Rivian Automotive Q1 2025 Earnings Call Transcript

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Operator

Welcome to today's Q1 earnings result hosted by Rivian. At this time, all participants are in a listen only mode. After the speakers' presentation, we will conduct a question and answer session. I'll now turn the call over to Derek Mulvey, Vice President, Finance.

Derek Mulvey
Derek Mulvey
VP - Finance at Rivian Automotive

Good afternoon, and thank you for joining us for Rivian's first quarter twenty twenty five earnings call. Today, I am joined by RJ Skarinj, our CEO and Founder Claire McDonough, our Chief Financial Officer and Javier Virella, our Chief Operations Officer. Before we begin, matters discussed in this call, including comments responses to questions, reflects management's current views as of today. We will also be making statements related to our business, operations and financial performance that may be considered forward looking statements under federal securities law. Such statements involve risks and uncertainties that could cause actual results to differ materially.

Derek Mulvey
Derek Mulvey
VP - Finance at Rivian Automotive

These risks and uncertainties are described in our SEC filings and the shareholder letter which we filed today with the SEC. During this call, we will discuss both GAAP and non GAAP financial measures. A reconciliation of GAAP to non GAAP measures is provided in our shareholder letter. Just before this earnings call, we published and filed our shareholder letter, which includes an overview of our progress of the recent months. I encourage you to read it for additional details around some of the items we'll cover on today's call.

Derek Mulvey
Derek Mulvey
VP - Finance at Rivian Automotive

With that, I'll turn the call over to RJ, who will begin with a few opening remarks.

Robert Scaringe
Robert Scaringe
Founder, CEO & Chairman of the Board at Rivian Automotive

Thanks, Derek. Hello, everyone, and thanks for joining us today. During our call, I will highlight key developments in the first quarter and provide an update on the progress we're making against our value drivers. First, I'm excited that Rivian delivered a second consecutive quarter of positive gross profit, with a gross profit of $2.00 $6,000,000 This reflects an outstanding effort from the team and a continued focus on cost and operational efficiency. Rivian has now met the gross profit milestone with Volkswagen Group and expects to receive $1,000,000,000 in funding at the June, which Claire will provide more details on in her remarks.

Robert Scaringe
Robert Scaringe
Founder, CEO & Chairman of the Board at Rivian Automotive

Customers continue to love our brand, our vehicles and our products. In the first quarter of twenty twenty five, R1S remained the best selling SUV with a starting price over $70,000 in California, and the R1S was the number one best selling electric SUV in The United States with a starting price over $50,000 Part of what customers love about Rivian is the seamless integration of technology into the product experience and the enhancements that come with our over the year updates. One of our most critical technology focus areas, which customers will start to see the output of, is a Rivian autonomy platform. With the launch of our second generation platform, we entirely changed the perception stack and compute. Our r one vehicles now have 55 megapixels of cameras and more than 200 tops of onboard inference.

Robert Scaringe
Robert Scaringe
Founder, CEO & Chairman of the Board at Rivian Automotive

We designed this platform around an AI centric approach with a vertically integrated technology hardware has enabled us to build a data flywheel for training our model with an end to end approach. With the scale of our second generation fleet growing, the strength of our robust sensor set feeding our data flywheel is enabling an important acceleration to our technology. The metaphorical plumbing for training our AI driving models is in place, and the resulting benefits are just starting to be seen. We believe control of the data flywheel and associated autonomy platform will be important for autonomy development, which we expect to have a greater impact on consumer purchasing decisions as we look towards the second half of this decade. We recently launched hands free eyes on driving for our second generation vehicles for highway driving, and this is the very start of a steady stream of ongoing enhancements which we plan to make.

Robert Scaringe
Robert Scaringe
Founder, CEO & Chairman of the Board at Rivian Automotive

We are focused on delivering turn by turn autonomy as quickly as possible, while expanding from hands free eyes on to hands free and eyes off. We believe eyes off functionality and autonomy in our review settings will enhance the overall product experience. Considering our broader AI work, including review and autonomy, there are several product and technology advancements which we've been working on, but not yet shown or discussed. This fall, we plan to host an AI and autonomy day where we'll share more of our product and our technology roadmap. I'm really excited to reveal more of what we're doing here.

Robert Scaringe
Robert Scaringe
Founder, CEO & Chairman of the Board at Rivian Automotive

As Rivian continues to innovate through AI, I'm also excited to announce Aiden Gomez is joining our board of directors. Aiden is the cofounder and CEO of Cohere, and he brings extensive experience enterprise wide across AI and is a terrific addition to our board. In parallel to technology development, Rivian is making significant progress in R 2, including the start of our validation builds and the continued work on a 1,100,000 square foot expansion to our Normal, Illinois manufacturing facility. We also announced the construction of a 1,200,000 square foot supplier park in Normal, for which much of the building's construction is complete. This supplier park will help us further reduce costs for our normal production.

Robert Scaringe
Robert Scaringe
Founder, CEO & Chairman of the Board at Rivian Automotive

Next year, we plan to start construction on our Georgia facility, which is planned to provide an additional 400,000 units of annual capacity for R2 and R3 once fully built out. Rivian's long term investment in technologies such as autonomy, software, electrical hardware and propulsion has provided substantial cost and performance advantages. For example, our development of the R1 zonal network architecture and associated software is the foundation of what's going into r two. With the expected scale of r two, our investments in this technology begin to build a structural cost advantage, which is a core element of delivering r two at a price point expected to start at $45,000. Rivian's enterprise readiness for R2 stretches beyond just technology design and manufacturing for the product.

Robert Scaringe
Robert Scaringe
Founder, CEO & Chairman of the Board at Rivian Automotive

It spans the entire organization as we scale our systems, processes and infrastructure for rapid growth. I couldn't be more excited for r two's launch. Last week, I was driving an r two prototype, and the vehicle is just incredible. Looking externally, the global trade regulation and policy environment is also top of mind. This is complex, multi layered, and rapidly evolving.

Robert Scaringe
Robert Scaringe
Founder, CEO & Chairman of the Board at Rivian Automotive

It impacts our global supply chains, trade, and consumer sentiment. We have a % US vehicle manufacturing and a majority of our bill of materials, excluding cells, are sourced from The US or USMCA qualified. However, we are not immune to the impacts of the global trade and economic situation, which we expect to impact material cost, material availability, capital expenditures, and the demand backdrop. Importantly, as previously announced, the LG battery cells for r two will initially be produced in Korea, but these cells are expected to be produced in Arizona starting by early twenty twenty seven. With thousands of employees in The US and more than 2,000,000 square feet of new construction underway at our normal Illinois campus, Rivian shares the president's excitement in expanding domestic manufacturing capacity and continued US technology leadership.

Robert Scaringe
Robert Scaringe
Founder, CEO & Chairman of the Board at Rivian Automotive

I can't wait for R2 and the long term potential of our mid sized platform, which we will build in our Illinois facility and future Georgia facility. Lastly, thank you to our employees, customers, partners, suppliers, communities and shareholders for their support. With that, I will pass the call over to Claire.

Claire McDonough
Claire McDonough
CFO at Rivian Automotive

Thanks, RJ. I also want to thank our team for a tremendous quarter. As RJ mentioned, in the first quarter of twenty twenty five, we achieved $2.00 $6,000,000 of gross profit, which resulted in the second consecutive quarter of positive gross profit. This fulfills the gross profit milestone associated with the next $1,000,000,000 of funding expected from Volkswagen Group in association with our joint venture. This positive gross profit is the result of the hard work of our teams as we continue to focus on driving cost efficiency throughout the business.

Claire McDonough
Claire McDonough
CFO at Rivian Automotive

Importantly, when we isolate the first quarter performance of our Automotive segment, we generated positive gross profit excluding the impacts of regulatory credits and depreciation. While our gross profit levels may vary over the next few quarters, given some of the policy impacts we expect to experience, we believe this milestone reflective of the progress we have made taking cost out and driving towards profitability. As we look forward to launching R2, we expect a faster path to profitability as compared to R1, and we also expect that the volumes of R2 in our normal facility will help lower the total fixed cost per unit across all vehicles coming out of the normal plant. In the first quarter of twenty twenty five, we produced 14,611 and delivered 8,640 vehicles from our manufacturing facility, which was the primary driver of the $922,000,000 of revenue in the Automotive segment. As previously stated, first quarter deliveries decreased due to delivery of more EDVs than is seasonally typical during the fourth quarter of twenty twenty four, resulting in limited EDV delivery volumes during the first quarter of twenty twenty five.

Claire McDonough
Claire McDonough
CFO at Rivian Automotive

This impact on automotive revenues was partially offset by increased average selling prices due to proportionately higher consumer deliveries as well as an increase in the sale of automotive regulatory credits. Total software and services revenue for the first quarter of twenty twenty five were $318,000,000 primarily due to new vehicle electrical architecture and software development services, remarketing sales and repair and maintenance services. Our total gross profit was $2.00 $6,000,000 our highest quarter to date, which includes $92,000,000 from Automotive gross profit and $114,000,000 from Software and Services gross profit. Our adjusted EBITDA losses were negative $329,000,000 as a result of the ongoing investment we are making to develop R2 and our key technologies as well as the continued growth of our sales and service infrastructure and organization. These operating costs partially offset by our $2.00 $6,000,000 of positive gross profit.

Claire McDonough
Claire McDonough
CFO at Rivian Automotive

As of 03/31/2025, we had $7,200,000,000 of cash, cash equivalents and short term investments. In addition to this, we expect to receive up to $3,500,000,000 of incremental capital associated with our joint venture with Volkswagen Group, up to $6,600,000,000 loan from the Department of Energy associated with the build out of our Georgia facility and have access to $1,300,000,000 of availability under our ABL facility that we recently amended and extended through 04/08/2030. Included within the $3,500,000,000 of incremental capital expected from the Volkswagen Group is a $1,000,000,000 investment related to the gross profit milestone we achieved in the first quarter of twenty twenty five. Subject to customary closing conditions, Volkswagen Group is expected to invest $1,000,000,000 in Rivian common shares at a 33% premium to our stock price based on the volume weighted average stock price from May 15 to 06/27/2025. The investment is expected to be funded on June thirty of this year.

Claire McDonough
Claire McDonough
CFO at Rivian Automotive

We believe external factors such as changes to government policies and regulations, macroeconomic impact on consumer behavior, and supply chain impacts from trade and tariff policies could impact our 2025 expectations. We're also monitoring potential impacts on our production due to the export restrictions on rare earth materials coming from China. We are actively monitoring these developments and working to mitigate potential risks through a variety of initiatives, including strategic sourcing and proactive engagement with policymakers. While we expect tariffs to impact our material and trade duty costs, with respect to batteries, we currently believe we have enough cells in The U. S.

Claire McDonough
Claire McDonough
CFO at Rivian Automotive

For production through 2025 and into early twenty twenty six. In addition, we plan to source our R2 4,695 cells from LG, which as RJ said, we expect will be manufactured here in The United States by early twenty twenty seven. While uncertainties persist, we remain focused on executing against our key value drivers and are confident the global car park will fully electrify in the long term. Our guidance represents management's current view of evolving trade regulations, policies, tariffs and the overall impact these items may have on consumer sentiment and demand. As a result of these impacts, we have revised our delivery outlook to 40,000 to 46,000 vehicles.

Claire McDonough
Claire McDonough
CFO at Rivian Automotive

Due to our strong first quarter results, we are maintaining our outlook range of adjusted EBITDA of negative $1,700,000,000 to negative $1,900,000,000 We also continue to expect to achieve modest positive gross profit for the full year of 2025. In addition, due to the expected impact from tariffs, we are raising our capital expenditure guidance to $1,800,000,000 to $1,900,000,000 We remain on track with the expected shutdown to both our consumer manufacturing lines in our normal plant for approximately one month in the second half of twenty twenty five to prepare for the launch of R2 and normal in the first half of twenty twenty six. This is the first line of production for our new midsized platform. And as a result, we intend to operate R2 on a single shift of production for the majority of operations in 2026. Thank you to our team for delivering a great quarter.

Claire McDonough
Claire McDonough
CFO at Rivian Automotive

We remain steadfast in our belief that R2 will be truly transformative for our growth and profitability. I'd like to turn the call back over to the operator to open the line for Q and A.

Operator

For the Q and A section of today's session, we will be utilizing the raise hand feature. If you would like to ask a question, click on the raise hand button at the bottom of the screen. Once prompted, please unmute yourself and begin with your question. As a reminder, we are allowing analysts one question and one relevant follow-up. We will now pause a moment to assemble the queue.

Operator

Our first question will come from Dam Levy with Barclays. Please unmute your line and ask your question.

Dan Levy
Senior Equity Research Analyst at Barclays Corporate & Investment Bank

Hi. Good evening. Thank you for taking the questions. I wanted to first start with a question on batteries and the tariff impacts. I appreciate the disclosure that you have enough cells to get you through into early twenty twenty six, but perhaps you can give us a sense thereafter what your strategy is, especially around LFP.

Dan Levy
Senior Equity Research Analyst at Barclays Corporate & Investment Bank

I appreciate that you do have the cells for r two eventually gonna be from The US, but what's your strategy around LFP? And if you could just confirm, are the LFP cells tariffed as an automotive product at 47 and a half percent or as a nonautomotive product at a 45%?

Robert Scaringe
Robert Scaringe
Founder, CEO & Chairman of the Board at Rivian Automotive

Yeah. Thanks, Dan, for for the question. Yeah. Certainly, we've we've been spending a lot of time looking at just the overall landscape around trade, and and certainly that has a a big impact on on battery tariffs. For us, as you said, through the end of twenty twenty five, we have inventory that provides us resilience to any increases in tariffs.

Robert Scaringe
Robert Scaringe
Founder, CEO & Chairman of the Board at Rivian Automotive

As we look at 2026, very importantly, with the launch of R2, the 4,695 cell that we're using is initially sourced out of Korea, but we've been, for a while now, working very closely with our partner on this, which is LG, to localize that into The United States. And starting in 2027, those cells will be produced in Arizona. And so that's outstanding for us in terms of long term cost structure for R2. And then as it pertains to R1, both with the 2,170 cells that we're using as well as the LFP cells, This is something where we're actively working to address some of the changes in trade, and we have the flexibility to be looking at alternatives and to be thinking around how do we evolve our sales sourcing strategy for R1 as we look at 2026 and beyond.

Dan Levy
Senior Equity Research Analyst at Barclays Corporate & Investment Bank

Okay. Thank you. Second question is also on the theme of tariffs. And a, the $3,000 I think that's out there, what period is that for? What vehicles?

Dan Levy
Senior Equity Research Analyst at Barclays Corporate & Investment Bank

And then, b, if you could just talk to broadly how you see the COGS of r two being impacted. So appreciate the battery commentary, but what other cost considerations are there r two? How how dramatically does this change the cost structure for r two?

Claire McDonough
Claire McDonough
CFO at Rivian Automotive

Sure, Dan. We expect the per unit direct impact from tariffs to be a couple thousand dollars for 2025 based off of the currently announced tariffs in place. And as you can imagine, we're exploring a number of offsets to those cost increases, including strategic sourcing decisions as as Arjay conveyed related to some of the batteries over the longer term. And beyond, those strategic sourcing decisions, also have the opportunity, to explore opportunities, for us to see how we're deploying our incentive spend or drive improved mix, which will help further offset some of the impacts from tariffs themselves as well. Maybe I'll invite Javier to jump in as well as we think about R2 sourcing, where there's certainly more opportunities in the longer term for us to strategically adjust some of our sourcing strategies and approach, to mitigate some of the longer term impacts.

Javier Varela
Javier Varela
Chief Operations Officer at Rivian Automotive

Yeah. Thank you, Claire. Yeah. We have been working, for a while in in getting a more resilient supply chain. And as a result, we are sourcing from The US and the USMCA qualified region heavily.

Javier Varela
Javier Varela
Chief Operations Officer at Rivian Automotive

Though there's some flows coming from overseas, For those flows, we typically use global suppliers that they have facilities in the three regions, in in Europe, in Asia, and in North America. And we we still have time to relocate or study some of those flows in the next months before the launch of R2.

Dan Levy
Senior Equity Research Analyst at Barclays Corporate & Investment Bank

Great. Thank you.

Operator

Our next question will come from Adam Jonas with Morgan Stanley. Please unmute your line and ask your question.

Adam Jonas
Adam Jonas
Head of Global Auto & Shared Mobility Research at Morgan Stanley

Thanks, everybody. So first, RJ, I wanna ask you about autonomy. The pressure to compete with Tesla just gets more and more intense as FSD makes further progress. How are you gonna catch them and match them technologically with such a small fleet and less computing resources and having a later start on moving to end to end? And can you how confident are you can develop this in house, or do you need an external partner to help speed things up?

Robert Scaringe
Robert Scaringe
Founder, CEO & Chairman of the Board at Rivian Automotive

Yeah. Thanks, Adam. I I appreciate the question. This is such an enormous focus area for us. And as I said in my opening remarks, we couldn't be more excited about this part of the business.

Robert Scaringe
Robert Scaringe
Founder, CEO & Chairman of the Board at Rivian Automotive

It's an area we've spent a lot of time on. Getting the plumbing in place, meaning getting the right sensor set with our Gen two vehicles at launch, so dramatic improvement in sensors, a lot of onboard inference in terms of the compute level in the vehicle, and then very importantly, that feeding our data flywheel. And as we think about our performance and the need to grow our performance, the data flywheel is really important. It's not just how many vehicles are out there, but also the quality of the data coming off the vehicles. So the very high performance cameras that we have that have great low light performance, great bright light performance, coupled with a multimodality approach to sensors where we have five radars, including a front imaging radar in the vehicle, allow us to make up for some of the fact that we have a smaller fleet.

Robert Scaringe
Robert Scaringe
Founder, CEO & Chairman of the Board at Rivian Automotive

Of course, the fleet is growing, but make up for that with very high quality data. And then as you alluded to, that training that happens for the offline model, for large parameter model that's happening through the data that's coming off these vehicles. And so we've seen incredible performance with just that in place. We've just started to you know, consumers are just starting to see some of the work that we're doing with the hands free feature that we just launched. But over the next year, as both the fleet size grows, the data flywheel I talked about continues to ramp up further and further.

Robert Scaringe
Robert Scaringe
Founder, CEO & Chairman of the Board at Rivian Automotive

And then the efficacy of this really rich data set where we control the triggering events, so what data we take, and then we control what goes up, meaning we have every vehicle, of course, has LTE. But a significant majority of our vehicles are also on Wi Fi, so we can very cost effectively move data from our car park, you know, into the cloud and then therefore use it to train our model. So we're quite bullish on this. I think this data infrastructure I just described is very unique because we don't have any third party camera systems or platforms that are in the middle of that that either obfuscate or create abstractions of the data. We have raw data that goes up and allows us to really use that effectively for an end to end model with a pure AI centric approach.

Adam Jonas
Adam Jonas
Head of Global Auto & Shared Mobility Research at Morgan Stanley

Thanks, RJ. And just a follow-up for Claire. You you called out rare earth, supply specifically and said that you will explore strategic sourcing to mitigate. For rare for rare earths, which are so critical, for the powertrain specifically, what exactly are you doing, can you do, in the event that China, were to, make sourcing of such materials or the processing upstream that's available. I just want to know exactly what those efforts could be.

Adam Jonas
Adam Jonas
Head of Global Auto & Shared Mobility Research at Morgan Stanley

Thank you.

Robert Scaringe
Robert Scaringe
Founder, CEO & Chairman of the Board at Rivian Automotive

Yeah. This is a complex issue, as you call out. It's something we're working on really, really thoroughly. Given that a lot of the processing of some of these heavier earth metals that are used in magnets, which is particularly important for an electric vehicle, which is using permanent magnet motors, you know, we're very close to the situation. And it's quite dynamic as we think about the overall trade environment.

Robert Scaringe
Robert Scaringe
Founder, CEO & Chairman of the Board at Rivian Automotive

Now saying that, there are an array of different solutions to solve this. And I think importantly for us, as we look out in the longer term, planning for R2, developing around heavy rare earth free motors, so using different types of magnets that are more available. And then, of course, in the longer term, developing rotor assemblies that don't require rare earth metals. And so this is this has long been talked about as technical topic. I think we're going to start to see the beginnings of that start to reach commercial deployment.

Robert Scaringe
Robert Scaringe
Founder, CEO & Chairman of the Board at Rivian Automotive

And certainly, of these trade challenges are going to accelerate that.

Adam Jonas
Adam Jonas
Head of Global Auto & Shared Mobility Research at Morgan Stanley

Thanks, Arjun.

Operator

Our next question will come from Shreyas Patil with Wolfe Research. Please unmute your line and ask your question.

Shreyas Patil
Vice President - Equity Research at Wolfe Research, LLC

Hey. Thanks so much for for taking my question. Just to clarify, I I think, Claire, you mentioned $2,000 per vehicle of tariff cost. I just wanna make sure I heard that right. And then is does that incorporate the latest US manufacturing reimbursement program that the the administration announced last week?

Shreyas Patil
Vice President - Equity Research at Wolfe Research, LLC

And and if so, is the primary exposure, as it relates to tariffs, is that primarily, on batteries?

Claire McDonough
Claire McDonough
CFO at Rivian Automotive

Trias, as as I mentioned, we expect a couple thousand dollars of of impact per unit for 2025, and that, does include the benefits from reimbursement, that had been announced as as well. And then you heard RJ talk a little bit about some of the longer term sourcing opportunities that we have with our two being sourced out of of US facility with LG and longer term opportunities as as we think about bringing more of our our battery production onshore.

Shreyas Patil
Vice President - Equity Research at Wolfe Research, LLC

Okay. Great. And then and then I was wondering if you could maybe just just help us think through some of the the remaining material cost opportunities that you see with r one and then as we kind of transition to r two. I I know, obviously, last quarter, you had the launch of the refreshed r one. It looked like COGS per unit further improved into into q one versus q four.

Shreyas Patil
Vice President - Equity Research at Wolfe Research, LLC

So I'm just wondering how much of that was material related and where you see additional opportunities both for this program and then additionally for for r two.

Claire McDonough
Claire McDonough
CFO at Rivian Automotive

Sure. In in q one, we saw a $3,300 per unit improvement in COGS, and that was despite the fact that we had a higher concentration of r one deliveries in q one relative to q four. And as you probably recall, our commercial van has a lower material cost associated with it. So to be able to deliver that level of improvement despite some of the mix was formidable in nature as a whole. And the key driver for us in Q1 was predominantly driven by some of the improvements that we've made in operational efficiency as well as the fixed cost leverage that we had in the quarter, given the higher production volumes with just over 14,600 units produced as a whole.

Claire McDonough
Claire McDonough
CFO at Rivian Automotive

And then as we look forward from here, while we certainly will have some increases from tariffs that we spoke a little bit about, we do still anticipate seeing some raw material savings in the business as a whole as we work through the remaining quarters of 2025.

Shreyas Patil
Vice President - Equity Research at Wolfe Research, LLC

Okay. Great. Thanks.

Operator

Our next question will come from Joseph Spak with UBS. Please unmute your line and ask your question.

Joseph Spak
Joseph Spak
Managing Director at UBS Group

Thank you, everyone. Claire, you mentioned, you know, auto gross profit ex credits and depreciation was positive, and that's obviously a pretty good proxy for cash gross profit, so that's encouraging. It did look, though, like the depreciation and amortization in Hod's line was down quite meaningfully quarter over quarter, and it's really actually trended down for a while. So I guess I just want to understand what's driving that and how we should think about depreciation going forward because, you you guys are still investing, so I would have kind of expected it to move the other way.

Claire McDonough
Claire McDonough
CFO at Rivian Automotive

Sure. So as you think about the dynamics of Q1, because we produce more vehicles than we delivered in the quarter, we absorbed more of our depreciation into inventory. And so that's one of the key drivers. If you looked on it on an aggregate basis, including the depreciation that went into inventory, the overall number still came down. However, a lot of what you're seeing in terms of the $75,000,000 of COGS related depreciation was driven by the absorption of that depreciation expense into inventory itself.

Claire McDonough
Claire McDonough
CFO at Rivian Automotive

Then as

Joseph Spak
Joseph Spak
Managing Director at UBS Group

we look forward also it's on the balance sheet.

Claire McDonough
Claire McDonough
CFO at Rivian Automotive

Yes. It's predominantly on the balance sheet. We'll start to see depreciation pick back up once we start production of of R2 next year as as well. So you'll see, more of a steady state run rate, in aggregate, excluding some of these impacts from, absorption into inventory, and then we'll see that, ramp back up with R2 coming online.

Joseph Spak
Joseph Spak
Managing Director at UBS Group

Okay. And then maybe a good segue to the second question, which is, you know, you talked about the overproduction. You're mentioning this couple thousand dollar per vehicle tariff headwind. I mean, it seems like that overproduction probably helps you minimize the impact for the year, right, since there was probably a more minimal tariff impact in the quarter. So, I mean, rough math, it seems like it should probably be under $100,000,000 total impact for the year.

Joseph Spak
Joseph Spak
Managing Director at UBS Group

Is that ballpark correct? And I guess I just want to understand if that's changed versus the you know, I think you mentioned last quarter a couple hundred million dollar impact undisclosed from from from what, but, you know, related to policy.

Claire McDonough
Claire McDonough
CFO at Rivian Automotive

Yeah, Joe. As as you take a step back and look at the overall policy impacts, the several hundred million of impact that we had baked into our original guidance, was related to tariff expectation, consumer benefits from EV adoption, regulatory credits. So it was a much broader basket as is currently still the case as as we think about the overall impacts for 2025 as as a year. However, as as we look at the overall tariff impacts, to to your point, we had produced more vehicles than we delivered in Q1, to help offset some of the lost production in the back half of the year as we shut down our manufacturing facility for roughly a month to integrate our two, into into the plant. And so we'll have those vehicles, which largely don't have tariff impacts associated with them, to sell in subsequent quarters as well.

Joseph Spak
Joseph Spak
Managing Director at UBS Group

Okay. Thank you.

Operator

Our next question will come from Mark Delaney with Goldman Sachs. Please unmute your line and ask your question.

Mark Delaney
Mark Delaney
Stock Analyst at Goldman Sachs

Yes. Good afternoon. Thank you for taking my questions. With respect to reducing the full year outlook for deliveries, can you help us better understand, is that based on weaker incoming orders Rivian has already been seen or purely an expectation that the market is going to deteriorate going forward as you think about tariff costs and the effects on pricing as well as the broader economy?

Robert Scaringe
Robert Scaringe
Founder, CEO & Chairman of the Board at Rivian Automotive

Thanks, Mark. Yes, there's a lot of uncertainty. And I'd characterize it as there's a challenging backdrop from a consumer demand point of view. And what we're seeing is the interest in our flagship product, R1, continues to be strong in that. You know, this is the the R1 is the best selling premium electric truck or electric SUV across the whole United States, over $70,000 And it's the best selling premium SUV, electric or non electric, in the state of California.

Robert Scaringe
Robert Scaringe
Founder, CEO & Chairman of the Board at Rivian Automotive

And so in terms of how our products are performing relative to, you know, alternatives in the market, we're doing extremely well. The challenge is consumers are more price sensitive than they typically are or typically have been, I should say, and are looking for lower priced alternatives. And this is what makes us so excited about R2. And the R2 price point starting at $45,000 If you look at even just in Q1, the average across both R1 and our commercial van, the average selling price is $88,005 So and that's with the vans included. And so we have a very high ASP, which is a great thing on our flagship product.

Robert Scaringe
Robert Scaringe
Founder, CEO & Chairman of the Board at Rivian Automotive

But by virtue of that, the size of that market is just more limited. And I think in this environment, with the level of uncertainty, it becomes even more constrained in this backdrop. But if we can have a fraction of the success we have with R1 in the much bigger market that R2 is operating in, much, much bigger market that R2 is operating in, we will be very happy.

Mark Delaney
Mark Delaney
Stock Analyst at Goldman Sachs

That that that's helpful. And hopefully, the new advertising campaign also is a step forward. I did like the the lemonade advertising campaign that you guys just just launched. My other question was on regulatory credits, came in very strong in the first quarter. I wanted to better understand if the company still expects about $300,000,000 of regulatory credit revenue for 2025 or does the strength that you saw in the first quarter imply some upside to the outlook there?

Mark Delaney
Mark Delaney
Stock Analyst at Goldman Sachs

Thanks.

Claire McDonough
Claire McDonough
CFO at Rivian Automotive

Thanks, Mark. We still expect to be roughly in and around the $300,000,000 area for the year as a whole as we look at the broader outlook for rent credits.

Operator

Our next question will come from Philippe Houchois with Jefferies. Please unmute your line and ask your question.

Philippe Houchois
Philippe Houchois
Managing Director at Jefferies

Yes. Good afternoon. It's Philippe Pouchois at Jefferies. Second follow-up on a question from Joe on inventory. I'm surprised the inventory didn't go up more than the 250,000,000 considering the overproduction with Claire you just said about shifting some of the depreciation into inventory and also the fact you hold more batteries.

Philippe Houchois
Philippe Houchois
Managing Director at Jefferies

Did you do any action to actually free up some capital from that inventory?

Claire McDonough
Claire McDonough
CFO at Rivian Automotive

Sure. The the dynamics that we saw in the quarter, was both a reduction in our raw materials by about $220,000,000, and then we did have a significant increase of roughly $563,000,000 in our finished goods inventory as a whole. And part of that was was and maybe I'll have Javier jump in as as well. But we're we're very focused on, you know, driving towards more, lean manufacturing principles from a logistics perspective. But Javier, if you wanna comment on some of the initiatives at hand.

Javier Varela
Javier Varela
Chief Operations Officer at Rivian Automotive

Yeah. Indeed. In the last, months, we have been focusing in accelerating lean manufacturing implementation in our operations, focusing on the on the flow, on compacting our processes, improving the workstations, empowering the frontline to continuously improve the process and particularly in our just in time operations. So we are heavily reducing our inventory and incoming material that based on hand, not only in the plant, but as well the flows that are coming from the suppliers to our plant in the cross docks or whatever it is on the on the trains or or in the in the trucks. So that's a great contributor to this cash free from from I mean, reduction of their working capital.

Philippe Houchois
Philippe Houchois
Managing Director at Jefferies

Right. That is good to hear. Thank you. And then maybe a follow-up on your autonomy platform. Is that part of the technology you would potentially share with Volkswagen and particularly on using the Volkswagen market share to acquire more data on the sensors?

Philippe Houchois
Philippe Houchois
Managing Director at Jefferies

Or is that separate?

Robert Scaringe
Robert Scaringe
Founder, CEO & Chairman of the Board at Rivian Automotive

Thanks, Philippe. Yeah. The our autonomy platform is entirely separate from our joint venture. The joint venture captures our operating system and software platforms across our zonal ECUs and then also includes the zonal ECUs themselves, but doesn't include our in house compute platform or compute stack or the perception stack that we've developed. And of course, not the foundation model and the work that's going into the software to drive our self driving platform.

Philippe Houchois
Philippe Houchois
Managing Director at Jefferies

Great. Thank you very much.

Operator

Our next question will come from Edison Yu with Deutsche Bank. Please unmute your line and ask your question.

Edison Yu
Edison Yu
Analyst at Deutsche Bank

Hi. Thank you for for taking our questions. Wanted just to confirm one thing on the the comments about tariffs as it relates to r two. Is the is the current thinking that if the existing regime tariff regime stays that we would not be impacted in in the timing of the of SOP and, also the the starting price that that we're aiming for.

Robert Scaringe
Robert Scaringe
Founder, CEO & Chairman of the Board at Rivian Automotive

This is a as you've heard us say a few times here, this is just a dynamic situation, so I I want to make sure we reflect that. But we're not planning changes in our our $45,000 starting price. This is important for us. And there's a number of variables that we are actively working on. Javier talked about it with regards to an incredible focus on our supply chain, our suppliers themselves, their production locations.

Robert Scaringe
Robert Scaringe
Founder, CEO & Chairman of the Board at Rivian Automotive

We have warning, if you will, or timing to we have the time to respond to the new policy framework that we're operating within. It's very clear the presence and intentions, and we're very supportive of that in terms of driving more manufacturing to The We're, of course, doing that already with our normal plant and with the plant that we're also building in Georgia, but we're also driving that into our supply chain as heavily and aggressively as we can.

Edison Yu
Edison Yu
Analyst at Deutsche Bank

Understood. Understood. And then follow-up on autonomy. I'm wondering if you could share your your latest thoughts on the the economics of of that, and it could you know, I guess there's two elements. There's the cost of of getting there, and there's the sort of monetization.

Edison Yu
Edison Yu
Analyst at Deutsche Bank

And if there's any kind of more updated numbers you could share perhaps on if, you know, you know, the pricing this could ultimately be would it be similar to FSD? Would there be subscription offering? Something along those lines. Thank you.

Robert Scaringe
Robert Scaringe
Founder, CEO & Chairman of the Board at Rivian Automotive

I think this is a part of a business that's going to evolve a lot over the next five years. And the way we think about it is, first and foremost, increasingly customers are going to want to see higher levels of autonomy. You know, I said this earlier in my opening statements just around the importance of going from a hands on, eyes on approach to hands off, and then very soon hands off, eyes off, which is where you get your time back. You can use the time to be on your phone, reading a book, doing something else with the hands off, eyes off, and then ultimately having that work across any type of road, so urban, highway. And so we see this as really critical from a customer experience point of view.

Robert Scaringe
Robert Scaringe
Founder, CEO & Chairman of the Board at Rivian Automotive

And the way these systems are developed now is so different than what the world looked like just a few years ago with transformer based encoders and using an end to end training approach where we're building truly an AI centric approach and think of it like a foundation model in the LLM world where there's a large parameter model that we understand how the vehicle operates within the physical world and the distilled version of that runs in vehicle on our inference platform. And so we're very bullish on the technology. We think the changes that have happened in terms of use of transformers has completely shifted how we look at this just in the last couple of years. It requires vertical control of the sensor set, meaning it's impossible to design a system that has multiple third parties that are providing sensors or creating any layers of abstraction amongst those sensors. And so with all that said, we really believe this is going to be a key value driver for customers.

Robert Scaringe
Robert Scaringe
Founder, CEO & Chairman of the Board at Rivian Automotive

Now the question is how does that value get harvested? So does it show up as an incremental paid feature? Does it show up in vehicle pricing? Does it show up in market share? I think it's yet to be seen.

Robert Scaringe
Robert Scaringe
Founder, CEO & Chairman of the Board at Rivian Automotive

We certainly have lots of hypotheses internally. But ultimately it's going to show up as value to the business in some way. And it's interesting watching the difference in the ecosystem here in the West or in particular in The United States versus the ecosystem that exists in, let's say, China. And what we're increasingly seeing happen in China is that the self driving features and capabilities are being used to drive market share. They're being used to drive sales.

Robert Scaringe
Robert Scaringe
Founder, CEO & Chairman of the Board at Rivian Automotive

That is a path it could go, but it really depends on the competitive landscape. If there's only one or two brands or one or two companies

Robert Scaringe
Robert Scaringe
Founder, CEO & Chairman of the Board at Rivian Automotive

that have

Robert Scaringe
Robert Scaringe
Founder, CEO & Chairman of the Board at Rivian Automotive

this of capability, we may see it show up more as a paid feature.

Edison Yu
Edison Yu
Analyst at Deutsche Bank

Thank you.

Operator

Our next question will come from George Gianarikas with Canaccord Genuity. Please unmute your line and ask your question.

George Gianarikas
Managing Director and Senior Analyst at Canaccord Genuity Inc

Hi. Good afternoon. Thank you for taking my questions. There's a debate around how to increase EV adoption. Obviously, you're bringing the r two and r three to market to help lower price points to that end.

George Gianarikas
Managing Director and Senior Analyst at Canaccord Genuity Inc

Some companies in China are introducing, you know, faster charging batteries with likely fat faster battery degradation as well. We obviously need more charging network density. Can you sort of talk to us about any technologies you're trying to bring to market to make that happen, maybe around batteries to improve EV penetration in The US and the West? Thanks.

Robert Scaringe
Robert Scaringe
Founder, CEO & Chairman of the Board at Rivian Automotive

Yeah. Thanks for the question, George. I love this question. I think it's an important one. I think there's a few big elements here, and one could debate what's the most important or the biggest.

Robert Scaringe
Robert Scaringe
Founder, CEO & Chairman of the Board at Rivian Automotive

But in our view, there's in The United States in particular, there's a pretty extreme lack of great choices. And when I say an extreme lack of great choices, in particular price points that start below $50,000 And in order for us to see large scale adoption of electrification, we need to have enough selection in terms of brand, the design or the look of the vehicle, the form factor, the segment. And if you think about it in terms of consumers coming out of ICE vehicles and finding their way into EVs, there's hundreds of choices you have in the ICE world for products under $50,000 And there's a very, very small number of compelling choices of EVs under $50,000 And there's an even smaller subset of different form factors. And so as a result of that lack of choice, we've seen, you know, significant market share consolidation with Tesla. And they've got great products with the Model three, Model Y in that price category.

Robert Scaringe
Robert Scaringe
Founder, CEO & Chairman of the Board at Rivian Automotive

But the market needs more choices. And this is why we're so excited about R2. We really believe this is something that will give consumers an alternative that's and a choice that's really interesting. It's going to help pull more people, we believe, out of internal combustion into electrification. I spent a lot of time in the product.

Robert Scaringe
Robert Scaringe
Founder, CEO & Chairman of the Board at Rivian Automotive

I was just in Arizona driving it. It is absolutely incredible. The dynamics, the function, of course, for us knowing all the work that we put into optimizing the way it's manufactured from a cost structure point of I just couldn't be more excited about what's coming with R2. But saying that, there's other elements here. And I think building out charging infrastructure is an important one for us.

Robert Scaringe
Robert Scaringe
Founder, CEO & Chairman of the Board at Rivian Automotive

Within Rivian, what we've done is we have a relationship with Tesla that allows our customers to use the Tesla network, but we're also building out our own network. And in fact, we referenced it in our shareholder letter. But this is a our network is there's really only two networks that have the level of uptime that we have. Tesla's network, which is outstanding, and our network, which is we have over 700 chargers. The uptime is higher than 98%.

Robert Scaringe
Robert Scaringe
Founder, CEO & Chairman of the Board at Rivian Automotive

And so Consumer Reports actually called out specifically our network as being incredibly performant and very easy to use, which is great to see. So we're continuing to scale that network. It's an open network, so it's also revenue generating, which helps build the acceleration of the flywheel, if you will, of that network being expanded. And I think the last piece, which actually ties to the question that came up before, is not for technical reasons, but for but in some ways by coincidence, autonomy and electrification are often interlinked. And so I do think the growth of autonomous features and what we're going to see as we look out into 2027 and 2028 will help draw more customers into electric vehicles.

Robert Scaringe
Robert Scaringe
Founder, CEO & Chairman of the Board at Rivian Automotive

Certainly, we feel that way about our own products. And so we're quite bullish on what that will represent in terms of driving consumer behavior.

George Gianarikas
Managing Director and Senior Analyst at Canaccord Genuity Inc

Thanks. And and maybe as a follow-up on the on the Volkswagen JV, can you tell us if any other OEMs have possibly approached you to collaborate? Thank you.

Robert Scaringe
Robert Scaringe
Founder, CEO & Chairman of the Board at Rivian Automotive

Yeah. We've I mean, Claire and I both referenced it, the The our second consecutive quarter of profitability with a $2.00 $6,000,000 of gross profit for Q1 does unlock an additional $1,000,000,000 in financing from Volkswagen Group. So that's outstanding. But the relationship there, it continues to progress really well. Our teams are working very closely together.

Robert Scaringe
Robert Scaringe
Founder, CEO & Chairman of the Board at Rivian Automotive

And even to the previous question, I think what has us so excited about this from a mission point of view is seeing our technology, our software stack, our zonal ECU architecture, seeing that deployed across a wide array of different vehicles and brands is ultimately going to give customers choice and is going to help drive more adoption of electric vehicles. And the scale of it, with Volkswagen Group being the second largest vehicle manufacturer in the world, is really enormous. And so at this point, we're very focused on executing a lot of programs across Volkswagen Group. We've talked about this before. Certainly, we're open to and plan to engage with other OEMs.

Robert Scaringe
Robert Scaringe
Founder, CEO & Chairman of the Board at Rivian Automotive

But at this point, we don't have any additional guidance to say other than that we're focused on execution of all these exciting programs within Volkswagen Group.

George Gianarikas
Managing Director and Senior Analyst at Canaccord Genuity Inc

Thanks.

Operator

Our next question will come from Ben Tallow with Baird. Please unmute your line and ask your question.

Ben Kallo
Senior Research Analyst at Baird

Hey, guys. Have you seen any uptick, just in demand from, from everything going on with Tesla? And my second question is about Slate, auto and what that means to you guys. Thank you.

Robert Scaringe
Robert Scaringe
Founder, CEO & Chairman of the Board at Rivian Automotive

Yeah. The it's as as we talk about consumer choice, and Tesla's got, you know, an incredible set of products with the Model three, Model y, the the vast majority of their volume is there and the price point is quite a bit different than our flagship product. So our flagship product ASP is roughly double Tesla's Model three, Model Y. And while you certainly do have some cross shop, really R2 will be much more of a similar product in terms of pricing, very different in terms of execution. And again, jumping off the previous points I made around the need for product selection and diversity of choices, the Slate product is a very different consumer than a Rivian product.

Robert Scaringe
Robert Scaringe
Founder, CEO & Chairman of the Board at Rivian Automotive

And we I'll always say this, I think it's really important that we have lots of choices and those choices are not all on top of each other in terms of price positioning, customer demographic, vehicle form factors, vehicle positioning. So it's I'm always pleased and encouraged to see new product concepts, new product ideas emerge. And this is one that's certainly not at all playing in the same spaces where Rivian operates today.

Operator

Our next question will come from Ronald Keusickow from Guggenheim Securities. Please unmute your line and ask your question.

Ronald Jewsikow
Director at Guggenheim Securities, LLC

Yes, RJ, Claire, good afternoon and thanks for taking my questions. Maybe starting on the delivery guidance changes, any detail or high level commentary on if the reduction is primarily from vans or consumer vehicles? And is there some supply risk baked into the reduction? I know you talked about rare earth restrictions, Claire, or is this solely what you're seeing in kind of the current demand backdrop?

Robert Scaringe
Robert Scaringe
Founder, CEO & Chairman of the Board at Rivian Automotive

Yeah. We talked about the just the level of uncertainty around you know, how consumers are looking at the market and what that means for us in terms of overall demand backdrop. And I mentioned just the price sensitivity with our current product set on the consumer side being our flagship products with high ASP. We do think R2 unlocks a huge amount of demand for us and will dramatically grow the amount of volume we're producing and because of that, improve our fixed costs across all of our normal facility. But as we then look at what does it mean for 2025, the guidance we provided reflects our adjusted view of how consumers are going to behave over the remainder of this year.

Robert Scaringe
Robert Scaringe
Founder, CEO & Chairman of the Board at Rivian Automotive

It also reflects what we expect on the commercial side, inclusive of our partnership with Amazon, a very close partner and we're working very much hand in hand to continue growing their fleet. As we look at this across our supply base, we're absolutely considering any impacts that the tariff environment will have on our suppliers from a cost point of view. But we're also looking at it from a supplier health point of view and making sure that we do all the work that we can to avoid any supply interruptions. And these are having lived through a number of these already, it's we're very we're acutely aware of the challenges of being short one part. The vehicle has thousands of parts in it, but you can't leave a couple of parts out.

Robert Scaringe
Robert Scaringe
Founder, CEO & Chairman of the Board at Rivian Automotive

And so our supply chain team has been forged through the supply chain crisis of twenty twenty two and twenty twenty three and has actually it's impressively jumped into action with what's happening from an overall trade point of view today. And we feel a lot of that training that happened in 2022, '20 '20 '3 is proving to be quite fruitful right now.

Ronald Jewsikow
Director at Guggenheim Securities, LLC

Yeah. I appreciate the color there. And then it's exciting to see some of your R2 content start to trickle out on on social media. It it seems like we're getting to the point where you're doing pilot production, and it's starting to feel a bit more real. I guess, maybe is there an update on retooling and production downtime?

Ronald Jewsikow
Director at Guggenheim Securities, LLC

And just for clarification, have you sourced, the capital equipment you need for the R2 already? Or is that what some of the capital equipment inflation is for this year just as we think about risks for the R2 launch?

Robert Scaringe
Robert Scaringe
Founder, CEO & Chairman of the Board at Rivian Automotive

Yes. I mean, we are I am starting to trickle out some content. And if it's not obvious, we are so excited about it. And my excitement sort of bleeds through into some of the pictures we're putting out there. But yeah, we're you know, when we look at the R2 program, this is well underway.

Robert Scaringe
Robert Scaringe
Founder, CEO & Chairman of the Board at Rivian Automotive

So we're producing at pilot scale, what we call validation builds today. And in fact, there's a picture of our validation our pilot line in the shareholder letter. Those vehicles are critical for not just validating the vehicle itself from an engineering and design point of view, but also validating our suppliers and making sure that their processes are robust. And it's for me, it's really a meaningful step forward. And it's hard to fully represent this here in words, but just the difference of where the R2 program is today relative to its start of sales in the first half of next year compared to where R1 was at the same point in its launch cadence.

Robert Scaringe
Robert Scaringe
Founder, CEO & Chairman of the Board at Rivian Automotive

The level of robustness, the rigor that we have from a testing point of view, the rigor and robustness that we have in terms of supplier bring up and plant bring up is just I mean, it's just incredible how much learning has been baked into this program. And a big part of that is, of course, the team that's grown and that's at all levels. That's our leadership team. That's the platform leadership team. And it's also sitting next to me, that's our COO with Javier.

Robert Scaringe
Robert Scaringe
Founder, CEO & Chairman of the Board at Rivian Automotive

And so I'd like to invite Javier just to talk a little bit about some of the work that we're doing in terms of your question on capital equipment and the build out of the R2 plant.

Javier Varela
Javier Varela
Chief Operations Officer at Rivian Automotive

Yeah. I was with you last week driving the car in in Arizona, the prototype. And, you know, thirty five years of experience launching cars in automotive industry, and I can tell you that the dynamic status that we have in this car is amazing. It was awesome and very fun to drive. We we had a really great time.

Javier Varela
Javier Varela
Chief Operations Officer at Rivian Automotive

When it comes to the prototype builds, they they are underway. The design validation build is is how we call it. And, for the equipment, the the building, we are increasing the the footprint in normal. So the building that will host body shop and assembly is finished, and now we start implementing the processes inside. The all the equipment is sourced.

Javier Varela
Javier Varela
Chief Operations Officer at Rivian Automotive

The the the the test in the, equipment maker is ongoing before shipping it. We typically test and and and we, we calibrate the equipment there. And, related to the downtime you were referring, we'll have that downtime in the second half of the year, and that's to integrate in the paint shop that we, currently normal delivers r one in advance to integrate the r two in there. So this requires as a heavy work in an existing flow, requires a downtime, and, again, is underway. There's still work during the weekends to to prepare some of the still work in in that paint shop, but the the the big transformation will come in in the second half in that downtime that will will be executed as planned.

Javier Varela
Javier Varela
Chief Operations Officer at Rivian Automotive

So overall, a great progress and as excited as everyone to to get the car out in the roads and great team behind. Really appreciate, and I would take the opportunity to to thank all the teams for the great efforts and and capabilities put in place.

Ronald Jewsikow
Director at Guggenheim Securities, LLC

Yeah. We're excited for it as well. I I appreciate all the color. Thanks.

Javier Varela
Javier Varela
Chief Operations Officer at Rivian Automotive

Thank you.

Operator

Our last question will come from Itay McKelley with TD Cowen. Please unmute your line and ask your question.

Itay Michaeli
Equity Analyst at TD Cowen

Great. Thank you. Good afternoon, everybody. Just had two clarifications back to the autonomy platform. First, are you still on track to launch eyes off in controlled conditions next year?

Itay Michaeli
Equity Analyst at TD Cowen

Maybe talk about kind of what you need to see to to do that. And secondly, with R2, should we think about that as having a standard autonomy hardware system, or or could we see potentially different iterations on that platform depending on the the trim level? Thank you.

Robert Scaringe
Robert Scaringe
Founder, CEO & Chairman of the Board at Rivian Automotive

Yeah. We are we I referenced it a couple times, but we just put in place a hands off, eyes on feature, meaning your eyes are you still have to be looking at the road, but your hands can can come off the wheel for highway application. That's going to broaden to more urban roads as well. But importantly, moving to hands off, eyes off, so what you might call a true level three, is something we're very focused on and delivering that in specific environments, starting with highways next year is really key for us. Now on the R2 side of things, we do have a slightly enhanced perception stack that's going on R2 relative to R1.

Robert Scaringe
Robert Scaringe
Founder, CEO & Chairman of the Board at Rivian Automotive

So it's a 65 megapixels of cameras. So we've made further improvements in our camera set relative to R1. Now that's noteworthy because the R1 camera set today is the highest performing camera set that's on any vehicle sold in North America. More megapixels than any other vehicle and the dynamic range on those cameras is just incredible. When I say dynamic range, I mean the performance in very low light conditions or in very bright light conditions.

Robert Scaringe
Robert Scaringe
Founder, CEO & Chairman of the Board at Rivian Automotive

And as I referenced this when I was responding to Adam's question earlier, that breadth of performance of the cameras and then feeding that entirely owned set of signals into our platform allows us to really accelerate the training with this really high quality data, particularly when it's combined with the radar set that's on the vehicle. So we have four corner radars that are traditional, pretty straightforward radars, but the front center radar is an imaging radar. So it gives us X, Y, and Z, and that provides a really nice additional modality for which we're training our system. And if we think about these end to end models being trained, the more robust the data set, the faster we see progress. And in fact, it's been helpful to see that same phenomena play out in the LLM space where the quality of data has become increasingly important.

Robert Scaringe
Robert Scaringe
Founder, CEO & Chairman of the Board at Rivian Automotive

So how the data is selected, partitioned and fed into the model becomes really key. So with all that said, we don't envision having an R2 that doesn't have a very robust autonomy platform built into it because we think it's such a critical part of the customer experience. And as we see what's coming with the feature set, we don't envision our products not having that level of capability.

Itay Michaeli
Equity Analyst at TD Cowen

That's all very helpful. Thank you.

Operator

This concludes the question and answer session of the call. I would now like to turn the call back to RJ Skirinj for closing remarks.

Robert Scaringe
Robert Scaringe
Founder, CEO & Chairman of the Board at Rivian Automotive

Thanks, everyone, for joining us today. This is a really exciting quarter for us being the second quarter of positive gross margin and our highest gross margin to date with $2.00 $6,000,000 We're excited to continue driving cost efficiency throughout the business and even more excited to see the effects that R2 will have on the business in terms of increased scale, sharing more of the fixed costs of our normal facility and therefore driving even higher levels of gross margin profitability and ultimately profitability for us as a business. With that said, we're also incredibly focused on driving forward in terms of our autonomy platform. This is something that it took years of time to implement in our Gen2 platform in terms of the hardware topology. And we're now just at the beginnings of seeing this nonlinear growth rate in terms of capability and features.

Robert Scaringe
Robert Scaringe
Founder, CEO & Chairman of the Board at Rivian Automotive

And we'll continue to talk more about this. As I said earlier, we're going to be having an Autonomy and AI Day in the fall. And in that, we'll provide a lot more visibility and details into our technology stack, both the hardware side of things as well as the software and provide demonstrations of what some of this roadmap looks like. And hopefully, everyone can see why we're so excited about this internal effort. So with that, thanks again for the call and look forward to speaking with everybody next quarter.

Executives
Analysts

Key Takeaways

  • Rivian delivered a second consecutive quarter of positive gross profit of $206 M in Q1, producing 14,611 and delivering 8,640 vehicles, which unlocks a $1 B funding milestone from Volkswagen.
  • Rivian launched its Gen2 autonomy platform with 55 MP cameras and over 200 TOPS compute, rolling out hands-free eyes-on highway driving and targeting hands-free eyes-off capability in controlled environments next year.
  • The R2 midsize platform is progressing with validation builds underway, a 1.1 M sq ft plant expansion in Normal, IL, and a planned Georgia facility adding 400 k units of annual capacity, aiming for a $45 k starting price.
  • Rivian revised its 2025 delivery outlook to 40 k–46 k vehicles, raised 2025 CapEx guidance to $1.8–$1.9 B, and maintained adjusted EBITDA loss guidance of –$1.7 B to –$1.9 B while expecting modest positive full-year gross profit.
  • The company faces trade and tariff headwinds of about $2 k per vehicle in 2025 and is mitigating this through U.S. localization of LG battery cell production by 2027 and exploring rare-earth–free motor designs.
AI Generated. May Contain Errors.
Earnings Conference Call
Rivian Automotive Q1 2025
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