of how quickly those activities ramp up in terms of production capacity. Thanks for that. Just lastly, you're gonna be producing over 10,000 vehicles in the Q4, and I presume that benefits to some extent, but not fully from the second shift, and you're still constrained by supply chain. Can you just give us any color you might have on what the where you are in the S-curve now? What the trajectory might look like from here, just because there are obviously there are people who are reporting some push out for the R1S vehicles. Wondering if that has any implications for what the ramp looks like. Yeah, the second shift is now up and running. We're building vehicles on it. Those vehicles are being delivered to customers, which is exciting. You know, and ramping a second shift, of course, it's additional team, it's additional, you know, it's a lot of additional hours every week of time building vehicles. But it does have a ramp curve associated with it. Now while the ramp curve is much faster than what we went through on the first shift as we brought the line up and brought the plant up, it's not as if it starts immediately at 100% output. We're going through that ramp now. It is going well. As you called out in your question, we're very much cognizant of the limitations of supply chain. That was, as you recall, we talked about this in the last call. That was actually what drove the timing of the second shift coming online, was we want to ensure before we brought on, you know, a large group of additional team members, make sure that we would have the parts to build the vehicles. As we stand here today, that is ramping. It's going well. The first shift continues to make improvements. As Claire referenced before, we're very much focused not just on the ramp, but also on operational efficiencies and cost efficiencies, many of which come, you know, implicitly just through achieving higher output of the plant and, you know, leveraging more of our fixed costs more efficiently across more volume. We're very much focused on fully ramping the second shift and going into 2023 strong. Okay. All right. Thank you. Thank you. Please stand by for our next question. Our next question comes from the line of Charles Coldicott with Redburn. Your line is open. Hi, guys. Thanks for taking my questions. My first one on the R2 and the delay to 2026 from 2025 previously. Can you talk a bit about what's changed there and maybe also how this changes, if at all, your investment plans for the period up to 2025? Sure, Charles. This doesn't represent a material change in the product by any means. This is really reflective of making sure that the production site is prepared. We have the appropriate amount of time to go through the ramp-up phase, leveraging a lot of lessons learned as we've gone through the ramp of the R1T, the R1S, the EDV 700 and the EDV 500 over the last 12 months. Those ramps have informed, you know, our thinking on making sure that we have as close to a flawless ramp as possible with R2. Now, in terms of investment dollars, you know, one of the things Claire and I spend a lot of time with the teams on is working very hard to push off payments on some of the CapEx as much as we can, but ultimately some of these things require us to spend over the course of next year and of course, into 2024 as well. Got it. Thank you. On production. I think to meet your 25,000 targets, you need to average about 850 units a week in the final quarter. Can I ask if you've exceeded that rate in any of the weeks so far in Q4? I I think that a missing component may have impacted production so far. Maybe along the lines of a prior question, you know, thinking into next year, you know, should we think that, you know, quarter-on-quarter growth is kind of linear through next year or will there be some seasonality to it? The overall way to think about the growth as we look at this, both week-over-week, quarter-over-quarter is it's a symphony of not just what we're doing in our plant, but also our supply chain, as you referenced. You know, looking into 2023, we do see healthy growth quarter-over-quarter. We do have some planned downtime at the end of the year as we make some line improvements and capacity increases across the plant. This is the end of 2023. We've talked about this before. In the Q1 of this coming year, Claire and I both referenced this earlier, we are integrating our Enduro drive unit and our LFP pack into the EDV platform. That's new battery pack, new drive unit, and of course, with that, a host of related changes. That introduction of a new propulsion platform, which provides considerable cost improvement, which we're really excited about, that will take some time. We've built into the plan for next year, really the appropriate time to go through the quality loops and training to make sure that it's a seamless launch. Got it. Thank you. Thank you. Please stand by for our next question. Our next question comes from the line of George Gianarikas with Canaccord Genuity. Your line is open. Hey, good afternoon, and thanks for taking my question. Just quickly, you recently had a recall, and I'm curious if you could share your thoughts on how your service department performed and how you see those facilities and personnel ramping over the next 12 months. Thanks. Thanks, George. Just as a point of background, we had a recall for a torque fastener in one of our suspension components, and it called for inspection and tightening, which the operation takes a couple of minutes on a vehicle. This was a really remarkable opportunity for us to demonstrate the benefit and the value of a direct service network. We today have completed that operation on 83% of our fleet with about ten line of sight to another 10% that's currently scheduled. The speed at which we are able to very rapidly address this across the entire fleet and to do it, you know, moments after the decision was made to do this voluntary recall, to have our service leadership immediately working on deploying this and, you know, within hours, providing, you know, performing these first inspections and operations. Then as you just heard me say, within weeks, to have now over 83% of the vehicles complete is really something we're proud of, and our customers saw that as well. The ease at which the process was for customers was great, where we could go to their homes, where we could go to their places of business. In some cases, they would come into service locations, but we tried to make it as seamless as possible. Ultimately, I think the transparency in which we handled the situation was appreciated by our customers. Thanks. Just if I could ask one more. You know, there have been some recent high-profile missteps in autonomy, and one of your competitors stated that it may not be critical for them to develop that technology in-house. I'm just curious whether your view has been updated on that and whether you think it's critical to have your autonomous offering developed in-house. Thank you. Yeah. There's, you know, within the autonomous space, a broad spectrum of ways to approach it. I'd say to oversimplify, you have very hardware-heavy systems where a vehicle will have $100,000+ worth of sensor set and compute. You have more hardware-constrained systems that are designed to be deployed on vehicles that are purchased by customers, where you have thousands of dollars of sensing and compute. Our approach is to focus on the latter, where we're developing an in-house autonomous platform that will grow in capability, but using a more constrained set of sensors. In our case, a very camera-heavy and radar-heavy platform. This is something that we do believe is really important, as we talk about, you know, not just, you know, highway assist features, but growing above, you know, above and beyond what we see today in the Level 2 space. This takes time, but it certainly benefits from having a very large deployed fleet, with vehicles that are driving many, you know, many millions of miles. As of today, our vehicles have driven over 92.5 million miles, which is great. All those miles, you know, contribute to great learning opportunities to build and grow this platform. Thank you. Thank you. Please stand by for our next question. Our next question comes from the line of Emmanuel Rosner with Deutsche Bank. Your line is open. Thank you very much. First, quick question around, you know, how do you think about some of the both unit and company economics, going forward? I guess in the quarter, you've had quite a bit of improvement in cash, R&D and SG&A type of spending. Do you view these as a new run rate that is sustainable or, you know, especially as volume increases, or how should we think about it? At the unit level, obviously nice to see the improvement in, I guess, the gross losses. What would be sort of like the run rate, production rates, or cadence that you need to achieve to sort of essentially, you know, shrink these losses and bring that more into a positive territory as we look ahead? Thanks, Emmanuel. You know, first off, as you noted, we're really encouraged with the progress that we've made to prudently manage our operating expenses across the board. You're seeing that now through the performance in our Q3 OpEx itself. As it pertains to more so of the baseline, our expectation is from an R&D perspective that those R&D expenses will increase in Q4 relative to the level of spend in Q3. That's largely the result of a lot of the development work that is underway for the introduction of our LFP pack and Enduro drive unit in the commercial van program itself. There's a lot of development builds that are happening in the backdrop that will contribute to that overall increase in R&D that we expect to see in Q4. But we do expect to continue to manage our OpEx spend in aggregate as we're driving a lot of capital efficiency, while at the same time we're investing heavily in the customer experience. On a you know ongoing basis, we're continuing to open up additional you know service centers and our charging network, things of that nature, which contributes to that overall SG&A balance for us. But also driving incredible efficiency across every dimension in our control as we're scaling the business on a go-forward basis as well. To answer the second question you had on unit economics and what that looks like on a go-forward basis. I think one of the pieces that's most important to first understand is today, as you look at our cost of goods sold, the majority of that, you know, COGS per unit is really fixed costs within the business. The biggest lever we have is really focused on our ramp from a production perspective. Maybe one thing that I think would be helpful is really providing you guidance as it pertains to the core inputs and drivers as we take our gross margins from, you know, current state to the path to positive unit economics in 2024. As we've talked about in the past, we expect to see a material step change in gross margin in that walk from current state to that 2024 timeframe. The biggest lever, not surprisingly, is really that fixed cost leverage, as well as our opportunity to move beyond some of the startup related costs that you heard RJ and myself talk a bit about, that we've already seen from a progress perspective, Q3 versus Q2. That reflects about two-thirds of the margin walk. Just wanted to make sure that you had a sense for just the magnitude of how important ramp is from an overall unit economic perspective. The second key driver for us is associated with pricing. As we've talked about in the past, with the post-March first pre-configured pre-orders that we have in our order book reflect a $93,000 average ASP. We've got a lot of really exciting next generation technologies that will be coming into the fold as well, that allows us to believe that you know ASP could even you know drive meaningfully higher on a go-forward basis as well. So that's the second core lever in that economic walk. Then finally last but certainly not least is really all of the core focus and work that we're doing right now around the reduction of our bill of materials. Importantly, the engineering and design changes and the roadmap we have in place to drive meaningful cost savings within that bill of materials over the next couple of years. Then finally, all of the work that our procurement teams are doing around commercial cost down opportunities, as we continue to scale the business, and importantly, work hand-in-hand with our supply chain partners, and as Rivian continues to grow out its own manufacturing capacity, and drive better unit economics for the business. That's incredibly detailed and helpful. Can I just ask a quick clarification on this, and then I have a question on free cash flow. The fact that you're, I guess, basing these targets and walk on 2024, does that correspond or match with a specific sort of like unit number where you think that these economics essentially work or the volume is at the right place? I guess what you know what happens in between, I guess? Sure. We'll continue to see ongoing performance and improvement as we scale, especially given the magnitude of how important ramp is across the board. The important piece here is that in 2024, you see each of these key levers really in place as it pertains to production ramp, as it pertains to Rivian moving to those post-March first pre-order base. Importantly, as you think about the composition of a lot of the engineering design changes that we have from a roadmap perspective that all come together to drive that meaningful step change in gross profit. Okay. That's clear. On the free cash flow side, so with some of the efficiencies in CapEx this year, but also some of it being, I think, timing into next year, how should we think about, you know, CapEx going forward? I think your previous view was maybe low $2 billion, you know, year in, year out. You know, should 2023 be ahead of this as a result of some of these movements? We still expect that, you know, CapEx should be in that low $2 billion area as well, even despite the fact that there will be, you know, some push of CapEx spend from 2022 to 2023. Okay. Thank you very much. Thank you. Please stand by for our next question. Our next question comes from the line of Colin Langan with Wells Fargo. Your line is open. Oh, thanks for taking my questions. IRA was pretty new when you were last reported. Just trying to get your latest thoughts. You mentioned LFP, and that's sort of hitting early next year. There's a little uncertainty around how that might impact LFP since so much is sorta from Chinese suppliers, and the rules are pretty tough there. Do you still think LFP makes sense longer term? Also on the commercial credit side, I mean, how does that work with some of your customers? Are they gonna capture most of the credit benefit, or are you able to kinda get some of that back to your margin? With regards to LFP, this is a cell just to speak to it broadly. As a chemistry, it works really well in vehicles that require high cycle life. Vehicles that see lots of charge-discharge cycles relative to a high nickel cell. Commercial applications are really a perfect application from a cycle life point of view. Further, the lower volumetric energy density associated with an LFP cell fits nicely into a vehicle that's physically large because you have the space to fit the pack, to you know, to achieve enough energy storage, but to do it in a slightly larger space. We're quite bullish on LFP. Interestingly, with regards to IRA, there's not as stringent requirements for commercial applications or sourcing of cells. This is really important. The $7,500 credit for low GVW commercial vehicles, low gross vehicle weight commercial vehicles, stands regardless of source of sale. As we talked about in the last call, the size of those incentives grow as you move into higher gross vehicle weight classes. Now the second thing I'd point out is we also do believe that the supply chain will evolve. The inherent benefits you know referenced at a high level of an LFP chemistry for high cycle life applications are real. There are meaningful advantages. We see a lot of opportunity to make sure there's the domestic supply chain for both the production of LFP cells, but also for the cathode active material and as well as some of the other precursor materials. Above and beyond that, of course, by the nature of an LFP cell, you remove nickel and you remove cobalt. So from an IRA compliance point of view, it's actually an easier chemistry to achieve compliance on, notwithstanding the fact that there's not, as you already pointed out, LFP supply chains for building the cells in the U.S. today. Certainly from a raw material supply point of view, it is an easier sell long term to maintain that compliance. On the commercial credits, I mean, do you think your customers will get that benefit? Because I'm not sure some of the cuts make. I feel like it might have been cost plus arrangements for some of the vehicles. Yeah, we believe the, you know, our customers and specifically our large commercial customer that we're launching our commercial business with will achieve some of those credits. There's also credits that are, manufacturer-facing with IRA. We're very cognizant of managing both sides of those credits, both the consumer or the customer-facing as well as the manufacturer-facing. Got it. Just last question. On the joint venture with Mercedes, how does the production split work? Is there a fixed amount? 'Cause, I mean, is there any concern because Mercedes obviously has an established footprint there, so, you know, is it just sort of you each have an allocation of production, or if there's demand, you could take over most of the production? How does that sort of work in the agreement? You know, at this point, we're still working through a lot of the specifics of our agreement. You know, we've signed and announced an MOU around this joint venture, but there's still a lot of work to be done in terms of defining exactly how it will work. Okay. All right, thanks for taking my questions. Thank you. Please stand by for our next question. Our final question comes from the line of Ryan Brinkman with J.P. Morgan. Your line is open. Hi. Great, first, thanks for taking my questions. You know, maybe just a couple around the planned increase in production here in Q4. I think squeezing from your reiterated full year outlook, it implies about a 45% sequential growth on top of Q3's, I think 67% improvement. You know, firstly, you mentioned being short a specific component in Q3. Are you able to share what that component is or if you've cycled past that shortage? What has been your experience so far here in Q4 in the first, you know, five weeks of the quarter, et cetera, maybe with regards to the second shift too? Thanks. Ryan, we've talked about before just the improvement we're seeing broadly within the supply chain, in particular relative to the first half of this year, which you know we've spent some time talking about just how challenging that was. That improvement we're absolutely seeing and continue to see. You know, with a vehicle that has hundreds of suppliers and thousands of components coming from the suppliers, it only takes one part from one supplier to stop the line. As Claire referenced earlier, we had five days we lost already this quarter because of a single component supply shortage. Now, that component and the supplier of that component is something we spent a lot of time working really closely with them to avoid having this happen again and have built robust contingencies to manage this risk going forward. We do believe that there's gonna continue to be challenges, certainly with supply chain, but we do believe with this specific instance that we've settled it to allow us to continue to ramping without those types of interruptions. Okay. Very helpful. Thank you. Just lastly, I think last quarter you talked about, you know, preserving free cash outlook by deferring some CapEx spending that was discretionary into next year. Now with the push out of the R2 a bit, how are you thinking about that? Are you maybe looking to trim capital expenditures next year relative to what might have otherwise been the plan? Ryan, as you heard, we both took down our guidance from a CapEx perspective this year. Part of that is a shift into next year. Next year does have some, you know, incremental benefit in that we're not spending at the same capacity towards the plant build out in Georgia. In aggregate, as I mentioned, we still expect to be in that low $2 billion area even with those movements. Okay. Very helpful. Thank you. Thank you. I would now like to turn the call back over to RJ for closing remarks. Thanks, everybody, for joining the call. It was great to have such a broad spectrum of questions here today. Yeah, just to reiterate some of the points Claire and I both made throughout the call, we're really looking forward to the continued ramp of our production line. The impact this has not only on the economics of our business, but very importantly on ensuring we deliver to customers excited customers that you know help us to bring them their vehicles, get them in their R1T or their R1S as soon as possible. That's a critical focus for us. As we look out into 2023, the continued ramp and continued growth in deliveries is our core focus. With that, of course, driving efficiency into and across the business, not just on our cost of goods sold, but across our operating expenses as well as how we deploy capital from a CapEx point of view. With that, thank you everybody for joining, and we look forward to our next Earnings Call. Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.