I don't think you need much of an introduction, but we're very pleased to have Founder and CEO of Rivian with us today. RJ, thanks for coming. Yeah. You said you've been, as we were sitting down, you're like, "You've been crazy busy. Yeah. What you've been crazy busy doing, and what messages do you have for us today to kick things off? Well, yeah, it's just an incredibly dynamic environment from both demand side and watching. You know, there's just the sentiment around electric vehicles and the tone around electric vehicles, in particular, I think as they become more politicized as part of this election cycle, has certainly been there. But for us specifically, we just went through a major relaunch of our vehicle with what we call Gen 2. Mm-hmm. So mass upgrade to our network architecture, significant cost down across the vehicle. We changed out well over half the suppliers and the parts in the vehicle. So while the car looks very similar from the outside, there's not a part that hasn't gone untouched. Big consolidation, the number of components, ECUs, parts, and suppliers in the vehicle. And so, with that, we've had a couple of supplier issues of recent that have been challenging, and in particular, a few issues around our in-house motors with some of the components that have been painful and a reminder of just how the multi-tiered supply chain can be difficult. A reminder of what we saw in 2022 and the beginning of 2023. So we've been working through some of those issues. Mm-hmm ... which is impacting us in this quarter. But along with that, we're also continue to see the R1 be one of the top-selling vehicles in its price category. So over $70,000, you know, we're currently the best-selling vehicle in a number of states over $70,000. And in the EV space, the R1 platform is continues to be a top seller. But the size of the market over $70,000 is smaller than we would like. And certainly, with the macro that we're living in and experiencing, we do see a need for our R2, for a product that's priced under $50,000, something in that $40,000-$50,000 range. So boy, do I wish R2 was ready to be selling to customers today. But there is a tremendous level of excitement, and I think, I've said this before, there is a lot of latent demand for EVs that's hard to see. But customers that want a form factor that's unavailable are looking for a brand and brand story that's different than what they have today, and want something that's clearly sub $50,000. And there's just not a lot of great choices. Of course, the Tesla products are outstanding. You know, Model Y continues to dominate, but there's outside of that, there's not a lot of really highly compelling products. And so we see the R2 as being significantly different than Model Y, intentionally. Not to say Model Y is not a great vehicle, it's just answering a different customer use case than what an R2 does. But the similarity of price points will create, we think, another viable choice for a lot of customers. Okay, I wanna double-click on demand, and definitely some of the things you're doing with the R1- Mm-hmm - relaunch, if you will. Yeah, yeah. It really is. Yeah. I'm not aware of any product that has undergone such an extensive reengineering since the- Yeah. Yeah ... I think—I don't think you are either. You're doing it. But just the issues with the supply and- Yeah - the motor- Yeah Is this something that kind of threatens the goal of a gross margin positive by year-end, do you think? We're working really hard to solve it. If provided we solve that, we remain very confident in our gross margin positive by Q4. And ultimately, it's a... We need to be able to achieve the volume to absorb the fixed cost of our plant. But we remain hyper-focused on that. You know, these supply chain issues are frustrating, especially when they're a level or two removed. And you know, in R1, we've gotten to a point of stability, and then we inserted a lot of new suppliers into the system- Right - which of course have the benefit of saving us a lot of cost, but also have the challenge of bringing up a new supply base. Okay, so supply is a bigger concern right now than demand? Is it fair to say, in the very short term? Yeah, well- or real time? Like today, certainly. I think in the long term, well, it's actually in the short term, certainly, in the medium term, all of you are looking at us through the lens of R1. So you're thinking about Rivian, our ability to be profitable through our flagship products. But really, in the long term, our story, us as a company, is gonna sit really entirely with the success of R2 and R3. And not too different from, you know, of course, Tesla's success with Model 3, Model Y. We don't really judge Tesla anymore on the Model S or Model X. Their flagship product still exists. They're important for Tesla as a brand, but they certainly have very little bearing on the financials. Mm-hmm. We are working very hard to have a very similar outcome, where R2 is the dominant vehicle within our portfolio from a volume point of view. So, as we think about what R1 represents for demand for 2025, it again links very heavily to macroeconomic conditions that we're gonna see. With a vehicle that has an ASP, you know, close to $90,000, there are limits to how many people will buy vehicles at that price point relative to something that's half the price with our R2 or R3. Mm-hmm. All right, so you mentioned EVs demand seems to be getting politicized. Yeah ... So how is demand then? Is it... How much of it is politicization? How much of it is just wealthy families that wanted an EV got one. Yeah, yeah. I mean, you see them all over Westchester, you see them in this part of the world. Yeah, I know. They're beautiful, and customers love them. Yeah. But, you know, finding that next 1%- Yeah is tough. How much of it is just that kind of the asymptote of that price point? Yeah. Or is there something else? Yeah, well, I mean, just to be clear, EV demand is still growing. Mm-hmm. It's growing at a much smaller rate than it was in 2022 or 2023. So the growth rate has slowed, but it's still a growth- Yeah Story. And so I think the question that, that the industry is challenged with today is how fast we'll get to the end state, which is 100% of new vehicle sales are electric. And I would say unequivocally and without any any hesitation, that that is the end state. That hasn't changed. And so what we're witnessing is companies that were planning to transition sooner are now dramatically pulling back. I think that's bad for the world, but I think it's actually, on a comparative basis, it's actually good for Rivian in that there will be a relatively small number of true, pure-play, focused companies. Of course, Tesla being the existing leader, but ourselves, being there as well. And so I'm surprised at how quickly large incumbent OEMs have pulled back, and I'm surprised at how much emphasis has gone into ICE and hybrid. Of course, that's optimizing for profitability in the short and medium term. But I do think it is a challenge, and it's a challenge for the bigger OEMs because they have a large denominator they have to capture. They have to continue to sell similar volumes to what they've sold in the past. So I think we're going to see continued presence of EVs, non-EVs, both in hybrid and pure ICE form. But by 10 years from now, you know, I think we'll see very significant penetration. Okay, so China's not a market that you participate in right now. Yeah. However, many in the industry argue that China is now the benchmark really to use in terms of BOM cost- Yep - and design- Yep and architecture, industrialization. Yeah, yeah. Even some argue even more so than Tesla that Tesla is now looking at China- Yeah and seeing how they're doing things and look to incorporate. Yeah. Tell us what your team has done to help benchmark some of these things. Yeah. I don't know if you bought an SU7, some call it the FU7- Yeah if you've looked at it, taken it apart, if you look Yeah and seeing how they designed some things. And even though they're different customers- Yeah, yeah and different ethos of the brand, is this... What are you learning? Yeah, it's a great question. Yes, we're seeing, you know, in China there's an enormous level of competition amongst a lot of different brands and both new companies, existing companies, and in the EV space, and of course, BYD, chief among them. We've seen some pretty impressive, I mean, I should say, very impressive vehicles from a cost point of view and a price point of view. And so lots of people have taken apart those cars and looked at what's in them. Mm-hmm. In many cases, there's not some singular magic wand. You don't take it apart and say, "Oh, that this is wildly- Mm-hmm different than you expected," but it's a cost advantage that exists across every nut and every bolt and every wire and every panel in the vehicle. And supplemented with the companies are competing in an environment where they're operating at zero gross margin and planning to do that for a very, very long time. And so or negative margin, and supported, in some cases, through other means. So you have a landscape that's just very aggressive competition. And with that as context, we have made the decision to not enter China for a lot of reasons beyond just cost, but also the geopolitical of being a US company trying to enter China. I think that that window is open for Tesla. They've executed that. It's a huge part of their cost structure today, but it's not something we're going to pursue. But it is an important question to say: Will those Chinese products be products we compete with here in the U.S. or, for that matter, in Europe? And, you know, the tariff structures that have been put in place today, there's a 100% tariff on vehicles, full vehicles from China. There's roughly 30% tariff on batteries from China, and then a much smaller tariff on components. And what we've seen happen over the last eighteen months, and really I'd say even more over the last, call it two, three quarters, is a lot of Chinese entities are recognizing that the way to access the U.S. market and, to a lesser degree, the European markets, is not necessarily with full vehicles, but through component relationships, where the tariff structures are lower, where the geopolitical challenges that exist at the, you know, respective top of house for both countries are not really felt. And as I described, when you take apart and look at the cost structure on some of those Chinese products, what's helping them is that it's not necessarily the part design. There's efficiencies of design, no doubt, but it's that every single component through their tiered supply base is 20% to 30%, sometimes 40% cheaper than what we would have for a part or a component that's sourced in a Western market. And so really designing and engineering our supply chains to identify where we see opportunities to leverage the much lower cost basis that exists, that's been built out in China, and that's on mechanical parts, that's on. You know, often we try to put it to parts that are relatively fungible to move. Mm-hmm. Meaning, they're not things where we build a lot of technical dependencies, but that often carry pretty significant costs, and so we've really been super intentional on designing our supply chain with R2 very differently than how we approached R1. All right, let's talk about R2. I want to talk about R2. I want to move into, like, into tech and in the Volkswagen relationship as well, and we'll open it up. R2 it seems to involve, if you're talking about a $40,000-$50,000, kind of sub-$50,000- Yeah price point, for that to be profitable- Yeah You're gonna have to get your BOM cost down, like- A lot volume adjusted, like 60%-70%. I mean, like- Exactly, yeah. How do you do that? Yeah, this is... There's a few things here. So- Mm-hmm The R1 BOM, what we launched with, the bill of materials on the vehicle that we first put into the market, that was a bill of materials that we largely negotiated in twenty eighteen and twenty nineteen. Just to wind everybody's clocks back, that was like a moment of peak auto. The auto industry was thriving. Everything was going really well. The good old days. It was the good old days. So it was a hard time to negotiate with suppliers. To go to a supplier, imagine in twenty nineteen, before anyone had seen or driven a Rivian vehicle, before any of the success we've had on the customer side had happened. You know, this past year, U.S. News & World Report rated us the top brand. J.D. Power put us the highest level of brand appeal two years in a row. It's the highest level of customer-rated satisfaction from customers, not from us. So all that wasn't there, and so you go in to talk to a supplier and say, "We're going to electrify an SUV and a truck," and they'd say, "You're crazy." So we really need parts, and they'd say, "Okay, we'll sell them to you." But you can imagine it was a significant risk premium. And that risk-adjusted bill of materials is what we had to launch with, and it took us. We anticipated that we'd be able to drive that down very quickly post-launch. We'd say, "The product's successful. We're doing well. To stay a supplier to us, you'll need to bring your BOM cost down." What we didn't anticipate was essentially the supply chain crisis that happened with COVID, and we went from an already inflated BOM, where we had to pay a lot to get suppliers to work with us on these contracts we negotiated in 2018, 2019, to then having to beg those very same suppliers to not only not lower their price, but to not charge us extra just to give us parts in that really complex environment. So we had, you could argue, a perfect storm that made it very hard to take cost out of our bill of materials. And so that ultimately led to what Adam referenced before, and I referenced, which is what we call this Gen 2 vehicle, where we said, "Look, either the cost comes down on these parts to what's reasonable, or we're going to move suppliers." And we had to move a vast majority of our supply base to new suppliers that were willing to be part of our long-term story and were working with us at price levels that correspond to the risk profile that we have today, which is to say, much lower. And with all that, we also made changes to design, and we've talked about this now a few times. We were able to bring the bill of materials down quite a bit. We spent time on this at our Investor Day, but that's at R1. As that's been happening over the course of last year, we've been negotiating pricing for R2. What's been remarkable is the R2 BOM, the R2 bill of materials, is dramatically lower than even the lower BOM in R1. It's because we're starting these negotiations from a clean sheet. We're developing components and systems from a clean sheet. The combination of the design of the vehicles benefits from being a true clean sheet design relative to our first vehicle. The features and the content of the vehicle have been adjusted, and of course, the size of the vehicle has been adjusted for the price point it's operating in. Then the leverage that we have, as I just described, is night and day. I've described it as just before, but lots of ways to try to communicate just how different this is, but on the R1 initial sourcing, like, to get a supplier to work with us, it would usually involve some version of me flying to a building in Southeast Michigan, somewhere in the Detroit area, waiting in a lobby to start a meeting fifteen minutes late with, like, a senior manager of sales at a supplier. Those very, very same companies today will fly their CEO to Normal, Illinois, to meet with us to try to be a supplier. It's just... Like, the leverage we had is so different, and it's surreal for me because it's like, man, just a few years ago, we were, like, begging to get a meeting to meet, you know, some person six levels down from the CEO to sell us a few parts. And now the CEO of that company, who was also the CEO then, is flying out to the middle of Illinois to come to our plant to pitch us on being part of R2. So that translates to a very different cost structure on R2 relative to what we saw on R1. Now, all that being said, of course, the announcement of our deal with Volkswagen. This is, I think, everyone at least maybe heard of this, but just a high-level point. It's a $5 billion deal whereby Volkswagen, as a group, is adopting our electrical architecture and our software stack across their portfolio of brands and products. That statement of confidence and statement of endorsement has led to a further sourcing tailwind for us as we complete a lot of the negotiations on our bill of materials for R2. So if I were to adjust, if I look at your stock at whatever it is, $12 today, and if I were to NPV the cash you're going to get from Volkswagen, adjusting for the- Mm-hmm The share count changes, your enterprise value is, you know, roughly $6-$7 billion. Yeah. Okay? So the stock market is looking at your business and making some, you know, in- Mm-hmm solving for, "Wow, this is going to be really tough. Yeah. And you have many, many people, including some investors in this room, who are asking the question- Mm-hmm Is Rivian better off being a kind of a stood-up Tier 1 supplier? Yeah For advanced architectures and technologies. Mm-hmm and software Mm-hmm software-led, true software-defined vehicle- Yeah and designs? Yeah. Which they've proven, and we're going to talk more about it. Yeah - an OEM. Yeah. What do you say to them? Why, why is it important for you to be an OEM? 'Cause like, Yeah ... they're asking questions about capital- Yeah the capital commitments now, and then when you throw in the AI commitments, whether it's on- Yeah on-prem or not on-prem, this is, you know... Yep. Yeah. What do you say? I think the first thing to recognize is, if we look at the end state, if we can debate when, 10 years, 15 years from now, if you're in a CARB state, it has to be 10 years from now, everything will be electric. Just to reiterate a point I just said quickly, yeah, there's a surprising lack of appreciation for how much and how fast and how significant the change to electrification will be over the next decade. In California and states that have also adopted the California Air Resources Board standards, from twenty thirty-five onwards, you will not be able to buy a vehicle with an engine in it. It's like that twenty thirty-five sounds like it's forever away. That's ten years away, so that's a product cycle and a half. The scale of this change is going to be significant. The United States, certainly from a policy point of view at the federal level, is not as aggressive as Europe and certainly not as aggressive as China, but policy is going to be driving us to that, and we think consumer demand will start to shift to that at a, at a large scale as well. We believe there's going to be the emergence of a few brands that build up dominant market positions in this new world. If we can translate even a fraction of the market share dominance that we have at a high price point, you know, we're at, you know, over $70,000, we're very, very strong market share player. If we can translate that into the sub-$50,000 price range, which is where you see Model 3, Model Y. By the way, the vast majority of vehicle purchases, the average sale price of a new car in the United States is just under $50,000. We believe we'll be in an outstanding position, and certainly the. We also believe that the market doesn't yet value that for, for a lot of the reasons we talked about. But one of the hardest things to create, and one of the things that if I remember back, or wind the clock back five years, the thing that I used to stress about and not be able to really, frankly, articulately answer how we'd solve it, is how do you go from nothing as a brand to something that people care about deeply? The idea of, like, brands are a funny thing. It's, they're ethereal. It's like you can feel it, you can sense it, but it's hard to be quantitative about it. You know, why does Nike mean so much to people when I say that? Why does Apple mean so much? So the idea of creating a brand is, it's a bit of magic in a bottle, and miraculously we can spend a lot of time talking about how it happened, but we have built a brand, and we built a brand that is highly valued by customers. And I'm saying that as obviously a biased party in this. I believe it's a really cool brand, but importantly, customers are saying that. So we have the number one rated brand in the auto industry right now in terms of repeat purchase and in terms of first-time appeal, and that's 2023, 2024, as per J.D. Power. Consumer Reports does a similar study, number one rated brand in the premium segment. U.S. News & World Report does a similar study, number one rated brand. So we've created a brand that has real value. Now, that's not to say that the business of selling technology isn't valuable as well. So what we've done with Volkswagen is an example of that. But I would say it'd be a an incredibly sad miss to take this wonderful brand that currently has higher levels of satisfaction and engagement than some of the best automotive brands in the world, Porsches or Teslas, and to not go leverage that with a product that has product reach that's much broader. RJ, it sounds like you really want to make cars. Yeah. Yeah. Okay. Okay. So why Georgia then? Do you have enough- Mm-hmm. Money to make that your plan A? Yeah. Why is it when you think about various demand scenarios, whether there's demand for one hundred and fifty thousand- Yeah Rivians or double that in the next few years, I imagine that's part of the calculus as to why. Yeah ... you would need just physically more capacity. Yeah. or is it that just normal? Yeah ... It's too normal of a car plant, and you need to- Yeah ... clean the sheet. Yeah. 'Cause there's a lot... Again, there's people in this audience- Yeah ... and listening or thinking like, "Why Georgia? Does it really? Yeah. Yeah. They're not confident that's part of the way- Why it's any- -questioning it. Yeah. We had an adjustment to our strategy we talked about earlier this year. Originally, we were going to launch the R2 platform, which underpins, as you can see now, R2 plus other variants, R3 being one of them. You can imagine there's other things that will come on that platform. We said that platform was going to launch out of Georgia, and we announced a change to the plan to launch that out of Normal, out of our existing production facility in Illinois. There's a few reasons for that. The biggest immediate reason, which is certainly on the minds of a lot of investors, and I'd assume on the minds of all of you, is capital efficiency. It allows us to remove more than $2 billion of capital spending through the launch of R2. But the other reason is it removes, essentially removes volume risk around any single vehicle. So now in Normal, we'll have R1, R2, and our commercial vans, which we really haven't talked about, but our commercial vans produced under the same facility. And it gives us a level of fungibility to say if the demand for things that cost $80,000-$90,000 is low, that's fine, we can sell more R2s. And if we are selling a lot of high margin, $95,000 R1s, we can make those as well. But it removes, long-term, any risk around the overall macro conditions that exist for a flagship product. And it sequences, importantly, when we turn on Georgia. So Georgia is going to be built across two phases, ultimately getting to a nominal capacity, meaning, I call it baseline capacity, without really pushing overtime of four hundred thousand units, with two chunks of two hundred thousand units each. And so that's a decision we can take as we see the market evolving, but it allows us to launch R2, get to positive margins and positive cash flows of business with our Normal facility, and then be risk sort of managed or risk-weighted in terms of how fast- It seems like the R2, you know, SOP and ramp and Normal is- Yeah opens up, and it changes the probabilities of- Yeah, and- -expansion. Yeah, totally. And to your point, the amount of excitement we're seeing for R2 is really high. Mm-hmm. It's humbling. It's like people, especially right now, we get so much inbound from customers that are saying, "Hey, can I get an R2 next summer?" And I'm like: I wish we could get it to you by middle of 2025. I wanna move to your autonomous tech, which you've been increasingly moving in-house. Yeah. You've explained how, you know, it's either farm everything out to someone to do everything or do it all yourself. Yeah, yeah. and this in-between thing, which you would, you know, most OEMs are in some form, is not optimal. Yeah. You've decided to more vertically integrate. Yeah. In addition to just kind of emphasizing why that was so important to you, I guess specifically, and we've discussed this before for this audience, there's many in the AV community and the robotics community that say that large language models and these, you know, this latest AI turbocharging of machine learning is transforming the way this embodied AI- Yeah ... work, Yeah learns. Do you agree? Yeah. How does it change your capital, the amount of capital that you allocate towards- Yeah - compute model training or- Yeah other aspects that you might need to just stay in the game? Yeah. Really quickly, just to provide background on how we've approached this, so our Gen one vehicles, we had a compilation of systems that came together, including a single front-facing camera that provided both processed information that would detect objects, classify the objects, and provide the vectors for those objects. The world of using multiple systems coming together with a late fusion of information is the wrong architectural approach, and we deeply believe to do this right, you need to control the entirety of the perception stack, and you need to fuse that information as early as possible, so it allows and enables an end-to-end approach in terms of how you're training the models, going from cameras all the way through the controls. And to your point, with what's happened in LLMs, the world has changed so dramatically. It's hard to fully appreciate how we approach self-driving today, how different that is from the way we looked at it as an industry four or five years ago. Where a true end-to-end approach with a heavy emphasis on training, not in the vehicle, offline, from the vehicle training, how different this looks. And so architecture, what's now in Gen 2, we have more megapixels than any other camera, any other vehicle on the road. We have 55 megapixels, incredible light performance. We have a new compute stack that's 10X more powerful on board from what we had in the past. And of course, the features we're now seeing with the Gen 2 vehicle are like the very beginning of the potential for this platform. Where previous systems, we have late fusion, you end up as encoding to capability. Basically, it's gonna get a little better than what it launched with, but it's not- It can't learn at the same- It can't learn. And so then the question, which you alluded to rightly, is: How do we get all that training? So where are we gonna get all these H one hundreds from? And, Do you need them? Well, it grows with the size of the fleet. Okay. It grows with, I mean, a lot. And, often it's I think for some reason, we have this conception that the H one hundreds care who owns them. They don't. They run the same way. So whether we build it ourselves and we own our own data center, or whether we're renting them from somebody who also owns a data center, it really doesn't matter, provided we can move information freely between that location. And so we've not announced any of this in terms of our details, but we, of course, are building a very robust way to access a lot of training, that allows us to, in a low-cost way, make sure that all the things that our vehicles are seeing, discrete events, hard events, the safety cases we're building around those events, are used to train the fleet. And the rate of progress here is, it's like night and day to what we saw two years ago. It's Yeah. It's hard to fully appreciate, and I feel like in five years- ... I feel like to tease the audience for a conversation, another conversation we should have on this ever-growing and changing surface area between AI and your business. Yeah - and I think how Volkswagen can play a part of that, not just as a capital provider- Yeah - 'cause anyone could provide capital- Yeah but, you know, to help kind of integrate you more and get you closer to those photons- Yeah and get them closer to those photons, and then now they learn, so. Yeah. Well, you know, this isn't a statement about Rivian. It's just an interesting statement for all of us to think about. If developing a robust automotive foundation model takes, call it, $3-$5 billion of training to get to a, a really solid place, do we think there's gonna be 25 different companies building those foundation models? The answer is probably not. So then the question is: Then who are the people that are gonna build it, and what are the partnerships- Mm. and relationships gonna look like? Yeah. That's cool. So there's- All right ... there's a lot I think that we need to think about as an industry- Yeah so that we're not spending $200 billion training 25 models. Yeah. Sort of like LLMs. You know, the hyperscalers built the big, big models, and there's lots of little levers to this. Yeah. Well, thanks for your perspectives as always, and your insights. Yeah. RJ, thank you. Good luck.