2023 Q3 earnings (beat) results! Rivian raises production goals

[MountainBikeDude]

Was there any mention of pending order numbers?

They said a while ago (Q3/22 I think? ) that they weren't going to continue disclosing that metric.

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[KootenayEV]

Why projecting a lower Q4 volume (ie total year volume guidance - produced to-date)?
- planning a longer shut down in Q2 '24 for changes to vehicle topology, reduce cost
- preceding that shutdown, 1 week in Q4 '23 for longer-lead changes that will lead into '24 changes
- broadly, recognizing some potential sales loss around Christmas

Service network build out - how sizing, locations?
- building footprint that relies on brick&mortar locations, but performing majority of service is Mobile service (which is still growing)
- from customer point of view, Mobile is easier; ie no need to drop off, Rivian comes to you; well over 1/2 of all service operations are mobile; expecting to move up to 3/4
- physical infrastructure still important for more involved activity; put close to locations with large pools of vehicles/demand

 

[KootenayEV]

Opening up RCV?!

Yep!

 

[DuoRivians]

The additional trim configurations is interesting!

 

[KootenayEV]

What about next year's potential for production? 65k?
- impact of shut-down in Q2 '24 temp in nature, but will contribute to run-rate in the future
- will create step-change in cost
- cadence of year, Q1 with existing run-rate, Q2 & Q3 will be impacted due to downtime; then ramping up again in Q4
- Q4 coincide cost and demand elements, completion of all pre-orders so ASP higher
- (she didn't actually address total volume though)

What are you planning for margin when you get past pre-orders, thinking about potentially tougher pricing environment?
- last few months, introducing additional build configs for R1 platform
- introducing Std pack in '24, with additional trim config; provides a broader spread of price choices for consumers on R1 platform to target both price sensitive customers and those who want full content vehicles; balance the two against each other; still see ASP growing as we move past pre Mar '22 pricing combined with above
- scale of segments operating in; SUV and pickups have large pools of demand in a range of prices; they see new EV customers
- big step in cost reduction in next year, but also continuing to get improvements in purchase agreements; R2 a good carrot for suppliers; Rivian brand is resonating and suppliers are recognizing how much volume delivering and demand for products vs established brands; recognize excitement for brand should translate to R2 at a lower price point

Next question was largely the same, path to your statement about positive gross margin by end of Q4?
- RJ reinforced points made above essentially (added simplification of HVAC structure in vehicle, which I hadn't heard before)
- higher run rate will also help

 

[UnsungZero_OldTimeAdMan]

I was looking for a better result on gross profit per vehicle (loss down about $2,000/vehicle to $30,500). I had expected the average price per vehicle to go up as, older orders at fixed low prices were filled and new orders came in. That didn't happen and in fact, the APPV is down nearly 4%.

Cost-cutting on parts and economies of scale as they ramp up have only helped so much. It looks like the cost per vehicle went down about $5,000. Great. But it would take another 6 times as much cost-cutting to turn a profit.

I agree that there's lots of good news here. But these are numbers I'm concerned about.

Reminder, it's only been 2 years since start of mass production.

 

[Supratachophobia]

The additional trim configurations is interesting!

Trim config, go on......

 

[KootenayEV]

OPEX drivers in '24 related to Georgia?
- some coming online
- more in relation to the '24 line changes at Normal

Volume split between Amazon and other customers? After factory re-rate next year, when do you expect to fill capacity for 65k annual for van?
- sales process relatively long lead-time (e.g. pilot programs, elaborated on power requirements for established facilities to support large EV fleets often not being enough and taking time to implement infrastructure improvements)
- expecting volume to increase, but in '24 will be minor; expect more to come in '25 as new customers transition from pilot to larger scale orders

CAPEX going forward? In '24 going higher than previously contemplated?
- ~$2B between '23 and '24; be slightly below that avg (I couldn't totally follow what she said here, sorry)

 

[DuoRivians]

EDV sales outside of Amazon will materialize beginning in 2025, once pilot program end

 

[KootenayEV]

Any small changes in your thoughts on R2 timing due to macro developments on other EVs?
- looking beyond even R2, there is an overreaction to short-medium term headwinds (e.g. interest rates, geopolitical challenges)
- R2 launching in 2026; our confidence to capture essence of the brand, do at a considerably lower cost point, at a smaller form factor that still fits market segment in US; think timing works out great with brand development from R1, capture hearts and minds of buyers and give buyers a real choice in the current vacuum of 45k-65k SUVs; concentrated market share currently with Tesla, need alternatives with robust vertical integration and seamless user interface

Update on modernization for software side?
- we believe in large scale opportunities to monetize; model we think will fit is around autonomy; proven examples out there (my take is he is referring to Tesla)
- upfront or monthly payments for higher level of autonomy; we think there has been overestimated how much manufacturers can charge for extra features; we think immersive features can be incremental charging
- don't think minor things (e.g. heated seats or not) isn't going to land well with consumer and not pursuing

 

[UnsungZero_OldTimeAdMan]

The additional trim configurations is interesting!

Resurrecting Explore? Lower cost interior and pared down audio system…

 

[DuoRivians]

Resurrecting Explore? Lower cost interior and pared down audio system…

Three subwoofer configuration: +$5k option haha

 

[KootenayEV]

Update on battery strategy? Your own chemistry and/or cell? LFP?
- space rapidly evolving; looking out over next decade, what is clear through lens of policy and security of long-term supply is upstream secure of supply, Li, Ni, graphite; each upstream raw materials has implications around cell (e.g. graphite closely related to anode chemistry)
- spending a lot fo time building robust strategy around components of cell on upstream relationship supplies and integrating with deals with battery cell suppliers
- R2 this is really important with customer facing tax credit and effect on consumer behaviour
- last 18 months challenging environment; a lot of 'bad' deals done in upstream environment, people over paying; aftermath of over exuberance, more rational deals available on the table now for securing upstream materials

How many pre Mar 1 '22 pre orders left? When completely cleansed?
- continue to work through the base as a whole, feathered in with new orders as expand production included DM units/Max pack, and new stuff in '24

In closing remarks, RJ emphasized excited to show R2 "early next year"; remain deeply excited around long-term movement to EVs, continue to build products that resonate with customers.

 

[KootenayEV]

Resurrecting Explore? Lower cost interior and pared down audio system…

Rumour mill was indicating higher IIRC... but would make sense to reintroduce Explore with the Standard pack and LFP to hit that broader price spread they mentioned in the Q&A period

 

[MountainBikeDude]

Heavy investment software features such as higher levels of autonomy and Augmented Reality features likely to be incremental A La Carte charges.

Heated seat style On/off features will not be part of an addition charge ARR model.

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