Okay. Thanks, folks. As we continue day one of the Barclays Global Autos and Mobility Conference, I'm Dan Levy. I lead U.S. Autos Research coverage at Barclays, and I'm very pleased to have with us Rivian, leading EV automaker, leading maker of software-defined vehicles, one of the two software-defined vehicle makers in the U.S., or leading on this front. Very pleased to have with us Claire McDonough, the company CFO, as well as Chip Newcomb, who's the company who's leading IR. So we're going to go through a series of fireside chat questions, and then at the end, we'll have time for Q&A. Anyone who has questions can also email my colleague J.R. Young, J-R-Y-O-U-N-G, at Barclays.com. You can ask them anonymously. With that, Claire, welcome. I would all urge you to look. There's a good Detroit News article about Claire's career trajectory, so from pastry chef to CFO. Interesting trajectory. Oh, thank you. I want to actually just first start, because you have a big event coming up. You have your AV Day, AV AI Day on December 11. Just give us a sneak peek of what we can expect. Sure. First off, thanks so much for having me here. We're going to be live streaming our Autonomy and AI Day event broadly, so everyone has the opportunity to tune in to the progression that you'll see from Rivian disclosed as part of the details of the day. Our objective is to both demonstrate the progress that we've made to date at Rivian, through first the transition from our first-generation autonomous programs to today, we're utilizing really a fully in-house camera suite, sensor suite that's feeding all of the data and inputs that goes into the Rivian large driving model that allows us to have an accelerated rate of improvement across our autonomous offering. What you'll hear about is both the hardware roadmap for the future, software trajectory for the future, a lot of the inputs in terms of the data advantages that a vertically integrated player like Rivian that's controlling both the hardware and software has in store. I think that the piece that sometimes does get missed as you look at our vehicles just sort of point in time from a feature standpoint relative to what else is out there is where is Rivian on the slope of the curve? That's one of the areas where we've seen truly rapid acceleration of improvement on our autonomous roadmap with every single monthly over-the-air update that we provide our vehicles. They're, again, providing over-the-air updates for our software features that feed our autonomous roadmap. You'll see and learn a little bit more about what's coming next in terms of the feature development and even some near-term, more visible milestones as well. A lot to look out for. A lot to see. Great. Okay. More near-term, I want to go back to you had your three key results recently. I think what struck us as really maybe the most noteworthy piece of that result was the profit per unit. It's still negative, but this was the best ever gross profit per unit that you've ever posted. I know there were some moving pieces in there on EDV versus fixed cost absorption, but maybe you can just talk more broadly right now about the gross profit trends we've seen on the current lineup, R1 and the vans, and what the future trajectory is. Does this give us any indication on what R2 can shape up to be? For everyone's benefit, we reported roughly $96,000 of cost of goods sold per unit delivered in the third quarter. As we think about that as a baseline, once the R2 program is launched, we'll have the added vantage point of having significant fixed cost leverage for our existing programs that improves the financial health and profitability of the R1 program and commercial vans, but also importantly, we have spent a lot of time talking about the underlying unit economics of R2, which has roughly half of the material cost of an R1, but importantly, significantly below that as we think about the non-cost of goods sold or non-material cost that go into our cost of goods sold as well. Are we seeing right now in the numbers the benefits of that changeover from Gen 1 and Gen 2 to R1? I think on our numbers, it looks like you've flipped the script on now the vehicles are variable margin positive. Are we seeing that playing out? The R1 program is variable margin positive. The commercial vans have been variable margin positive for a while now as we made some significant advancements in terms of our battery cell chemistry and drive unit technologies a couple of years ago for the commercial vans. We are seeing all of the renegotiated costs come into play from the switch to our Generation 2 R1 program, both from a commercial negotiation standpoint, but also, importantly, all of the next-generation technologies that are adding to some of the structural cost advantages that we see with R1. Okay. I want to double-click on a comment you made on R2. I think this is where there's been a lot of attention. The BOM costs, right? BOM being roughly half of R2 of what it is for R1, the non-BOM costs being less than half, but in that ballpark. What is your line of sight on this? How do we get comfortable that this is going to play out? The line of sight that we have on the material costs are driven by the contract terms that we have with our supplier partners, which today we're shortly by the end of this year, we'll be starting our manufacturing build process. That would be building R2s in our manufacturing facility on our manufacturing lines with production intent parts. It just shows you how close we are to getting towards more commercialized serial production in the first half of 2026. It is a lens into the visibility we have into each of those respective contracts. The other part of the equation on the non-BOM COGS, so to speak, is driven through the process engineering that we've gone through to understand how many employees in each respective shift does it require for us to produce the part? How do we think about the staffing levels per each location? There is a very high degree of fidelity as we do a lot of simulation work on our manufacturing lines to simulate the production process and the labor as part of that process. Walk us through the trajectory to get to positive contribution margin, and then eventually you targeted exiting 2026 at total gross margin positive. Is the story here, I mean, maybe you could just walk us through the fixed versus variable costs. If it's fair to assume that the fixed costs aren't increasing all that much and you've got the contribution margin piece figured out, is this then just a function of volume? Walk us through that fixed versus variable dynamic and the path to gross margin positive. Sure. With any new launch, there are inefficiencies in terms of the overhead staffing levels. You flip the switch on, all of a sudden, you now are depreciating new assets into your cost of goods sold as we unlock the first commercial production for R2. In the initial quarters of the ramp, you'll see that be a headwind to the business. Very quickly, as we continue to progress the production ramp and have the ability towards the end of the year to add a second shift of operations onto the R2 line, that's where you see the opportunity to very rapidly get to profitability with the R2 program. R2 also benefits from the fact that we're introducing the product into a running factory as well. The same way that R2 benefits R1 and the commercial vans, R2 also benefits from their existence and volume as well as we think about this being a lower level of headwind or lack of fixed cost absorption relative to if it was in a fully owned greenfield facility just dedicated to R2 production. Okay. You mentioned it briefly, but just the cadence of what we should expect on the ramp. There are going to be some inefficiencies. One line, which implies roughly 50,000 units of annualized capacity. What is the cadence on that ramp? What is the trajectory over time to get to the full three-shift production? Sure. The overall installed capacity across three shifts of operation is 155,000 units. Over the course of 2026, we'll start with one single shift. Part of this is to also ensure that our supplier partners are ready to scale and ramp as quickly as we would want to when we add the second shift of operation on. We expect to be in a position to add the second shift, as I mentioned, in the second half of 2026. That will set us up to continue the progression of ramping up the second shift with the opportunity to add a third shift in 2027. Okay. Great. Just broadly on the economics of R2, the BOM is fixed, right? That's been in place for a while. We've seen, obviously, a lot of changes in the industry that will impact probably the way that you're getting profit in terms of and the economics that maybe you've planned out for the vehicle. Be it no EV tax credit, no reg credits, or little to no reg credits. There's some tariff costs now. What are the factors that are within your control that you can modify, be it on trim configurations, pricing preferences? I don't know if there are any cost considerations. What is in your control to mitigate maybe some of those regulatory or macro industry factors? Our philosophy and approach has always been to provide a vehicle that is incredibly compelling from its overall value proposition in the market relative to combustion engine vehicle comparisons, other EVs in market as well. We think that R2 embodies that in spades. Given the R2, I have had the advantage of being able to drive the R2. It is incredibly fun to drive, and we can't wait to get many of you all here behind the wheel in 2026 as well to experience it for yourselves. Part of the philosophy and approach for more of a mass market price point vehicle is also centered around how do we unlock the largest addressable market possible for the business. We do that by a focus on how we continuously reduce the cost structure of the vehicle, with the material cost being the largest component of our cost of goods sold as well. That is a key area of focus for us as we think about the opportunity to unlock our base price variant, which sits well below the average new vehicle price in the US, which is centered around $50,000 today, and our base price will be at roughly $45,000. Even without some of the IRA benefits or credits, our intention is always to give more customers the opportunity to say yes to a Rivian. Can you talk about or unpack the tariff side of it, which on the earnings call you mentioned had been running at it's running right now at a couple thousand dollars per vehicle, but with the revisions on policy, it gets you down to a couple of hundred dollars. Maybe what are some of the puts and takes, and is there maybe more opportunity if there's further changes on policy to further narrow those pressures? Sure. One of the biggest changes from a policy standpoint, which is especially beneficial to a vertically integrated player like Rivian, was the expansion of the classification of what is a Section 232 automotive part. Because we're very vertically integrated, we buy a lot of direct materials, which are not classified as automotive parts. The modification allows us to now capture really the entirety of the parts that we're purchasing as automotive parts. The areas where we have some exposure today are largely centered around steel and aluminum tariffs and some of the IEPA tariffs that are in place. As we look forward, we're always looking for opportunities for us to drive further cost efficiency, whether that may be moving manufacturing locations from our suppliers to a different geography and understanding the inputs that it can have for Rivian from an overall cost perspective. I assume that over time from a battery, even though you're sort of insulating that right now because you have supply on batteries, over time on R2, because that's going to be localized cell supply, that should also be relatively nominal on the tariff front? Right. In the longer term there, we have had ample headroom in the fact that we have the opportunity to offset 3.75% of our MSRP on the vehicles with offsets. Can you help us understand on the reg credits? Is this a temporary air pocket, or is this something for the next few years we just shouldn't assume much in the model on reg credit contribution? Since we don't have the crystal ball on some of the policy dynamics in play, we wanted to ensure that we were being appropriately conservative with an outlook of saying we're not including regulatory credit benefits in our forecast. That doesn't necessarily mean that Rivian won't be able to have some benefit in the future. There also could be additional new state-related programs that provide additional incentives. Given where the landscape sits today, we think it's appropriate to just not factor those into the forecast. Okay. Adding all of this up, and I'll talk in a bit about the software service side, you had an investor day a little less than a year and a half ago, and you gave a target of EBITDA break-even in 2027. Now, there's a lot that's changed since then, so we totally understand that. Given those changes, how should we conceptually think about the path to break-even whenever that may be? Is this purely a volume game? Are there other costs in control? Or, and we'll get to it in a bit, is all of a sudden the software service revenue piece taking on increased importance? Right. At the time of our investor day, we had just announced, I think a day before, the start of our joint venture with Volkswagen Group, but that was not factored into our economic models. While we have had a number of headwinds associated with reductions in regulatory credit revenues or incentives and certainly have more tariffs today than we had in our outlook then, we now have a very profitable software and services side of the business that is rapidly growing as well. That is a key component for Rivian to achieve EBITDA positive within the future. We also need to ensure that we're coupling the strength of software and services with a robust automotive gross profit trajectory. As we talked a little bit about, R2 is a key enabler as we think about the long-term automotive profitability of Rivian. Okay. On that topic, I know there's a lot of debate on demand, and you nor no one has a crystal ball here. Maybe we could just talk about, and we don't know what the EV uptake is going to look like. We'll find out in the coming months. I want to just start with a question maybe more on brand because I think some of us would argue there's clearly an opportunity on brand awareness aside from maybe the coasts. Rivian's probably a far less known brand than some of the legacy names out there or versus Tesla. As you're ramping on R2, what is the opportunity on brand awareness, and how much of a demand driver do you think that can be? We see brand awareness as being a key unlock for Rivian. The best way to drive brand awareness and virality around the brand is to get customers behind the wheel of our product. No words can describe what it feels like to drive one of our vehicles. A lot of companies talk about the technology. They talk about vertical integration. When you drive a Rivian, it all makes sense. It all comes together in our form factor as well. I think we'll surprise people when they experience our product and say, "Wow, this is so much better than many of the benchmark vehicles at this similar price point that are available in the market as well." We can't wait to get more and more customers behind the wheel as well. The other key for Rivian has been the power of the Rivian community. This is the piece that you can't buy: community. We've had a community of really viral early adopters with R1 that are out there as evangelists for the brand. They're doing their own sort of personalized demo drives for their own communities. It is important for us to continue to expand the reach of the brand, get into new markets where we may not have as deep penetration across the U.S., and provide more accessibility into the product as well that comes from a much lower starting price point with R2. I think we need to see more Gear Guard. On this topic of just what R2 is going to comp to, if we do a very, let's call it traditional comp analysis, and we just say, "Okay, this is going to comp against a typical luxury two-row crossover," the TAM is underwhelming. If we comp this against the broader crossover segment, against Model Y, against the broader brands, all of a sudden it opens up. How should we think about the comp set or the TAM for R2? We see the comp set as being very expansive in nature. One good analog for this is actually when we started production, one of our top five traded-in vehicles for R1S was a Honda Odyssey minivan. That is not the luxury three-row SUV comp that you might ascribe with the price point of an R1S, for example. It just shows this was a customer that was really interested in moving their kids' gear, stuff, and the R1S was a new form factor that could address their personal needs. We expect to see similar opportunities as there are many customers that may be in a RAV4 today or a Honda CR-V that say, "Look at what I can achieve with the R2, and I'm willing to make a bigger trade-up in terms of my purchase selection. What's the demand or competitive outlook right now on the vans? I thought it was actually interesting because on the third quarter call, you gave us some indication that the van volume outlook actually for next year could be better. Amazon is your anchor customer. What is the environment on vans right now? Amazon's been very forward-looking as they think about the technology suite and the productivity that the van can unlock for their overall operations. I would say beyond Amazon, the broader market has been slower to adopt electrification in EVs. Amazon's now at a point where they've deployed a lot of EV-related infrastructure across their DSPs nationally, and that allows them to increase volumes as well because of the forward investments that they've already made. In the longevity of time, I think more commercial operators will certainly get there. I think autonomy will be another enabler for EV adoption in the commercial space in the longer term as well. Maybe just one last one on R2 because we know that R1 benefited heavily from the EV leasing credit. How does the approach on R2 change now that leasing is, I would venture to guess, going to get relatively de-emphasized versus where it was previously? We expect leasing to be more normalized relative to what you would see in a typical traditional price point of the product in the combustion engine world. It will not disproportionately have share from a Rivian standpoint, but we still will have a very meaningful, healthy leasing business over the longer term. Okay. I want to jump back to the software service side because you said that was incremental versus what you discussed at your investor day. How do we—and the numbers have been good year to date, I think probably better than what most of us expected. What is the trajectory of that software service revenue and margin going forward? What exactly is driving that right now with the core business with VW, plus you have some other ancillary businesses that are in that revenue stream? Overall, we expect there to be considerable ongoing growth of the software and services. That's both driven by JV-related growth through both background IP revenue recognition that will continue to increase as we achieve ongoing development milestones as part of the joint venture. It will also increase because we're investing in the build-out of our team in the JV. There will be additional development services revenue that Rivian will also earn as part of that growth. Beyond that, we've had the mantra of getting every single element of our business to profitability as well from a gross profit standpoint. We've also continued to see significant contribution as well from our broad-based software and services. Whether that's software subscriptions like our FleetOS offering for Amazon, where every single commercial van has a subscription to our software offering, whether that's our Connect Plus offering for R1 vehicles. We also have ongoing maintenance and repair. We have used a robust used business, so both reselling Rivians to customers, which also helps us address and expand the addressable market over the future. Your collaboration with Volkswagen right now, I think, is just limited to that core network architecture JV. You have talked about some opportunities to improve your procurement economics on joint sourcing. How much opportunity is there? Maybe what is some of the lower-hanging fruit to change the procurement so you are getting better economics on your sourcing, part sourcing? Sure. The joint sourcing opportunity for Rivian stems from areas of shared collaboration between the businesses. You can think about that first directly on the ECUs that go into the vehicles on a go-forward basis, those being a part of a joint sourcing opportunity. You can think about software and sort of external software subscriptions or things that also embed within the technology development opportunity, and then adjacent systems. As you think about the efficiency of the JV working with a handful of braking or steering other component players as well, there is efficiency in collaboration in some of those areas over the longer term as well. It is not just the direct materials that go into the electrical architecture. You can also think about it a little bit more expansively, some of the adjacencies that those ECUs will touch. How long does it take to work that off into the BOM? It depends. We've already gone through the process of jointly sourcing the ECUs. That will be projected within the R2 material cost, for example. As we think about additional areas of sourcing, those would be more future areas of collaboration. Can you talk about the consideration to license this technology out to other automakers? I know there's a media article. I think Wassym has talked publicly, who's heading your CTO. He talked about the opportunity to license this to other automakers. What are the considerations? What's the timeline? What does it look like? For us, the priority one is getting the Volkswagen Group programs launched efficiently and effectively in market. Part of what makes Volkswagen Group such an attractive partner is if you can solve for all of the applications from the very most premium vehicles in their portfolio to their entry-price vehicles, you can address really any other OEM's lineup of product as well. The philosophy and approach is building an architecture that's very extensible in nature. You see that through the fact that last week we celebrated our one-year anniversary of the joint venture. As part of the one-year celebration, Volkswagen Group talked about some of their upcoming winter testing milestones, which requires us to have brand new electrical architectures running in their vehicles with our software stack. It is a very accelerated timeline from a development standpoint. That, again, demonstrates the extensibility of the technology that we built and the foundations that they're working off of by leveraging many of the advancements that are already going into our R2 program, which will be the first program out of the joint venture. Can you license out what you're doing on AV to other automakers? On AV, yeah, we can definitely license that to other players. I think one of the areas that Rivian is focused on is being a technology provider to the industry. You see that with our joint venture with Volkswagen Group. There are other technologies that certainly could be part of future licensing deals as well. Okay. Let's just wrap with a couple of cash balance sheet questions. Maybe one of the questions that's on folks' minds is you're ramping on R2 next year. Historically, we've seen it when there's a big launch that can be a working capital drag. Should we expect a significant working capital drag related to this? We will see working capital be a drag for us next year. It has been a significant tailwind for us this year, but we will certainly see that flip as we ramp up both raw material and finished goods inventory as part of the R2 ramp. Okay. Between the VW funding, there's still more to come. You have the DOE loan related to Georgia. Do you think, or do you feel like you have sufficient resources to comfortably get through the R2 ramp at both Normal and Georgia? We ended Q3 with $7.1 billion of cash and equivalents. We expect to receive another $2 billion as part of the initial proceeds from the joint venture with Volkswagen Group in 2026, and then another $500 billion that will come between 2027 and January of 2028 from them. As you mentioned, the way that the DOE loan is constructed, it is up to $6.6 billion of capital. We would use that capital to offset the capital investments that we are making as we build out the Georgia facility and plant. We will always be opportunistic as we think about ensuring we are always maintaining a robust balance sheet position as we look at the future and additional vectors and avenues for growth and investment. Okay. Folks, any questions in the room? Can you talk a little bit about the international opportunity for the R2 and how long that will take? I mean, obviously, there's a lot of debate around electric vehicle demand in the U.S. In Europe, obviously, things are still progressing in the right direction for you? We designed the R2 for global markets. We intend to have the opportunity to export R2 to Europe and internationally. One of the policy changes that has happened that is a net benefit to Rivian is actually the reduction in the tariffs of vehicles exported from the US to Europe that previously had a 10% tariff. Now that's gone down to zero. It makes it an even more attractive proposition for us to continue to grow and export abroad. We'll start focused on the ramp here in North America, but certainly have the opportunity to go international. How would you look at the distribution of that? Is that also an aspect where you can work together with Volkswagen? From a distribution standpoint, we want to make sure we're owning the customer relationship, but certainly can look and explore different avenues or approaches for the advancement of our products in new geographies. We've been selling vans to Amazon in Germany, for example. We do have some physical infrastructure in Germany right now and would continue to expand that as well. Thank you. Yeah, that was my question as well, but I have a follow-up on that. Now that you're looking abroad with the R2, can you just give us your quick assessment on the competitive landscape? When we think about the bill of materials coming out of China, the technology coming out of China, the attempts, your software-defined vehicle, I put you in a leadership position, but there's some Chinese players catching up very quickly. They seem to be looking at Europe as like their high-price region as they all continue to put in a lot of new capacity. Walk me through how you are going to differentiate and say Europe in terms of that competitive dynamic. Maybe you disagree a little bit about that thread, but curious what you think. We see there being still significant opportunity for Rivian in the continent of Europe, given the brand positioning, given the advanced technologies, the software-defined vehicle attributes, and the autonomy runway that we have as well ahead of us. I think we're also continuing to invest in innovation for Europe through our joint venture, where we're developing some of the Volkswagen Group products that are designed for the continent of Europe. One of the areas that we thought was really exciting with the joint venture was actually the opportunity to build more globalization into our frameworks, into our software stack earlier on in our process relative to what we would have potentially been able to do completely on our own. We think that that can be a key differentiator for us as well. Okay. Great. Finals? Okay. We'll leave it there. Claire, Chip, thank you so much. Looking forward to the AV Day on the 11th. Thank you. Thanks, Dan. Appreciate it.