Rivian at UBS Auto Conference: Navigating Challenges with Innovation

On Wednesday, 04 June 2025, Rivian Automotive (NASDAQ:RIVN) presented at the UBS Auto & Auto Tech Conference 2025, offering a strategic overview of its operations. CEO RJ Scaringe emphasized Rivian’s agile response to global challenges, while also addressing the company’s strategic advancements and market positioning. Despite some hurdles, the company’s optimistic outlook was evident throughout the discussion.

Key Takeaways

• Rivian is focusing on cost optimization and leveraging supplier relationships, particularly for the R2 model.
• The company is committed to U.S.-based manufacturing with plans for a new plant in Georgia.
• Rivian is advancing its autonomous technology with a shift towards AI-centric systems.
• The R2 model is positioned at a competitive price point, targeting a broader market.
• A $5.8 billion software licensing deal has been made with Volkswagen Group.

Financial Results

• The average selling price (ASP) of R1 vehicles is approximately $90,000.
• Rivian anticipates around $300 million in regulatory credits for the year.

Operational Updates

• Rivian has launched the second generation of its R1 product and is preparing for the R2 launch amidst trade challenges.
• Production is scaling at the Illinois facility, with a new plant planned in Georgia.
• The R1S holds a 35% market share as the best-selling electric SUV over $70,000.

Future Outlook

• Rivian plans to expand its product line with the R2, a smaller SUV, and the R3, a small crossover.
• The company is focused on reducing material costs for the R2, aiming for half the cost of the Gen 2 R1.
• An AI Day is planned to showcase advancements in autonomous technology, including data architecture and model training.

Q&A Highlights

• The impact of policy changes on EV credits and regulatory environments was discussed.
• Rivian addressed potential demand shifts due to expiring credits and the competitive landscape dominated by Tesla.
• Cost reduction strategies and lessons from the R1 program were explained.

To explore more details, readers can refer to the full transcript below.

Full transcript - UBS Auto & Auto Tech Conference 2025:

Unidentified speaker, Conference Host, UBS: Alright. Welcome, everyone. We’re about to kick off the second annual UBS Auto and Auto Tech Conference. Really pleased all of you can join us here today, in person and online. And to to kick the conference on, super excited to have with us, Rivian.

We have, Founder and CEO, RJ Skirinj, with us, up on up on stage. Got a couple of their beautiful vehicles outside, so please take a take a look at those as well. So RJ, thanks for thanks

RJ Scaringe, Founder and CEO, Rivian: for joining us this Yeah.

Unidentified speaker, Conference Host, UBS: I guess just to to kick things off, you know, the the world seems as dynamic as ever, whether it’s, you know you know, policy or or or macro, and those two are obviously, interrelated. Can you give us a sense for, you know, how you manage that volatility and uncertainty inside the company? And sort of really, what have you learned over the past year? And what has sort of changed to sort of help better prepare you for the future in this ever changing world?

RJ Scaringe, Founder and CEO, Rivian: Yeah. Mean, we’ve it’s funny you asked this. We, we’re joking internally when we launched r one in 2021 end of twenty twenty one, it was surrounded by, you know, of course, the pandemic. And and the lead up to that, we were trying to build a plant or it was our first time launching a product of this scale. And so the process of bringing up a supply chain, launching a manufacturing plant, and and doing that in the context of COVID was just, you know, entirely unexpected and and very difficult.

We then launched an update to the r one product, which we call gen two. And as we’re getting ready to do that, we had this massive supply chain crisis. It’s now we’re getting ready to launch, r two, our next product, and we have a major trade challenge. So we were joking and saying every time we launch a product, it it it’s sort of a precursor to some sort of big global disruption. By the leading indicator.

Yeah. Yeah. But, I mean, I say that, but, you know, jokes aside, we’ve we’ve actually learned a lot as a company having grown and scaled through some of these really big challenging times. You know, learning to to run a manufacturing facility where we couldn’t have people working on-site to then trying to scale production with the the supply chain crisis and semiconductor crisis that we experienced in in 2022 and 2023. And so we’ve actually have a lot of robustness in our supply chain processes and our our experience in running SWAT team style daily stand ups.

And so what what we’ve been doing now for for the last many months, I guess, should say, is we have a we have a daily meeting of of senior leaders where we talk about what’s changed in the last twenty four hours and what that tactically means for us. And never did I ever think that we’d be on a daily basis talking about supplier health, supplier situations, and trade, but it’s it is extremely dynamic. And the challenges we’re making as a company decisions, we’re typically make these decisions with time scales measured in five to ten years. So these big CapEx decisions or production location decisions. And the the the frequency for which the environment changes and therefore the calculus changes on how you might make a decision is is just on you know, it’s it’s it’s it’s in territory.

And so, you know, one of our advantages, we we are a really agile company, and we we’re we’ve built a lot of muscle around doing that, but it’s a it’s a very unique way of operating.

Unidentified speaker, Conference Host, UBS: I I guess just, you know, on that sort of, you know, to day noise, obviously, there’s a there’s a couple of, you know, policy elements that I think the the administration’s looking at that can squarely impact your business, whether that’s, EV and emissions related stuff here, obviously, sort of trade. I guess just like bigger picture before we dive into some of those topics, like what is your view on the goals of the administration? And how do you think sort of that can impact Rivian? And secondarily, like, what efforts are you or the company doing in DC or through other areas to sort of help educate the administration about maybe some of these challenges or the the negative repercussions of some of them? Yeah.

I mean, it’s a

RJ Scaringe, Founder and CEO, Rivian: it’s a great question. I think it is we have to be responsive to what’s happening real time and and be thoughtful around that. But the important question and something we spend a lot time thinking about are what are the what are the things we can plan around? And if we try to take the to take all the signals up, down, left, right, and interpret that noise into into a more steady state signal, what are the things we can, you we can pull out of it? And so the first is and this side say it’s true whether we’re in a Republican led environment or a Democratic led environment, which is there’s a focus on technology being in The United States and manufacturing being in The United States.

And that’s that’s clearly a shift. And it’s it’s a shift in The United States, but I’d say it’s also just a it’s a global change. We see a lot of large economies shifting to wanna create more jobs, create more technology, or create more manufacturing in in their home environment. And so that fortunately actually aligns really well with our overall strategy. We we’re a US company.

We have, you know, well in excess of 15,000 employees here here in The United States, produce our vehicles in The United States, and we’re incredibly vertically integrated on our technology and what we build here. So we’re we’re actually very aligned with the administration in terms of administration’s objectives. Our our next plant beyond what we have in our initial facility in Illinois is in in Georgia. It’s helpful that that’s an important swing state. So, we’re politically in in a perhaps one of the best states one could one could hope for.

It’s a great state for for doing business. I have a great relationship with the governor. You know? And so we it’s a it’s a great place to be scaling the next level of volume for us as a business. But I think above and beyond all that is looking at what’s happening from a customer point of view.

Customers want products that are really exciting. They’re gonna want products that hit, like, a value proposition that’s unique and compelling. And our job is to work through all the noise, all the complexities to deliver on that. And so I couldn’t be more excited about what’s coming with our next generation products with this r two, and then we have a follow on product out, which we call r three, both a small SUV and then a small crossover. And they are exceptionally I think they’re you know, the the opportunity they have in terms of expanding volume for us as a

Unidentified speaker, Conference Host, UBS: business is really exciting. Yeah. And then and then and we were talking a little bit earlier about, you know, some of the of the maybe near term challenges that have come up, whether it’s rare earths or additional steel tariffs. Think you were mentioning, like, some of this stuff is just difficult to sort of get around in in the near term. So I I guess what kind of role are you trying to sort of play in educating, you know, policy here?

RJ Scaringe, Founder and CEO, Rivian: Yeah. Yeah.

Unidentified speaker, Conference Host, UBS: I mean, we

RJ Scaringe, Founder and CEO, Rivian: we we along with our a number of other car companies and folks we have great relationships with, we have a huge partnership with Volkswagen Group. They’re a they’re an investor, and we have a a large we have $5,800,000,000 software licensing deal that we didn’t as part of a joint venture with them. So it’s been helpful to have them as a a thought partner here. But the the time we’re spending in DC is is really focusing on helping administration understand the nature of more, like, very complex supply chains. And I think often, when we think about these things and and they get written up in in media and their headlines, it’s as if we’re talking about an economy that is buying, and selling or trading coffee cups and t shirts, like these really simple products and simple supply chains where it’s, you know, low CapEx and relatively straightforward to move production around.

But on, you know, something like a car, we have hundreds suppliers who in turn have thousands of suppliers who in turn have tens of thousands of suppliers who in turn have hundreds of thousands of suppliers. And the the ripple of these changes in policies is very, hard for the these systems to adapt to immediately. And, you know, a good way to think about this is just practically go through that change. So imagine how we react when tariffs increase. So, of course, my job and and the team of our procurement or the job of our our procurement team is is to go to all of our suppliers and fight like hell to say, well, yes, we understand tariffs have gone up, but we negotiated a price that that protect us against those tariffs and to hold to that.

To say, look, yes, your costs have gone up, but we have a fixed price that regardless of what happens to trade, it was that’s how we negotiate it. And so we maybe in a few cases, we’ll bend on it, but generally, we put push push really hard to maintain the pricing that we negotiate with suppliers. Of course, they don’t like it, but they then turn around and do the exact same thing to their tier twos. They go to their tier twos and say, look. We were we were sourcing this for you.

This is what we’re gonna do. We can make a 5% adjustment, but you’re gonna have to eat a lot of this. You’re gonna have to find ways to drive efficiency in your business, and they push it to their tier twos. Tier twos don’t like it, but they say, okay. Fine.

We’re gonna have to deal with this. Tier twos turn on, they go to their tier threes, and they do the exact same thing. And in the end, it gets to a very large number of very small companies, like companies that, you know you know, these are often, you know, sub $50,000,000 a year companies. They’re the tier three, tier four suppliers, so the end of the supply chain. And they don’t have the financial capacity to absorb it, but they’re the last in the line.

And I think this is this is not appreciated, of how the dynamics of these changes get rolled out and what they do to a very large number of businesses across The United States. And so I think the messaging we’re providing along with a lot of other manufacturers, along with a lot of manufacturing associations that represents these small businesses across The US, are starting to recognize that this is a dynamic that’s going to hurt if we have these rapid changes and don’t have ways to to ramp into them. It’s gonna hurt them. And it and it can be like little things like a I talk about like we buy a we buy a taillight from a taillight supplier. It’s a US sourced part.

It’s a % US sourced. That taillight has components they buy from tier twos. Those tier twos buy from tier threes. Like, you move down to a tier five, they’re they’re providing plastic pellets that go into making a, you know, plastic part that goes inside a plastic assembly. And that pellet supplier buys an additive that gets processed in China, and that represents 20% of their cost.

That company can’t exist if their cost structure goes up by a 50. And that’s just that again, it’s my point of, like, the economy is not running on you know, the it’s not we’re not dealing with making t shirts and coffee cups. It’s much more complex, much more nuanced, and much more layered. And so recognizing that there is a desire to shift a lot of things to The United States. There are certain things that we don’t have as a country, either the capability or the desire to house.

And so a good one here to think about is, which is maybe the most complex because it’s not even cost, is rare earth metals. When I say it’s not even cost, it’s a question of can we get those because China’s taking as relationships have become increasingly antagonistic, it got to a point where China put in place export controls around ultra or heavy earth metals. And so, you know, a quick Google search would tell you, well, heavy earths are not that rare, and you can find them in lots of places. But then the follow-up Google search should be, well, where do they get processed? And and almost all of the processing of these rare earth metals is in China.

And so take like, dispersion, which is used in a lot of, you know, power dense power dense applications like motors. We’re we’re not gonna build a dispersion processing infrastructure in United States. And if we do, it will take a lot of time and it would take significant changes to our regulatory environment in terms of allowing those types of facilities to exist here. So these are these are like these big ripples that that that we need to contemplate. So we’ve spent a lot of time on these topics.

And and I’d say the administration has been really receptive. You’ve seen how they’ve responded and moved changed tone in certain topics. But this is it is a, you know, twenty four hour a day full court press. We have a giant team on this. This is this is Probably bigger than

Unidentified speaker, Conference Host, UBS: you thought a couple years ago.

RJ Scaringe, Founder and CEO, Rivian: This is in the category of hard work.

Unidentified speaker, Conference Host, UBS: Let’s let’s move on a little bit to I do wanna get to the r two and some of the exciting stuff you’re working in the future. But just in the very in the very, you know, near term, one of the things you talked about on one of the past earnings calls is maybe a little bit more hesitance on the consumers’ front to sort of buy bigger ticket items. You do have the overhang here of potentially sort of a consumer EV credit going away or at least from a leasing perspective. So I just want to I want to understand how you’re sort of thinking about or what you’re seeing right now on demand in real time? And then what what you think that could mean, you know, for demand over the balance of the year.

Yeah. Is there even a potential maybe you get some pull forward, people taking advantage of a credit that might expire? Then what does that mean for for ’26?

RJ Scaringe, Founder and CEO, Rivian: I mean, it’s been just as chaotic as it seemed in the macro. We we see it show up also on the demand side. We’ll have a lot of volatility around how consumers are behaving based upon, you said it, but what’s gonna happen with consumer facing credits, perspective on what’s gonna happen with interest rate, perspective on what’s gonna happen with overall health of the economy. You know, today, have our flagship products, so it’s our r one, which is the r one s and the r one t. It’s a a sibling set of products and that should be in a truck.

And they’re they’re they’re they’re high priced. It’s a ASP. You can see in our financials, it’s about $90,000 ASP, but it’s very popular. So the r one s is the best selling electric SUV over $70,000 by a pretty significant degree. Of course, it depends on when you’re looking and which month, but call it 35% market share, which is remarkable.

But the 35% market share is of a relatively narrow TAM because of the price point. And so our hope is that we can continue to maintain that market leadership r one, but importantly, translate the leadership that we have on r one, even a fraction of that, I should say, into the r two products. The r two price point starts at $45,000, and, you know, the average price of new car in The United States is around $49,000. So r two is, like, right bull’s eye in the the, you know, medium market. And, you know, for us that represents the really significant scaling potential for for the company.

So the guidance we’ve had on r one is really just trying to reflect what’s happening to the size of the this premium market and, know, is it gonna be a little bit more compressed as folks instead of buying a $90,000 car might buy a 50 or $60,000 car or hold off on a purchase entirely until there’s a little bit more stability in the system. But but importantly, I’m sure this is being talked about in the conference today is, like, overall volume has not dropped. Like, the auto auto industry in terms of volume has been well. It’s just the the mix shift has has moved into less of these premium vehicles and more into, call it, 45,000 to $55,000 vehicles.

Unidentified speaker, Conference Host, UBS: And I do want to touch on the R2, but I guess maybe just one more point on the guidance that you’ve given for this year and as it relates to some of the potential policy. You did guide to about $300,000,000 in the regulatory credits this year. Can you just sort of talk about what are some of the assumptions that were baked into that? Because you know, you saw the It was. Senate passed the congressional review act, you you know, there’s at least the seems like seem high potential that, you know, CARB loses their ability to regulate.

Now maybe they challenge that. Who knows? But I

RJ Scaringe, Founder and CEO, Rivian: just wanna We’ll definitely challenge it. But I I yeah. I I look. We we guided on that. But as you said, we talked about $300,000,000.

In that guidance, we contemplate a lot of what’s happening. These are a lot of this has been these are there’s not a lot of surprises happening. The the CA waiver getting getting hold is was expected. It’s been talked about for a while, and and so that was embedded in in our guidance. We these are things we expected.

We we, of course, would like it to not go away, but but but we are where we are.

Unidentified speaker, Conference Host, UBS: So the the the credits that were sold in the first quarter and over the balance of the year are more on the at the federal level than California.

RJ Scaringe, Founder and CEO, Rivian: And and I think the it’s important to note this is so while the carb credits in the are are gonna go away and and California’s ability to to require a % electrification by 2035 is gonna go away. The federal credits, even if they’re softened, have become on a per credit basis more valuable because the the the very rapid retraction from the incoming OEMs away from electrification. And so what we’re seeing is the OEMs are much more aggressively pursuing our credits. And it’s it’s really interesting selling credits to other OEMs because it you get a really clear picture as to how the other OEMs view electrification. And so, like, at a working level, the teams are all talking.

And so, you know, we I would just say broadly, the the significant pullback from OEMs and the refocus on their ICE business has made the credits environment more attractive for us even despite the fact that you have some credit categories disappearing like like like EV, ZEV credits for California.

Unidentified speaker, Conference Host, UBS: Well, that’s I think a great segue into the R2 or this and the topic we were talking about earlier. Because at least from my perspective, it seems like one thing that has slightly changed, and I’m curious how sort of you view this as a go to market strategy, right? With the R2 coming in, mentioned earlier sort of hitting that sweet spot of the market and the price point. But I think you could also go to taking the view that it was launching into a US market where everyone was going to have to try to sell more EVs, and you had a more compelling EV offering. If you don’t have California, if EPA emissions are sort of not rolled back, but sort of maybe pushed out and there isn’t sort of as much of a need to sort of for some of the legacy automakers to move to EV.

It seems to me like the R2 may actually be competing more against ICE vehicles than maybe we thought about when the product was initially owned. I don’t know if that’s your view or not, but I’m curious on your view. And I guess if that is the case, then it seems like the additional challenge here is really to get to convince someone to go electric. Yeah. Right?

And so how do you think about that? How do you think about the go to market for for r two in that world?

RJ Scaringe, Founder and CEO, Rivian: Yeah. It’s a great question, and it’s it’s important to just recognize where we are in the state of electrification United States. So we’re relative to the other large economies, we’re by far the slowest to electrify. So if you like us relative to China, you know, we’re a half of our magnitude behind them. But, you know, just in terms of numbers, about 8% of new cars sold in The United States, they’re electric.

Roughly half of those, you know, are are Tesla. And the fact that that is the case, the fact that there’s this extreme market share concentration with a single company on two products, the model three and model y, is reflective of a unhealthy lack of consumer choice, which is gonna create, I think, this artificial ceiling on how how much we can electrify. Meaning, there’s only so many the model y and model three x are are great products. They’re they’re very compelling. But there’s only so many customers that want that form factor, that look, that design, that that positioning.

And so as you start to think about how do you get the other 92 of customers who aren’t buying an EV into an EV, we need more choice. In the ICE world, at comparable price points, you have 300 different choices. I think it’s like 310 right now. And in the EV world, you have two good ones from one company. And otherwise, it’s a really thin field.

And so, you know, it’s by the way, that’s a sharp contrast to what’s exist happened in China where there’s a lot more competition. In United States, there’s just a lack of competition. So I think first and foremost, we need to have choice. R twos, I think, obviously, I’m biased, a highly compelling choice at a very similar price point to model y, but importantly, very different. Just like the if you think of, like, r one s relative to model x, they’re both seven passenger SUVs, but they couldn’t be more different in in almost every way that they think about the decisioning across attributes and product features, application, tonality.

Model x grade cars is very, different than an r one s. And so we have the same dynamic between a model y and an r two. And so we we really believe, yes, sure, there’s gonna be some cross shop with with model y, but more importantly, our hope is that we pull a lot of people out of ICE vehicles that haven’t yet had a product that spoke to them. Maybe they’re buying a Toyota RAV four, maybe they’re buying a, you know, a a Jeep Grand Cherokee, but they’re in something that’s, you know, a more functional SUV in terms of form factor, shape, you know, loading configuration, what have you, and we’re seeing that. We see it manifest in just the excitement for the product.

We we have an r two in our in our meat space of meat packing, and I was over there yesterday at a, like, an invite customer event, and it was like the walls were bursting with people. There there was so much excitement for the product, and we see it translate to orders. We see it translate to a lot of emails that come in every day. And so I say all that, and I would have said the same thing a year ago. What’s changed between a year ago and today, though, is two things which you called out.

One is the the the other vehicles that we both that we as a company expected to see there see come have taken sort of a a back burner in a lot of companies. And then the execution of a lot of those products has been not as strong as what I thought it would be. And the tailwinds that were going to exist in terms of policy driving the continued investment of those products has has disappeared. And so I think in some ways, it’s it’s it’s a good thing for Rivian, but I think it’s a bad thing for the country. It’s a bad thing for the world.

So I think it’s two lines of, like, my kids and and wanting a better world for them. I think it’s unfortunate that there’s going to be less competition, and therefore, a slower rate of adoption of EVs in The United States. I think for Rivian, there’s a like, for if you’re a shareholder of Rivian, it’s there’s no denying it. It’s a good thing. I think it’s also probably a good thing for Tesla.

But but I wish you had I wish we had more competition. I wish it was a, you know, more healthy ecosystem driving us from 8% to 50% over the next five to ten years, but I do think we’re gonna have a slower rate of adoption because of an underinvestment that’s gonna happen in the space.

Unidentified speaker, Conference Host, UBS: You mentioned r two orders. I know you gave an update right after the initial r two launch. Is there any is there any update on the traction there as as that sort of continued to progress upwards? It’s it’s

RJ Scaringe, Founder and CEO, Rivian: been it’s been a lot of excitement. Think the brand has just translated so well. We, you know, we we thought a lot about, like, the position of the company, the brand, and what we hope to achieve. And I remember the last day, in, like, 2017, we would have these brand discussions and product positioning discussions. And a lot of them would end with some version of, if we do things really well, imagine if there’s these groups of Rivian customers that get together, and self formulate and talk about the product, and they’re online in chat groups talking about it.

Fast forward to today, for the last two years in a Brian’s been by far the number one rated brand in terms of brand satisfaction on consumer reports. But we have one of the most active user bases. So you see it, you know, in the Reddit, you know, forum, you see it. We have reviewing reviewing owner groups, are just incredible. And so the level of anticipation around the brand to now have something that’s much more accessible and therefore much broader aperture has been awesome for us as we think about the launch.

Unidentified speaker, Conference Host, UBS: Yep. Just two more big there’s a lot more to talk about. There’s two more main things I want to make sure we touch on. The first is cost. So you’ve highlighted some of the cost out as you move from R1 Gen one to R1 Gen two.

I think about 20% or order of magnitude is sort of what you’ve indicated. Curious, like, if you think there’s even more that can be done there or R one. On r one. Or or and is but is is is does it get harder from here to sort of take that cost out? Or what are really the levers on R1?

And then moving from R1, let’s say, Gen two down to R2, obviously, different vehicle, maybe not as premium or, as you mentioned, sort of flagship. But I think there’s some investor concern or doubt or skepticism, I should say, out there about the ability to sort of take cost down with a lower priced vehicle and still make it profitable. So just maybe if you could talk a little bit about the path on both those.

RJ Scaringe, Founder and CEO, Rivian: Yes. You said it’s a gen one vehicle with r one. We, which we launched in 2021. That vehicle would you know, when you think about it, that was sourced in 2018 and 2019. So we went out and built all the supplier relationships, signed the supplier contracts for the content that ultimately went to the vehicle at a time when the auto industry was near peak and at a time where Rivian as a company was very unknown and very unproven in terms of our ability to, you know, fully execute the products or launch the product and then have demand for the product.

And so when we did that, we had to pay a premium on every part. We and we had to swallow it. We didn’t know, you know, sort of how to how to we had no other way to do it. We had we needed tires. We had windshields.

We had headlights. We had all the parts. So we we took this premium price on all of our content with the expectation that we’d be able to lower that with launch and with demonstrated success. Fast forward to launch. Of course, that was now in the middle of COVID.

And then as we sort of rounded the quarter in COVID, we had this, like, major supply chain interruption. And rather than being able to negotiate price out as we expected, we were met with suppliers that wanted us to pay a further premium on top of that just to get components. And our lack of scale across the portfolio meant that we were, in some ways, like, last to get volume allocation. And for those who have been following the company for a while, you all saw this. We were, like, scrapping for every vehicle we could build with, you know, lots of missing parts.

It was a very like, I couldn’t imagine a more painful ramp process than what we went through in twenty twenty twenty two and 2023. Anyways, that led us to deciding to resource a lot of the vehicle. We resource about, you know, well in excess of 50% of the bill of materials. As you said, that took around 20% out of our material cost, out of our bomb cost. But we did that resourcing activity, you know, what what we launched last year.

Of course, the sourcing didn’t happen last year. The the sourcing decisions and negotiations happened in 2022 and 2023, but we are doing that in the middle of the supply chain crisis. So while our leverage was demonstrably higher than what it was in in what we did in 2018, ’20 ’19, it was still not at the level that would allow us to get truly, I would say, like, world class pricing. Fast forward to r two. R two is mostly sourced in 2024.

The vast majority was completed then, and our leverage then was much, much higher. We had a product that was the the market share leader in its category. The brand has resonated extremely well. It’s really helpful that a lot of the CEOs, a lot of suppliers drive Rivians. So there’s just an overall excitement around the brand, the product.

We signed a a very large joint venture with Volkswagen, which put us from a technical point of view in the decision seat on making a lot of the core decisions around electrical architecture, not just for our products, but across the whole Volkswagen portfolio. So suddenly, you know, negotiating on, let’s say, electronic components, we not only became an important customer because of the Rivian portfolio, we became an extremely important customer because we represented a broader set of volume across this this Volkswagen family of products. And so the supplier leverage that we had that we have now is like night and day. And I’m giving the anecdotal exit sort of way to think about this and sourcing our one initially in 2018, ’20 ’19. Like, the way that worked is, like, I would have to go to Detroit for the suppliers that are based in Detroit.

Go to, you know, go to the supplier, sit in the lobby, have the meeting start ten minutes late, go meet with the director at most of of whatever that function was, you know, following the the director likely telling us some version of this probably won’t work, but, you know, we’re gonna help you out here. That kind of a meeting to then when we resourced meeting with VPs, often VPs coming to meet with us, to now as we source to r two, the CEOs of the companies, the same exact companies are flying to MeetMe wherever we are. So it’s just a completely different environment. And so a big part of the cost save is through the supplier negotiations and leverage, and that’s not insignificant. We were talking significant double digit percentage reduction in cost structure.

But then in parallel to that, we’ve just optimized the design in ways that our engineering organization has matured and grown a lot relative to what we did in r one. And it’s every area of the vehicle, it’s the big things and the small things, you know, less fasteners, more part consolidation, lots of part elimination. You know, if you wanna see a good example of it, the of the, like, the little hidden details that you don’t even notice, you can Google this. Just look at the rear door on an r one s versus the rear door on an r two. On an r one s, there’s a div bar.

There’s a fixed piece of glass. There’s a belt molding, and a trim molding. On an r two, it’s a single piece of glass. We package it also. There’s a full drop with a single piece of glass.

There’s no belt molding. There’s a div bar. There’s no fixed glass. And, you know, as a customer, look at it, you don’t even notice this. Maybe it looks a little sleeker because there’s less parts on the r two.

But we took, like, half the content out of just the door, and that’s that mindset has flowed through every single part of the whole vehicle. And so what we’ve said is the r two material cost is about half the material cost of of the gen two r one, which is the improved r one. And then the nonbilling material cost, so that’s all the assembly costs or plant logistics, you know, it’s well under half of what it is in r one.

Unidentified speaker, Conference Host, UBS: Wanna, know, for the last topic, close with, you know, ADAS, autonomy, and AI. And I I guess, maybe those all sort of build So, you have sort of the level two, level two plus features on the vehicles now. I mean, I’m wondering if there’s any data or insights you could share from your fleet today, sort of how that’s being used, you know, what what the what the reception to it is. You’re talking about, you know, more like level three type features, you know, hands off, eyes on, I believe, next year, sort of what that entails. And then, you know Hands off, eyes off.

I’m sorry. Hands off, eyes off. I misspoke there. And then, you know, just, I guess, broadly how you see that technology progressing for Rivian vehicles and whether you think this is this can be a differentiating feature or what else can or or what what else can come of the data being used and collected from from that. And then maybe just so I know you have the you said you mentioned there’ll be an AI Day later this fall.

I’m assuming some of this will be spoken about, but sort of maybe a little bit of a sneak peek as to sort of what you what investors can come to expect as as sort of topics for for you to address there.

RJ Scaringe, Founder and CEO, Rivian: Yeah. I mean, the first thing just to recognize is we’ve had, in in the world of autonomy, a a mega shift in how we approach these systems as an industry. This is, like, not unique to Rivian, but the way that autonomy was developed prior to 2021, maybe early twenty twenty two, was these are these were very rules based systems. So you would have a a perception stack that would identify, objects, classify those objects, and associate vectors with those objects. All those object, identifications plus vectors would be then handed into a a planner, And this planner would be something that would be a a rules based environment that would be written by software developers to say these are the rules of the road.

This is how the world works. And that planner would then make a whole series of decisions and projections around the trajectories of those different things in the environment, and then, of course, have corresponding, intended reactions for the vehicle relative to all those, objects in the system. And so a lot of work went into building these planning platforms. And and, you know, what you often maybe hear this call, this is the late fusion process. You’d be taking all this information, and then you’d be fusing it late in the planner.

None of that carries over into what I would you may be recall what we call AV two dot o, which is where different than having the information taken from cameras moved linearly into these planners, we now have all the information is taken in very early on as fused into a global view of the world and fed into the build out of a large parameter foundation model. And that large parameter model, is trained, you know, the catchy way that this has been called is a end to end. So you train it by looking at vehicle drivers, how they behave in these environments across all these different things, and you’re building this neural net understanding of the world. And all the image processing, image encoding is done with transformers. And then, you know, obviously, transformer allows it to be adjusted into the into the into the foundation model or into the neural net, and you have a completely different way of building the systems.

You no longer have programmers who are building rules based environments. And so the reason it’s important to recognize it’s it’s entirely different, topology. It’s a complete, you know, melt and report in terms of what you would have in terms of technology stack is that in order to be successful in the long term, our view, there’s no possible way and this is true in autonomy. This is also true for language. This is true for, I think, almost anything.

There’s no way for a rules based programmed environment to beat a neural net if the neural net has a robust and well defined data flywheel. And so, really, when you think about autonomy, the question is what is what is the data architecture? What’s the data flywheel? What’s the training mechanism? And so for us, we reded redesigned our gen two vehicle contemplating this.

And in in order to do a robust AI centric end to end approach on training an AI, an economy platform, first and foremost, you need to have complete control of your perception stack. Meaning, you can’t train an AI model with a perception stack that has a bunch of abstraction layers of third parties. So you can’t have cameras that modify information or in any any way interpret information or process it and feed into the system because it it it completely corrupts the ability to do this where you’d be building a model. And so first and foremost, own perception stack. Second, you’d have a really capable compute platform, an inference platform in vehicle that’s capable of in real time running a distilled version of your large model to make decisions around how the vehicle should behave in this environment.

Number three is the vehicle architecture needs to have a a really robust way to collect segment sequence and choose which data gets saved, and then a way to move that data off the vehicle and to do it at scale. And in order to do it at scale, what I mean is do it in a cost effective way. And so the vehicle architecture should have, of course, a WiFi platform, and then the WiFi platform should have a high level of engagements. You need a way to encourage all customers to be on Wi Fi. So when they come home or park their car in their garage, that for close to free, you’re moving a lot of information off the vehicle into the cloud.

And then once the information’s off the vehicle, you need a way to train a model. And so, of course, the, like, the the foundation as you need a lot of GPUs, but those GPUs need to be designed. You need to have a team that’s capable of running all the experiments. So the right team, you know, you need the right science team, the right research team. And so we’ve been building this for the last couple of years.

Core to this type of an architecture is you need data, so you need the car park to be big enough. And so when we launched our gen two vehicle, the features that were in it were built on a really small fleet that was our own fleet. What you’re now about to see is as the fleet’s grown, a lot more rapid progression of feature set. And, course, that leads into r two. But what we’re planning to go through in our AI days is just pull the curtain back.

You know, this is one of our largest spend categories as a business. It’s something that we we you know, it’s a classic if you’re building a big project. It’s like it’s housing project. You have to do all the plumbing, all the foundation work, all these things you don’t really see, and then suddenly, it seems like overnight the house is built. And so we’ve been we’ve got a large team on this.

It’s one of our biggest teams in the company. Huge investment category for us is a from a, you know, percentage of our r and d. And so AI Day sort of coincides with when these features will start to manifest from customer facing features. So you’ll start to see the vehicle get better and better on our gen two fleet. It’ll make another step forward with our r two platform, but we wanna show how we’re gonna like, show how this is happening.

So everything from reviewing our hardware stack, what we’ve vertically integrated, how our data flywheel has been architected, what our foundation model architecture looks like, what our approach to GPU GPUs has been, how we’re building a large enough cluster to do all this training. And and that will be, of course, included with a demo, which is it would have to be part of the process. You actually have to see this manifest into a feature. Great.

Unidentified speaker, Conference Host, UBS: Well, we’ll we’ll look forward to that. That we are at times, RJ. Thanks for joining us this morning. We really appreciate your time. Yep.

Yep. Thanks, everyone.

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