Rivian Automotive, Inc. / DE Q3 FY2024 earnings call

R1 Gen 2 Ramp Up

• Material costs and efficiency improvements are critical for long-term profitability. Challenges with suppliers impacted Q3 production, but progress is being made. The Tri-Motor variant was introduced, offering exceptional performance at lower cost.

R2 Program

• On track with production starting in the first half of 2026. 85% of R2 bill of materials sourced within cost targets. Using cylindrical 4695 cells from LG, with a structural battery pack forming part of the vehicle's body. Leveraging electrical architecture and software stack from R1 for R2 and the joint venture with Volkswagen.

Operational Improvements

• Focus on lean acceleration, compressing value streams, and empowering shop teams to improve plant performance. Robustifying the Rivian industrial operating system and enhancing cross-functional collaboration.

In the third quarter of 2024, Rivian produced 13,157 vehicles and delivered 10,018 vehicles, generating $874 million in revenue. Total gross profit was negative $392 million, with a gross loss per vehicle delivered of approximately $39,100. The second generation R1 platform is expected to enable a 20% material cost reduction when comparing an R1 dual motor with large pack produced in Q1 2024 versus Q4 2024. The R2 program is advancing with 85% of the bill of materials sourced within aggressive cost targets, targeting a $45,000 starting price and aiming for a faster path to profitability than R1.

Production and Deliveries

• Reaffirmed annual production guidance of 47,000 to 49,000 vehicles and delivery outlook of 50,500 to 52,000 vehicles (low single-digit growth).

EBITDA and CapEx

• Revised 2024 adjusted EBITDA to between a $2.825 billion loss to a $2.875 billion loss. CapEx guidance unchanged at $1.2 billion.

Q4 Outlook

• Expect modest GAAP gross profit in Q4 driven by increased revenue per unit (non-vehicle revenues, higher R1 ASP, EDV sales), material cost improvements, and reduced fixed cost per vehicle delivered.

• Supply chain challenges, including component shortages (specifically Enduro motors) impacting production.
• Challenging consumer environment affecting demand.
• Uncertainties in regulatory credit recognition timing.

Q: What percentage of volume in the quarter is pre-ordered versus sold out of dealer inventory, and how is leasing and tax credit utilization?

A: Claire McDonough mentioned lease penetration was 42% in the quarter, with Chase as the lease partner and third-parties used to mark residual values. Most sales don't qualify for the full $7,500 tax credit due to price points and income levels.

Q: How is the supply constraint with the Enduro motor being addressed?

A: Javier Varela stated the team is working with the supplier, ramping up new capacity in record time, with promising trends to recover capacity soon.

Q: What is the outlook for regulatory credits in 2025?

A: Claire McDonough said visibility into future regulatory credit sales exists, expecting them to be in line with 2024 levels, but exact recognition timing is tied to counterparty transfers and government agencies.