We're webcasting. I know we're webcasting. Good morning, everyone. Good morning, everyone. My name is Avi Steiner, and I am the automotive analyst here at JPMorgan . It's our pleasure to have with us today from Rivian, Chief Financial Officer, Claire McDonough, who has graciously agreed to be peppered in a fireside chat Q&A format this morning. As always, I'm gonna start with some Q&A up here, and then I'm gonna open it up to the audience for questions, hopefully if time allows, and then we'll go from there. Claire, thank you for joining us today.
Thanks for having me, Avi.
Excellent. Okay. Let's start here. You've done a great job, the company's done a great job of reducing the bill of materials for the next- generation R1, both year-over-year and sequentially. Can you walk us through how the company achieved those savings?
Sure. As you look at our cost of goods sold for per unit delivered in the fourth quarter of 2025, we saw a $7,000 reduction versus the fourth quarter of 2024. We were able to achieve that through a significant reduction in our material cost of the product. Those were achieved by both the transition that we made from our first- generation R1 to our second- generation, which improved all of the core technologies in the vehicle itself, bringing us to a lower cost basis in our material costs on the R1 program. We also saw a slight increase in terms of our Commercial Van deliveries in the fourth quarter, so had some additional favorability from a mix standpoint as well.
The important piece is as you look at the fourth quarter on a cash basis, we made over $2,000 a unit. That sets us up really nicely as we now think about the added volumes that will come into play with the ramp and rollout of R2 that will start first external deliveries of R2 in the second quarter. We'll build for the majority of the year on a single shift. Then we'll add a second shift of operations. As we look towards the fourth quarter of 2026, we'll see a key inflection point in terms of the overall production volumes. With that, the fixed cost leverage that benefits not just R2 that is coming to market, but also importantly, the underlying unit economics of our R1 program as well as our Commercial Van .
You touched on a lot there, hopefully we will get to address a bunch of those things. I wanna shift to the R2. It's expected to be a game changer for the company. The reviews so far have been pretty positive. If anyone hasn't seen them, I encourage you to go online. That's not me saying that. That's other companies. More importantly, recognizing launch is proceeding deliberately as you kind of just touched on one shift, what are the biggest financial and operational challenges you're preparing for as the company scales production? How, you know, is Rivian mitigating or getting in front of any potential supply chain bottlenecks?
First off is thanks for the shout-out on the early release of reviews. We couldn't have asked for better reviews out of the February launch where we had about 10 media outlets drive the R2 product. Some of the favorite quotes that came out of that experience from my standpoint were, you know, one reviewer called it the best EV that he's ever experienced. Others, you know, said that if you had, you know, not told him and just put him behind the wheel of the driver's seat, he would have thought he was driving an R1S, but instead, driving an R2 with a much more affordable price point associated with it as well. As we look at the roadmap for the R2's ramp, we're critically focused on the supply chain right now.
In early January, we started our first manufacturing validation builds on our lines in Normal, Illinois. Over the course of the last year and a half, we built out an expansion in our Normal facility to accommodate a brand-new body shop and general assembly of the R2 product. We've been going through the cycles each and every week to improve the production quality, improve our processes, system, training of the team. It's you can think about it really as a continuous roadmap as we reach saleable production on the product first, then ultimately get to a point where we're inflecting and adding a second shift of operation as well.
The strategy that we've deployed to run most of this year with a single shift is focused on getting the quality right and as the assurance that we're keeping the supply base working in lockstep with Rivian as they increase their production rates and volumes ahead of the second shift and ultimately in 2027, the addition of a third shift of operation for R2.
With the first shift and really the R2 deliveries, I think, starting in the second quarter of this year, remind us as to how we should think about the margin evolution here from launch to, I'll use the word steady state. I don't know if you can kind of quantify that. Is that after two shifts, three shifts, just how to think about that whole evolution?
For R2, we had the advantage of starting with a low material cost basis on the product. We were able to achieve that through the demonstration of the brand strength with the development and sales of R1 program as well as our Commercial Van offering that allowed us to get to much lower levels of I would characterize cost with the supply base as a whole as we work through the negotiation of the R2 program over the course of 2024. That enables us to have a very fast path to variable profitability on the product. We anticipate by the end of 2026 that we'll be in a position where both R2 and our overall automotive gross profit will be positive within the business.
We look at the quarter- sequential mix, you'll see Q2 and Q3 as being more of a headwind associated with the early stages of ramping up a brand-new product. As we look at Q4 and the exit rate, R2 starts to be a net beneficiary of our underlying unit economics.
Okay, maybe one more on R2, if I can. I think it's March 12th, you'll correct me if I'm right.
Yeah.
On March 12th, you plan to reveal the different configurations that consumers can select for the R2. What I'm really curious about, company's had pretty good learnings, if that's the right word, from the R1 to guide it, and this is obviously a lower-priced vehicle aimed at different consumers. What are some of the puts and takes in terms of how management thinks about combinations, price points that it might make available to the consumer within that, you know, the enormous backlog that was once noted for that vehicle?
One of the key learnings, that we're employing with R2 is to focus on simplicity. To narrow the SKU assortment, ensure that we're focusing in a way that enables the acceleration of our ramp and roadmap for the future.
As we look at the conversion of our, you know, pre-order base of customers, we're gonna invite those customers, you know, to say, "Are you interested first and foremost in configuring a Launch Edition vehicle for Rivian?" Not saying everyone come and configure the exact variant that they want, but instead say, "This is what we're building today, and you can queue up to put in your pre-order for that Launch Edition variant out of the gate that will help us bring up the supply chain, reduce complexity with the ramp, and hopefully be, you know, more successful as a result of the simplification of the build plan.
Okay, terrific. Then Rivian unveiled the RAP1 chip at its Autonomy Day last year. Walk us through the capabilities that provides and the timing in terms of introduction of Gen 3 autonomy, which is really the genesis of this question? When will it be commercially available or included in the R2? Relatedly, if I can ask, any thoughts on whether the different tech that is available at launch versus maybe later in the year might impact at all R2 sales?
First off, we introduced to the world our Rivian Autonomy Platform at our Autonomy & AI Day back in December of 2025. The core advantage that we're deploying with an in-house silicon program is the opportunity for us to have, you know, rapid cycles in terms of development. A product that is custom-built for the universe of heavy camera- and sensor-based AI physical world applications, which allows us to use the vast majority of the TOPS or processing power of this chip relative to other players in market that are trying to solve for many more use cases versus just the use case of autonomy or advanced physical AI and robotics. The other element is cost as well.
We had the opportunity with the talent that we had within our team to recruit a world-class, semiconductor, you know, organization to Rivian to build this program out for Rivian. Today, we have production-intent silicon that we're testing and developing, you know, with our teams, and those will go first into vehicles at the end of 2026. You'll see us scale up the R2 volumes in 2027 with this new Gen 3 hardware set, which includes the Rivian Autonomy Platform chip, but also includes a LiDAR, the first LiDARs that will go into Rivians as well. This is, you know, 1,600 TOPS.
As you think about the overall compute and processing power, it's, you know, twice as powerful as what we have in our Gen 2 products or the first R2s that will go in market as well. However, with that said, R2 will be, you know, at launch, still one of the most advanced vehicles in terms of its autonomy capabilities, the level of the compute that's in the vehicle as well. For those first orders, they'll have full access to point-to-point navigation. So any road that has a painted line on it, they can use point-to-point navigation to have the car effectively drive them, you know, hands-free to their destination.
That's great. There was a lot in there, so I probably should have broken that up into a couple of questions. I'm going to build off of that if I can. If you could talk about the company's NAND and DRAM needs, how that might be impacted given everybody's talking about the shortage and obviously the pull from AI. Obviously you've had plenty of learnings, again, to use that word, just from your build in R1 and different shortages. Just talk about how you might be navigating that.
Sure. The fundamental challenges within the memory space was factored into our guidance for 2026. As we think about some of the core advantages of a player like Rivian, we do have the flexibility because of our vertical integration. In terms of the electronic control units that we design in-house, we work directly with contract manufacturers on the production of those boards that enables us to be more agile in an environment like this. Back in 2021 when we were going through the semiconductor crisis, for example, we were able to redesign some of our ECUs to move away from constrained parts within the industry as a whole and gravitate towards new supplier partners that had availability towards Rivian.
Our teams are working, you know, around the clock to ensure we have the memory for our products. We do use a sizable amount of memory given the advanced technologies and autonomous capabilities of the product itself. But we also do have, I would say, a core inherent advantage in the level of vertical integration that we have and deploy.
Okay. As a reminder to the audience, I'm gonna open up to questions in a couple. Let me kind of take a bigger picture view here if I can.
Mm-hmm.
There are a couple of crosscurrents as we see it for electric vehicles at the moment. On the one hand, the administration has effectively unwound the incentives that were meant to spur adoption of electric vehicles. On the other hand, we see as consequences, I guess, to the former, the D3 and other manufacturers have begun to meaningfully pull back from the EV product, right? I'm sure you don't necessarily view them as competitors, and I don't say that in a pejorative or negative way, but just thinking about how, you know, folks are moving to hybrids. There's been some discussion of maybe Tesla pulling back on some vehicles. Just how you think about, you know, your position, Rivian's position, and these two kind of crosscurrents either benefiting or hampering demand for Rivian's vehicles?
We very strongly believe that the future is gonna be autonomous, software-defined. If you look at the characteristics of those two capability sets, they often come in the package of being a fully electric vehicle as well. We believe that the steadfast clarity of our focus in the roadmap in each of these core technologies that we think will transform consumer buying behaviors in the future will put Rivian in a great position as others are actually taking, you know, a step back from their electrification initiatives as a whole. We also wanna just bring the very best product to market. We often get asked about, you know, some of the dynamics in market with EVs. Our ambition as a company is to create the best vehicle, full stop.
Whether you're coming to Rivian because you want an electric powertrain, you're coming to Rivian because you love the design of the product, or you love the technology of the product or the performance, we think we're bringing a fantastic product to market, and our intention is to take a large percentage of the customers today that are still buying combustion engine vehicles and convince them to buy their, you know, very first EV with R2 as well.
All right. I'm gonna dig into that maybe a little bit further from a different angle. RJ on the last earnings call listed a number of states that the R1S, I think, is the best-selling EV in. If you look at those states, and again, I don't mean this negatively, but California, New York, New Jersey, Oregon, Washington, D.C., and Virginia, I think they all adhere or subscribe or are part of CARB, right? They're more EV-focused, for lack of a better definition. Really the question is, you know, how does a company increase awareness and adoption?
Everything you just talked about how you view this as transformative technology and wanna reach those ICE consumers or those ICE vehicle owners, how do you increase awareness, adoption in other states and really countrywide to get them to make the switch?
We've seen a lot of power in the strength of our Rivian community, the best influencers for Rivian are our customers. The customers that are going out at their, you know, their Little League baseball game, talking to their neighbors, talking to their teammates, friends about the experience that they have, you know, driving their Rivian, that's the best marketing that we can have. The other challenge is we need more consumers to test drive our products because the best way to showcase the performance, capability, and utility of a Rivian is to get behind the wheel.
We have a couple of Rivians downstairs, for those of you in the audience that have never driven a Rivian, please take us up on the offer to do just that because you can listen to, you know, Avi and I go back and forth about the business and strategy. I truly believe that getting behind the wheel, you know, makes the vertical integration, makes the intentionality of our technology stack and the true differentiation of Rivian all, you know, come together in one driving experience and package that is incredibly well thought out as well. That's another strategy of how do we continue to have more customers, you know, grow their awareness of Rivian, whether they're in market today for a vehicle or whether they're considering, you know, their very first EV for their next product.
Having more of those experiences is critically important for us. The other element is, you know, the continued growth and build-out of our physical infrastructure, so our service infrastructure, our sales infrastructure, our charging infrastructure that supports, you know, many consumers in many additional geographies as well.
Can you size the infrastructure you put in place, service centers, et cetera, on the one hand? Then just finishing off that last question, if I can? Is there ever a role for a traditional marketing campaign in Rivian's future, or this is just you wanna keep going on the word of mouth experience path, which has been great.
Today, from a physical infrastructure standpoint, we have just under 100 service center locations across North America. We have 35 dedicated, we call them Spaces, which you can think about them as experiential retail hubs for the business. We'll add another 40 locations over the course of 2026 as we scale up for the launch and growth of the R2 platform as well. One of the keys from a physical infrastructure standpoint is the opportunity for us to be very asset efficient. In the case of service, the majority of our service can be done through mobile service applications. We have hundreds of mobile service vans that are deployed across each of our 100 service locations, and the majority of events can be done at your home.
There's nothing more convenient than a Rivian service van coming to your home or workplace that can do the job for you without you ever having to, you know, lift a finger or bring the car in for services as well. One of the core advantages of EVs is they require very limited services as well. I think that that's an area where many new owners are just completely, you know, surprised and delighted by the efficiencies and reduction in their total cost of ownership through service overall.
Okay. I'm gonna open it up to the audience for any questions. I ask because it's webcast that you wait for the mic to come by so you can ask your question into the microphone. Does anyone have any questions in the audience?
What's the status of the build-out in Georgia? As a resident of Atlanta, I drive through the I-20 corridor. I see what looks to be infrastructure improvements around where a site may potentially land. What's the status of that build-out?
Well, great to have you as a Georgia and a adjacent customer in our community. For the Georgia site, we've focused on a lot of the long-lead-time items . Those are oriented around bringing power and utilities to the site. We've done a lot of work with the state on building a lot of the transportation infrastructure, logistics infrastructure. There's a new overpass, new rail spur that's going into effect as well, such that when we get to vertical construction in 2026, we can go much faster with the anticipation of the very first vehicle builds happening at the end of 2028 at the site.
I think one question up front. Thank you.
Can you delve a little deeper into the Tesla decision to get out of the X and S and what that means for you as an opportunity? Also, you know, was your perspective on the logic of canceling those programs? Those were obviously the benchmark programs for that EV platform or had been for a long time before the lower cost versions. Is there any read-through that you guys have about your platform and vision going forward for EVs generally?
Fully agree with you on, you know, Model S and Model X as being benchmark programs. Those were really the first programs in the EV space that, you know, showcased the capability, performance, desirability of an electric product. As we look at Rivian's opportunity now, there's certainly customers that Rivian can recruit and look to continue the continued sales of our R1S, which is a seven-passenger large SUV, and our R1T electric pickup truck as well. I can't opine on Tesla's strategic rationale in their own decision-making.
Similar to Rivian, we've used the R1 platform as really our handshake with the world or opportunity to build brand to showcase the on-road and off-road capability performance of what a Rivian can do, and then now have the opportunity with our mass- market price point with R2 to significantly grow the addressable market of consumers that can now consider Rivian as part of their purchasing decision.
Okay, great. I'm gonna turn it back to myself and ask a couple more questions. Can you update us on the relationship between Rivian and VW on the one hand?
Mm-hmm.
You know, a couple of reports have been out there, intermittently. More importantly, can you also remind us, and the audience what the timeline and milestones are to the next payments from VW to Rivian and both timing and amounts?
Sure. Rivian maintains a very strong relationship with Volkswagen Group. We were incredibly proud to have delivered multiple vehicles back to Volkswagen at the end of 2025 for the start of winter testing. That's testament to the extensibility of the software and electrical architecture that we've rebuilt and the joint venture is leveraging for future vehicles as well. In that 13-month, you know, timeframe, we were able to modify our Gen 2 architecture, which is what powers our Gen 2 R1s, as well as, you know, what will power R2, and build that into multiple different brand programs for the Volkswagen Group, which is, you know, multiples faster than they would have ever been able to execute against working, you know, with their own supply base and ecosystem as a whole.
It showcases the speed, and the utility of the foundation of the IP that sits, you know, at Rivian and now at Volkswagen Group as part of the joint venture as well, as we think about the ongoing deployment of these products working our way through, you know, multiple Volkswagen Group launches in the future as well. As you as it pertains to the incremental capital from Volkswagen, as part of the $5.8 billion of consideration for the joint venture, there's an $2.5 billion of that that is still yet to come to Rivian.
We anticipate receiving, $2 billion of that this year in 2026, $1 billion tied towards successful winter testing, $1 billion, which is a non-recourse loan, from Volkswagen Group, to Rivian as part of the consideration, another $500 million that will come in in equity in 2027.
Perfect. On your last call, and I think during the Autonomy Day as well, the company talked about the potential to license its software-defined vehicle technology to other OEMs. Beyond what it is doing with VW, importantly to note, is it possible to size the opportunity or how we should think about it here? Is this something that can reasonably be expected before all the VW benchmarks have been reached, as you just discussed, and those vehicles launch in 2027? Just how do we think about that possibility?
Sure. There's multiple avenues for Rivian and the joint venture to execute on being a technology partner for the industry. Within the joint venture itself, we have housed our electrical architecture and software stack that powers the key functions of the vehicle itself. Outside of the joint venture is all of our initiatives around autonomy. As we think about what the opportunity is for Rivian, as I mentioned, we believe that all OEMs will, in the future, need to have a zonal electrical architecture, be a software-defined vehicle, and have high levels of autonomy to be part of the consideration set for consumers or risk losing in meaningful market share overall.
We see there being a huge opportunity for Rivian to play a meaningful part in that transition for many other OEMs as well. Through our large commercial relationships with both Volkswagen Group and Amazon, you know, have built and are building a muscle of how do we work collectively with large, complex organizations and customers as we look to that future state of being a technology provider to the industry.
Okay. Very much a stay tuned. We are at a debt conference, I'm going to go maybe one on the balance sheet and cash use if I can. Based on the company's full year guidance, it's likely Rivian will burn another $4 billion of cash just from EBITDA and CapEx spend, right? We have working capital, which is an outflow. I don't think you've sized it, but you're growing this year. It makes sense it'll be something not small. You have the incoming dollars from VW. You are in a net cash position today, just walk us through, A, if my math is right, and B, how you think about your liquidity evolving as you head into 2027.
We ended 2025 with $6.1 billion of cash. We'll receive another $2 billion this year from Volkswagen Group. Your math is correct around our guidance for adjusted EBITDA and CapEx, as well as the fact that we do expect there to be an outflow of capital from working capital as we ramp up for R2. Beyond that, as we look ahead to the Georgia site and facility, we do have a project-based finance loan with the Department of Energy that we anticipate being able to utilize for the continued build-out of our Georgia site and the tooling associated with the future vehicles that will be housed at that site.
Beyond that, we'll remain opportunistic as it pertains to maintaining a strong balance sheet position for the future.
Okay. I want to give our audience one more chance to ask questions. We've got about six minutes left. If not, I've got more questions. Anyone in the audience have a last question for Claire? Don't be shy again. Okay, great. I'm gonna keep at it. Claire, thank you for-
Sure.
Enduring this. I appreciate it very much. There's been relatively less conversation around Amazon, although you just touched on it, and Rivian's EDV offering. Can you update us on how the company is delivering on their electric fleet goals and remind us what the initial agreement was, if you can? just beyond that, I guess, I believe it's not exclusive is where I should be going with this. Maybe talk about the opportunity set there beyond just with Amazon.
Amazon's initial order was for 100,000 Commercial Van s by 2030. Part of the work that we've been doing alongside Amazon over the course of the last couple of years has been the build-out of infrastructure to support the electrification of the Amazon fleet. They've put that foundation in place. As we look at our guidance for 2026, we do anticipate there being an increase in our volumes of Delivery Vans to Amazon, which is embedded within our guide for the year. We're also launching a couple of new variants for Amazon.
We're adding a larger battery pack unit and all-wheel- drive configuration so that they can use the Electric Vans for more rural routes versus today, where more of the Commercial Van deliveries in our products are being deployed in suburban and urban types of environments overall. Amazon is a great partner of Rivian's, and we're really excited about the continued deployment of this offering. There's roughly 30,000 vans, as reported by Amazon, on the road from our Electric Delivery Vans for them. As we look to the future for other customers, we see there is an opportunity over the longer term to continue to educate large fleet operators on the advantages of an EV fleet.
We see that through the total cost of ownership advantages that our EDV offers to Amazon, and their appreciation of the efficiency and deployment of these vehicles within the fleet. I will say that it does require a level of investment, as Amazon has done in their charging infrastructure. That's an area where we're continuing to educate our fleet customers who don't anticipate, you know, significant volumes outside of Amazon in the near term. You know, remain confident that over the longer term, we will see, you know, more fleets electrify.
Terrific. I wanna go back to Georgia, if I can. Recognizing that's going to create a ton of jobs, and that's obviously a positive, but we also have an administration that in various areas as it relates to grants and electrification has maybe pulled back a little bit. I'm curious, has anything changed in your conversations with the administration at all and just how your outlook may have evolved, if at all, for the plan?
We're very aligned with the administration on the opportunity to bring more manufacturing jobs to the U.S. Rivian will be adding 2,000 jobs in our Normal, Illinois, facility as we ramp up R2, and we'll be adding another 7,500 jobs in Georgia as well. Beyond the job creation, Rivian is also a leader in the advancement of technologies as we think about the evolution of the automotive industry and the role that Rivian can play as a key enabler for the transition for many more traditional OEMs as well, through the feature set and capabilities that Rivian can provide. There's broad-based alignment as you think about our capabilities and the job growth and creation that Rivian can bring to market.
Okay. The relationship's great. Everything's on track. Perfect. Maybe my last question here, as we're running out of time. I think at one point Rivian was contemplating selling the R2 into Europe, which at the price point and given the market dynamics there broadly would seem to be attractive, at least from my perspective. Any updated thoughts on potential timing or is the focus just specifically at this point getting the R2 right, getting the rollout right, and then going from there?
R2 was designed for global markets and not just to be a North American-centric product. We have large international ambitions as well as the company, and there's been a huge level of interest from a lot of Europeans that, you know, follow Rivian, that track the brand. Part of the media reviews was through a couple of elite outlets out of Europe as well, all who had, you know, glowing reviews of the product. We're really excited about the opportunity now that we'll have R2 in place to begin to build out the brand and integrate Rivians across the continent of Europe over time.
Okay. That's a great stay tuned, a great place to stop. Claire, thank you so much. Rivian, thank you so much for being here. I appreciate all the time.