Rivian Automotive Inc ($RIVN) Q3 2025 Earnings Call

Thanks, Chip. Good afternoon, everyone, and thanks for joining us for today's call. We continue to make progress against our key strategic priorities, including preparation for the launch of R2 and development of our technology roadmap, including autonomy and our vertically integrated hardware and software. As we have stated before, over the long term, we expect the industry to be fully electric, autonomous, and software-defined. I've never been more confident in the opportunity ahead for Rivian than I am today. I firmly believe Rivian's technology, along with our direct-to-consumer ownership experience, position our company to build a category-defining brand with a strong product portfolio for the US and European markets. One of the key drivers for attracting customers to electric vehicles, and to Rivian's products more specifically, is consumer choice and price point. The average new vehicle purchase price in the United States is now just over $50,000, and the most popular configuration is a five-seat SUV or crossover. Given the attractiveness of this crossover market, I believe R2 is addressing the largest market opportunity with the right product. We leveraged the performance, utility, and personality of R1 and refactored it into a smaller SUV at a lower cost. From an R&D perspective, our teams are executing well to ensure the development of R2 remains on track with our plans. We continue to increase the quality and maturity of our design validation builds, positioning us to begin manufacturing validation builds at year-end following the full commissioning of production equipment. We recently completed the construction of our 1.1 million square foot R2 body shop and general assembly building, and our 1.2 million square foot supplier park and logistics center. All shops have started equipment bring-up, and we're in the process of commissioning the robots in the R2 body shop. In addition, we have completed updates to our paint shop that will allow us to increase our total annual plant capacity to 215,000 units. I've been driving an R2 for a while now, and it is incredible. From a performance perspective, it delivers on the adventurous spirit customers expect from Rivian, while also being a great daily driver that will fit so many different use cases for our customers. Looking longer term, we expect to add an additional 400,000 annual units of capacity for R2, R3, and associated variants with our next US manufacturing facility in Georgia. In September, we were honored to be joined by state and local officials for a groundbreaking ceremony. Our significant investment in the state of Georgia is expected to create 7,500 jobs, as well as billions of dollars of economic benefits to the local community as we expand our US manufacturing and technology footprint. In parallel to the progress we've made in developing R2, we've also continued to invest in our technology, including our hardware, our software, and our autonomy platform. I'm excited to share the progress we're making at our upcoming autonomy and AI day on December 11th. Over the longer term, we believe what will differentiate Rivian's autonomous capabilities will be our end-to-end AI-centric approach. With the launch of R2, our growing fleet of customer vehicles will collect real-world driving data, which will complement the data already collected by our second-generation R1 vehicles. That data can be used to train our large driving model, which we believe will allow a rapid rollout of updating driving inference models with growing capabilities. In closing, as we look towards 2026, I'm excited about the opportunity ahead for Rivian. I believe our technology and our products will position Rivian as a market share leader over the long term. I want to thank our employees, customers, partners, suppliers, communities, and shareholders for their continued support. With that, I'll pass the call over to Claire.

Thanks, Emmanuel, for the question. We certainly expected to see a pull forward of demand from October into September with the end of the IRA program, and we saw that in September. That pull forward, of course, results in somewhat of a softer demand environment as we look at October, and I think that's true just across the full space, across the industry, across multiple different manufacturers. I think it's important that we look out from a longer-term horizon point of view and recognize that ultimately the customer is going to be making decisions around what's the best product for them. We spend a lot of time, I think, often overly focused on electric vehicle sales relative to others. The way we think about this, and in particular with regards to R2, is we need to build the best vehicles and give customers great choices. In the case of R1, we have the best-selling premium SUV sold in the United States. That's for EVs, premium SUVs, and we have the best-selling SUV, electric or non-electric, in the state of California. With R2, we're really hoping to capture the magic of what is in R1 in terms of performance, features, and capabilities in a much more cost-effective or affordable package that allows us to have this vehicle be cross-shopped with so many different types of vehicles. It's hitting the most popular segment with a mid-size SUV, five-passenger SUV, with a price point that starts at 45. The average price of a new vehicle sold in the United States is around 50. So we're really bullish, really confident on R2 and what that represents for us as a business.

Yeah, Mark, this is an area we've spent a lot of time on as a company, thinking around what our manufacturing infrastructure and manufacturing platforms look like long term. As we thought through that, it led us to the view that we need to develop products and robotics solutions that can allow us to run our manufacturing plants more efficiently. The design of these robotic solutions captures the data that we have within our existing facilities to train the robotic platforms on manufacturing and to train on some of these high dexterity operations. We've ultimately raised $110 million in a seed round to launch this as an effort outside of Rivian, but obviously with Rivian still as a close partner and as a shareholder in this entity. The applications will include Rivian applications, but also much wider ranging, thinking about a wide spectrum of industrial applications where we see the benefit of AI-enabled robotics.

Yeah, the Volkswagen relationship coincidentally is coming up on its 1-year anniversary for the joint venture. A lot has happened in the last year. We continue to make great progress. We have an incredibly productive and strong relationship with Volkswagen Group. I was just in Munich a few months ago for a number of different product reveals, one of which was the Volkswagen ID.1, which is a roughly $22,000 EV that's being developed by Volkswagen. Of course, leveraging our technology platform, and it's just an awesome vehicle. I'm really excited for that to be one of the launch vehicles that comes out of our collaboration and joint venture with Volkswagen. It's the first of what will be many programs that come out of this joint effort. The relationship remains very strong, very positive, and there are lots of things to come in front of us in terms of products and other ways we can work together.

A lot of emphasis has gone on the robo-taxi side. I think independent of whether the application is in a personally owned vehicle or in a robo-taxi, what's really important is recognition that the technology is going to become a key part of our automotive ecosystem. In our view, as we look towards the end of this decade, it will start to become a really important driver for consumer purchase decisions around whether or not a vehicle's capable of driving itself with both hands off the wheel and eyes off the road. Importantly, doing that across a very wide spectrum of roads. Essentially, any drivable road should be something that can be driven by a vehicle without a lot of involvement from the driver. As it stands today, more than 95% of the miles driven in the United States are in personally owned vehicles, the remainder being a mix between taxi, ride-share, and rental. We think that's likely to stay mostly the same. Maybe ride share grows by some percent, but in terms of large-scale adoption of autonomy, solving this for personally owned vehicles is going to drive the biggest step change for us. That said, the opportunity for us to participate in robo-taxis is of course there. If we chose to partner with some of the big ride share operators, there are lots of market opportunities there. But our focus today is really on the technology. That's what we'll spend our autonomy and AI day talking about: the technology roadmap, how we've developed it, both the hardware, the software, and our data flywheel. We'll demonstrate what all those different elements come together to enable in terms of what the vehicle can do. Through that event, you'll see there are lots of different ways this can be applied in terms of go-to-market, whether that's personally owned or through robo-taxi partnerships as you stated.

Thanks, Joe. We're not planning to offer an E-REV or, effectively, a series hybrid which would involve putting an engine into the vehicle. That's not in our product roadmap or something that we're at all contemplating. But I do think it's important to note that part of the journey of electrification is providing customers with choice. Different manufacturers are going to make different decisions on this. Some will decide to take more of a hybrid approach or an E-REV approach. Others are going to take a pure EV approach. In the end, as asymptotically, this is all going to be driving towards, in our view as I said in my opening remarks, everything will be electric, everything will be software defined, and everything will have very high levels of autonomous capabilities. We're very focused on continuing to lead with electrification. We think particularly for the mid-size segment SUV, which is going to make up the vast majority of our volume with the launch of R2 and its follow-on product with R3, that that segment really works beautifully with an electric car, a fully electric architecture where we're able to deliver great performance, outstanding range, and at a price point that's very comparable to ICE or hybrid alternatives.

Yes, Minder Robotics is a separate company from Rivian. Rivian is a shareholder in this. The $110 million that I referenced before is the seed financing as capital from outside of Rivian. We're incredibly excited about it. As much as we've seen AI shift how we operate and run our businesses through the wide-ranging applications for LLMs, the potential for AI to really shift how we think about operating in the physical world is in some ways unimaginably large. That influences how we think about designing logistics inside of a plant, how we think about designing even plant layouts. The creation of this company ultimately came from us coming to the view that we wanted to have direct control and direct influence over the design and development of advanced AI robotics that would be very focused on industrial applications. These are robotic solutions we will be creating through this entity, through Minder Robotics, that are designed and optimized around manufacturing and industrial environments.

Yeah, the R2 program, we've talked about this in the past, is launching with the 4695 cylindrical cell. That cell, starting in the late 2026 time frame, will be produced in the United States in Arizona. We sourced that quite some time ago and have been developing in close partnership with the supplier of that cell, which is LG, for some time. As you point out, there are opportunities to look at other sources of battery cells both in terms of chemistry and in terms of supplier. But as it relates to the production coming out of our Normal facility, that's planned to be the LG cell produced in Arizona.

There's a lot in that question, but let's unpack it. First and foremost, the bill of materials is contractual. As we negotiated the bill of materials and made decisions strategically as to where the content that ultimately makes up the bill of materials in the vehicle is coming from, we made decisions around prioritizing domestic or USMCA-compliant BOM sourcing. We had parts coming out of USMCA-compliant locations because those decisions were made where we already had line of sight to the likely shift in some of the policies that we've seen recently. Importantly, those contractual agreements that we have on the BOM itself help give us confidence in achieving the BOM and getting to the exit rate of positive unit economics on R2 at the exit of 2026. Another element that's changing is the expansion of the 232 framework and the allowance for the 3.75% to carry out longer, which is very helpful for us. We previously guided to say the effective tariffs have been a couple of thousand dollars, and what we would now guide to say is that it's a few hundred dollars of tariff cost per vehicle. So it's a pretty significant shift for us. Above and beyond that, in terms of the overall COGS framework, Javier and the team have been very focused on making sure we're ready at the plant. Your team is responsible for the bill of materials and supplier sourcing, so just comment on the confidence we have in our cost structure.

The Normal facility, as you said, will have 215,000 units of capacity, and that'll be split between R1, our commercial van, and R2. R2 of that will have 155,000 units of capacity. The Georgia facility, built across two phases, will ultimately have 400,000 units of capacity, and that'll support R2, R3, and variants of each of those products. I said this before, but I think it's a very important point to make: understanding the demand profile from customers for electric vehicles requires us to look deeper than just EV sales in aggregate, but rather to look at the strength of a vehicle offering relative to what else is on offer. Ultimately, the way customers are going to be making decisions is based on the price of the vehicle and the value it provides, which includes performance, capability, and features. We're very, very bullish on what we're building with R2. The way we think about it as a team is we're building the best car you can buy in this category and at this price point. We want that to be abundantly clear and something that is so self-evident when you use the vehicle. We were just talking about how exciting it'll be for people to compare the vehicle to other things in this price category. We've also seen that the rate of adoption of EVs really does tie heavily to the number of highly compelling offerings. To date, at this mass market price point, call it in the $45,000 range, there's really been a single dominant brand with really two products. That's, of course, Tesla with the Model 3 and Model Y. With them taking up roughly half the market, 50% market share, it's not a reflection of a healthy market; it's a reflection of a very underserved market in terms of choice and options. What we're building with R2 is very different than a Model Y. It's similar size, similar price, but very, very different in terms of the way it's executed. It's going to attract, we think, a very wide range of customers, including people that may be considering EV, but also importantly, folks that are not necessarily considering EV but just looking for a great vehicle for $45,000 to $50,000. With all that said, what we've shown to date in terms of product sets or product portfolios is the R2, the R3, and the R3X. Importantly, there are other variants which we haven't shown yet that will be built off the R2 and R3 platforms that will support the overall volume in Georgia as well.

The R2 and R3 vehicles are absolutely architected from the very beginning and designed with Europe in mind and planning for Europe. We think they both fit the European market extremely well. We haven't announced European timing yet, but it is really a core part of the program. It was also a key element of the decision we made to set up the plant in Georgia, given its ease of export for vehicles going to Europe.

In the early part of next year, we're going to have an R2 event where we'll go through the full portfolio of R2 products, which would include the different pricing levels across trim and powertrain configuration. As you called out, when we're starting a production line of a new vehicle, we're going to limit the number of variants that we're building. We have a launch edition for the R2. This is a classic challenge because, of the thousands and thousands of people that are excited for R2, some will want the most base version, the lowest price version, others are going to want the highest end version, some will want something in the middle. We spent a lot of time thinking about what's the right version to launch with. I'm not going to provide the pricing for that here. I'll say that it's a dual motor variant and that's well appointed, but it's not intended to be our most expensive version. It is intended to be a very nicely set up vehicle which we think will make the most people the most happy, which is really the goal we had in selecting our launch configuration. As implied, following the initial ramp up with that launch configuration, we'll then add in the other trims and other configurations. At that event I referenced earlier, we'll go through that in the early part of 2026 and talk about when those different trims are going to be available.

It's an awesome question. Ultimately, the question is getting at this idea of awareness. Awareness of what R2 is and awareness of Rivian as a brand. Some of that will naturally come just from the presence of R2 on the roads and having more people have access to it, the brand becoming much more accessible because of a much lower price point, and some of the same word of mouth that's benefited the brand to date with R1. Beyond just the existence of the product, the presence of it on the roads, and the positive dynamics associated with word of mouth, we are putting a lot of thought into exactly how we'll launch different campaigns for the vehicle. That's putting it in unique places, making sure that it's whether those are physical activations that are temporary in nature, physical activations through partnerships with other entities, whether it's going to show up at a ski resort or a restaurant, these types of decisions, to the more digitally focused marketing spend that allows people to see and experience the vehicle. We've historically not really relied heavily on paid marketing. That's certainly been a decision, but I think there's an opportunity there for us to be thoughtful and highly measured, but thoughtful in how we deploy dollars into driving awareness so folks know about this really incredible product that we've developed.

We didn't hear any of the question, though.

The impact of a 0% export tariff is certainly something we've been quite enthusiastic about, and we're pleased to see it. It hasn't had as much attention as we think it deserves. While as I said before, we haven't announced the timing for when we're going to be exporting to Europe, it's certainly part of our own calculus on deciding when we add that layer of complexity to the business, recognizing that we have a lot of demand here in the United States and we want to make sure we achieve critical mass for the large pool of demand that we have here in the US. But at the same time, without a tariff to now bring our vehicles from the United States to Europe, there's a real opportunity to get into Europe sooner. These are the types of things we're thinking about, but we haven't yet said exactly when we'll be in Europe.

We haven't announced R3 yet in terms of timing. But what we have said is that R3 will be produced only in our Georgia facility. We're not planning to produce that in our Normal facility. And the Georgia facility, we have said, is launching in late 2028. So it would be no sooner than the launch of that facility in Georgia.

First, thanks for the plug for autonomy day on December 11th. We're incredibly excited about that. We're going to be going into a lot of detail there and talking about a number of things we've not yet talked about publicly, unveiling a lot of the technology behind what we're building and what we've been focused on the last several years to enable this. At the highest level, this is an area of the business and a technology drive within our business that we think is going to be among the most important for transportation. It represents one of the largest investment areas for us as a company, one of the most focused R&D efforts for us as a company, and it captures a tremendous amount of excitement from us as a business and certainly for me. In terms of the applications for autonomy, it is very wide-ranging. We think it's going to become a very powerful driver of sales. When you think about the products we're launching, particularly with R2 and R3, the form factor of those vehicles is so universally useful. It's universally useful for a personally owned vehicle, for a vehicle that might participate in any form of ride-sharing services, and it's universally applicable in the United States and in Europe. Layering on top of that already very interesting vehicle in terms of form factor, package, pricing, very high levels of autonomy, where we start to look well beyond hands-off wheel, eyes on road, but into hands-off wheel, eyes off road, point-to-point navigation, so address to address, we look at that as a really significant driver of demand. It will unlock a lot of folks that may not have even been considering Rivian or an EV but to say, 'Wow, I really like this car, but I also really like the fact that it can give me my time back. I can have it drive places with me sitting in the car on my phone, getting my time back.' That is our North Star. It's not that we will be able to start immediately there, but what we'll talk about on December 11th will be what that roadmap looks like: first, expansion of the number of roads that we have hands-free on, then overlaying that with point-to-point, address-to-address navigation, then following that, adding in for select specific environments hands-off and eyes-off, which is an important one, and then over time growing the number of locations and broadening the operational design domain for where the vehicle can operate with eyes off. That is the core focus for us as a business. Doing that well will unlock, as you already alluded to, many different types of businesses that'll support what we already build in our commercial business, which we're quite excited about. It opens up opportunities for robo-taxi, but importantly, by far and away the largest revenue opportunity is consumer-owned vehicles or vehicles owned by a household, which represents well in excess of 95% of miles driven in the United States and largely true for Europe as well. That's our core focus to start, but to be very clear, the technology can be applied in many, many different places.

Thanks everyone for joining today's call. Hopefully you can hear in our voices just the level of excitement that we have for R2 and importantly the technology platforms that we're building. Certainly our autonomy platform being chief among them. We've got a lot of work to do in front of us as we get ready for the launch of R2, but as I said, I've been spending a lot of time in our vehicles and they are just absolutely incredible. Both the vehicle, the technology, and the autonomous capabilities of the vehicles. We're incredibly excited to spend more time on December 11th talking about our autonomy technology and overall AI within the business and within the vehicles. Then certainly in the early part of next year, starting to get folks in our R2 products. That is what we're heads down on and focused on. We spend a lot of time talking about the vehicle itself, but the rest of the business is also being prepared: all of our go-to-market functions, our service functions, and as you heard from Javier, getting our plant and our operations teams ready. We are focused on that and feeling very excited for the launch of the vehicle and for the launch of all this technology that we've talked about today. Thank you all very much for joining today's call.