Rivian Automotive Q4 2025 Earnings Call Transcript

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Provided by Quartr
February 12, 2026

Key Takeaways

  • Positive Sentiment: R2 launch imminent: Rivian said customer deliveries begin in Q2 with a March 12 product/pricing reveal and Launch Edition R2 offering dual-motor AWD (>650 hp, >300 miles) at a mass-market price point (starting ~ $45k), initially on a single shift with a second shift added late 2026.
  • Positive Sentiment: Material progress on profitability: 2025 delivered nearly $5,500 higher average selling price, ~ $9,500 lower automotive COGS per unit and > $1.3 billion improvement in full-year gross profit, resulting in Rivian's first full year of positive gross profit and ~ $6.1 billion year-end liquidity (plus ~$2 billion expected from VW in 2026).
  • Negative Sentiment: 2026 is a transition year with near-term headwinds: Guidance calls for 62,000–67,000 vehicle deliveries but expects automotive gross profit to be pressured in Q2–Q3 during the R2 launch, an adjusted EBITDA loss of $1.8–$2.1 billion, working-capital outflows for R2 inventory build, and ~$1.95–$2.05 billion of capex.
  • Positive Sentiment: Software and autonomy are strategic growth drivers: Universal Hands‑Free expanded to ~3.5M miles of roads with doubled usage, Rivian Assistant is expected early this year, RAP1 chip development was showcased, and software & services produced $447M revenue / $179M gross profit (≈60% from the VW JV), supporting future monetization and margin upside.
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Earnings Conference Call
Rivian Automotive Q4 2025
00:00 / 00:00

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Operator

Good afternoon, and thank you for joining us for Rivian's fourth quarter and full year 2025 earnings call. Today, I'm joined by RJ Scaringe, our CEO and Founder, Claire McDonough, our Chief Financial Officer, and Javier Varela, our Chief Operating Officer. Before we begin, matters discussed on this call, including comments and responses to questions, reflect management's 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. These risks and uncertainties are described in our SEC filings and the shareholder letter we filed with the SEC. During this call, we will discuss both GAAP and non-GAAP financial measures. A reconciliation of historical non-GAAP to GAAP financial measures is provided in our shareholder letter.

Operator

Just before the earnings call, we published and filed our shareholder letter, which includes an overview of our progress over the recent months. I encourage you to read it for additional details around some of the items we will cover on today's call. Following our prepared remarks, we will be taking questions from sell-side analysts. In the interest of keeping the call to one hour, we would ask these analysts to limit any follow-on questions to one. With that, I'll turn the call over to RJ.

RJ Scaringe
CEO and Founder at Rivian

Thanks, Chip. Good afternoon, everyone, and thanks for joining us for today's call. 2025 was a year focused on execution at Rivian as we laid the foundations for scaling our business. Our team progressed the development of our technology roadmap in R2, while simultaneously driving continued improvement in our customer experience and our path to profitability. In founding Rivian, I wanted to demonstrate how a clean sheet, technology-focused vehicle could eliminate long-accepted compromises and provide consumers choice. Our goal with the launch of our R1 products was to establish the Rivian brand by delivering a combination of efficiency, on-road performance, off-road capability, functional utility, and product refinement that simply didn't exist in the market. The first vehicles established Rivian as a brand that enables people to do the things they love, enable adventure, as well as transcend different segments, form factors, use cases, and geographies.

RJ Scaringe
CEO and Founder at Rivian

In the fourth quarter of 2025, the R1S was the best-selling premium electric vehicle priced above $70,000 in California, New York, New Jersey, Oregon, Virginia, and Washington, D.C., and it was the best-selling SUV, EV or non-EV, over $70,000 in the state of California. Now, I'm excited that we are months away from starting customer deliveries of R2, our first mass market vehicle. One of the things that's often overlooked around EVs is that there is a surprising lack of high-quality choices. At prices around or below $50,000 for a new vehicle in the United States, there are only a few compelling EV choices, as compared to hundreds of internal combustion or hybrid options that have a wide range of form factors and design aesthetics.

RJ Scaringe
CEO and Founder at Rivian

From the lens of the customer, if you want to buy a midsize SUV with robust technology, autonomous capabilities, and a reasonable price point, you've really only got one choice, and it's been that way for a long time. This is a reflection on a market that's being underserved. We believe R2 is going to change that. R2 is an extension of the experience we delivered in R1 with design elements and performance to inspire adventure, but in a smaller form factor and importantly, at an attractive, lower price point. Launch Edition R2 variants will be well equipped with a dual motor, all-wheel drive setup that provides more than 650 horsepower and over 300 miles of range. In mid-January, I was thrilled to drive our first R2 manufacturing validation build off the production line in our factory in Illinois.

RJ Scaringe
CEO and Founder at Rivian

As you've seen from the extremely positive media reviews of our pre-production vehicles over the last few days, R2 is an exceptional vehicle and I believe will be a game changer for our customers, our company, and the industry. One reviewer said, "The R2 is an exceptional vehicle, quite possibly the best all-around electric vehicle I've ever driven." We look forward to getting investors and more media in R2 for demo drives, so they can experience the capabilities of the vehicle. We plan to provide additional product, pricing, and lineup details on March 12th. Turning to our AI & Autonomy Day, it was great to see so many of our stakeholders at our offices in Palo Alto this past December. We were excited to showcase our innovation across our vertically integrated hardware, software, and autonomy teams and unveil RAP1.

RJ Scaringe
CEO and Founder at Rivian

Developing our own chip was driven by the need for velocity, performance, and cost efficiency, and is a key development of our autonomy platform. Near the end of last year, we released Universal Hands-Free, which expanded our advanced assisted driving capabilities for Gen 2 customers to more than 3.5 million miles of roads across North America. Since its release, customer utilization of our autonomy features has doubled. Rivian is also making significant progress in making software and AI core to everything we do, from the way we design, develop, manufacture, and service our cars, to the way our customers interact with their vehicle. This is enabled by the Rivian Unified Intelligence, a common AI foundation that understands our products and operations as one continuous system and personalizes the experience for our customers. It also defines how applications will integrate in our vehicles in the future.

RJ Scaringe
CEO and Founder at Rivian

We were excited to demo the Rivian Assistant at AI & Autonomy Day, and expect to launch this feature early this year. Finally, we continue to see the extensibility of our electrical hardware and software platform with the work happening in our joint venture with Volkswagen Group. I'm very pleased that we have delivered vehicles for winter testing for multiple Volkswagen Group brands, 13 months after the formation of the joint venture. In closing, 2025 was a foundational year for scaling Rivian, and I could not be more excited for the year ahead. I believe 2026 will be an inflection point for our business. As an American automotive technology company that develops and manufactures incredible electric vehicles, we believe that the future of the automotive industry will be fully electric, autonomous, and AI-defined. I've never been more confident in the opportunity ahead for Rivian than I am today.

RJ Scaringe
CEO and Founder at Rivian

I firmly believe Rivian's technology, along with our direct-to-customer ownership experience, position our company to build a category-defining brand with a strong mass-market product portfolio for the U.S. and global markets. With that, I'll pass the call over to Claire to discuss our financial results.

Claire McDonough
Claire McDonough
CFO at Rivian

Thanks, RJ, and good afternoon, everyone. As RJ discussed, we believe 2026 will be an important year as we scale our business. Launching R2 will extend our brand to the mass market, and we expect R2 will drive meaningful automotive segment growth and profitability over time. Now, before I dive into the quarter, there are a few key financial metrics that I'd like to highlight for 2025. First, on a full year-over-year basis, we delivered nearly $5,500 of improvement in average sales price due to the introduction of our second generation R1 quad models, a higher mix of R1 units, and increased base prices for the 2026 model year. Second, on a full year-over-year basis, we achieved an approximately $9,500 improvement in automotive cost of goods sold per unit due to material cost reductions and operational efficiencies.

Claire McDonough
Claire McDonough
CFO at Rivian

Finally, the improvement in unit economics in our automotive segment, when combined with our strong software and services performance, resulted in greater than $1.3 billion of improvement in full year gross profit, making 2025 our first full year of positive gross profit. Additionally, our gross profit performance, coupled with our focus on cost management, enabled our adjusted EBITDA for 2025 to be at the favorable end of our guidance. All of these metrics represent our continued progress in the operational efficiency and profitability of our business with such a strong foundation for 2026 and beyond. We expect the gross profit per unit for R1 and the commercial vans to be further enhanced as we ramp up production and deliveries of R2, coupled with the gross profit contribution of R2 over time.

Claire McDonough
Claire McDonough
CFO at Rivian

Turning to the results of the fourth quarter, our consolidated revenues were approximately $1.3 billion. Consolidated gross profit was $120 million, and our gross profit margin was 9%. Gross profit included $108 million of depreciation and $26 million of stock-based compensation expense. Adjusted EBITDA losses for the fourth quarter were -$465 million, a $137 million improvement from Q3 2025 due to higher gross profit and lower operating expenses. Now, looking at our automotive segment, during the fourth quarter, we produced 10,974 vehicles and delivered 9,745 vehicles from our manufacturing facility in Normal, Illinois. This was the primary driver of the $839 million of automotive revenue.

Claire McDonough
Claire McDonough
CFO at Rivian

Automotive gross profit for the fourth quarter was -$59 million, a $71 million improvement from Q3 2025 due to a higher mix of commercial vans, which resulted in the lowest cost of goods sold per unit in our history. Our software and services segment reported another strong quarter with $447 million of revenue and $179 million of gross profit. $273 million, or approximately 60% of software and services revenue, was attributable to our joint venture with Volkswagen Group. We also experienced strong growth from our marketing and vehicle repair and maintenance. Looking at our balance sheet, we ended the year with approximately $6.1 billion of cash, cash equivalents, and short-term investments.

Claire McDonough
Claire McDonough
CFO at Rivian

In 2026, we expect to receive an additional $2 billion of capital as part of our joint venture with the Volkswagen Group. $1 billion is an investment subject to the successful completion of winter testing, which RJ discussed earlier, and $1 billion is non-recourse debt, which we expect to receive in October. Finally, for our 2026 guidance, we expect to deliver between 62,000-67,000 total vehicles across R1, R2, and our commercial vans. We expect total deliveries of approximately 9,000-11,000 per quarter in the first half of 2026. We plan to start production of the R2 launch variant with a single shift and expect to add a second shift towards the end of the year.

Claire McDonough
Claire McDonough
CFO at Rivian

While we believe our gross profit will increase year-over-year, we expect the complexity of a new vehicle launch to negatively impact our automotive gross profit in the second and third quarters before becoming a benefit to our overall operations in the fourth quarter as we ramp production and deliveries. As a reminder, we believe this is a transition year for the automotive segment's profitability. Delivering a strong exit rate for R2 production and deliveries will be a key focus for our team. For 2026, we expect an adjusted EBITDA loss of between $2.1 billion and $1.8 billion. Our adjusted EBITDA guidance also includes a step-up in R&D spend as we accelerate investments in our autonomy roadmap and look to deliver LiDAR, our first RAP1 chips, and limited point-to-point functionality for our customers by the end of the year.

Claire McDonough
Claire McDonough
CFO at Rivian

We believe autonomy will be a key fundamental long-term differentiator for our business. We also plan on the continued growth of our SG&A, driven by the expansion of our service and sales footprint as we scale with R2. Finally, for 2026, we expect capital expenditures of $1.95 billion-$2.05 billion, related to finalizing construction and tooling for R2 and Normal, kicking off vertical construction for our greenfield plant in Georgia, and the continued build-out of our sales, service, and charging infrastructure. In closing, thank you again to the team for delivering a great 2025. As we look forward to 2026, we remain steadfast in our belief that R2 and our technology roadmap 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&A.

Operator

For the Q&A section of today's session, we'll 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. We will now pause a moment to assemble the queue. Thank you. Our first question comes from Emmanuel Rosner with Wolfe Research. Please unmute your line and ask your question.

Emmanuel Rosner
Emmanuel Rosner
Managing Director and Senior Autos and Auto Tech Analyst at Wolfe Research

Great. Thank you so much. My first question is on the cadence that Claire, you just highlighted with the 9,000-11,000 units per quarter in the first half, and then obviously 62,000-67,000 on a full year basis. Is that 10,000 per quarter or so, is that your expectation for R1 plus EDV for this year in 2026? And then the upside in the second half would be essentially delivering the R2s?

Claire McDonough
Claire McDonough
CFO at Rivian

Thanks, Emmanuel. As you think about the cadence, as RJ articulated in his prepared remarks, we expect first deliveries to begin for R2 in the second quarter. But, like any ramp, the number of deliveries will be rather small as you think about the Q2 impact of R2 contribution to the 9-11,000 units per quarter that we anticipate in the first half of the year. And then as we get into the second half of the year, we expect to see the continuation of the ramp of R2, coupled with the ongoing deliveries of our commercial van as well as R1. So on a full year basis, you can think about the R1 coupled with the commercial van as being roughly in line with our 2025 total volumes.

Emmanuel Rosner
Emmanuel Rosner
Managing Director and Senior Autos and Auto Tech Analyst at Wolfe Research

Okay. Then another one on the, you know, cadence side, but more from a financial point of view. I think in the past, you had targeted, I think, by the fourth quarter of this year, you know, some level of profitability on R2 to sort of like demonstrate essentially the, you know, the potential. Is that still the expectation for this year?

Claire McDonough
Claire McDonough
CFO at Rivian

Yes. As we mentioned, we expect, you know, 2026 will be a transformational year for our automotive gross profit, and we expect that both R2 and our overall automotive gross profit will be positive as we exit 2026.

Emmanuel Rosner
Emmanuel Rosner
Managing Director and Senior Autos and Auto Tech Analyst at Wolfe Research

Thank you.

Operator

Our next question comes from Dan Levy with Barclays. Please unmute your line and ask your question.

Dan Levy
Dan Levy
Senior Equity Research Analyst at Barclays

Hi, good evening. Thank you for taking the questions. First, I wanted to start with just a question on the R2 volume assumptions, which you just talked about a moment ago. As you're going into the launch, do you have a feel for what the aggregate demand is? And maybe you could just talk to the question of your confidence on people wanting to take delivery of R2 before the new ADAS platform or hardware is put into the vehicle. How much of a deterrent the lack of that new hardware will be on deliveries?

RJ Scaringe
CEO and Founder at Rivian

Hi, Dan. Thanks for the question. Yeah, with regards to R2, I've had the chance to spend a lot of time in it over the last several months and really over the last month or so, driving our validation vehicles that are produced in our plant off of our manufacturing validation building. The vehicle is just absolutely incredible. It's the combination of features, the packaging, the vehicle dynamics, the steering feel. We're incredibly bullish on it. And as I've talked about a lot in the past, we ultimately think the market is really hungry for some choice in this segment. As I said in my opening remarks, just the lack of choice that exists in and around this $50,000 price point has led to, you know, very high market share concentration of, you know, one vehicle.

RJ Scaringe
CEO and Founder at Rivian

This is the first time there's gonna be a real alternative. This is important for folks that are in internal combustion vehicles today, you know, mid-size SUVs, and looking for something that fits their form factor needs, their aesthetic needs, their packaging needs. We're very, very focused on putting this together. With that said, we have a lot of confidence in the overall demand profile, and of course, that's why we've leaned so much into the program and leaned so much into what we're about to launch.

Dan Levy
Dan Levy
Senior Equity Research Analyst at Barclays

Great. And just the issue of the ADAS platform, people taking it before the new hardware comes in?

RJ Scaringe
CEO and Founder at Rivian

Yeah. With new technology, there's always, you know, especially for us as a business, given that we've got an enormous focus on developing new technology, there's always something new coming. Recognizing that, there are a lot of customers that are just waiting to get a great mid-size SUV. So given the enormous backlog of demand we have as well, the short period that we have where we'll be launching with essentially an upgraded version of our Gen 2 autonomy stack before our Gen 3 autonomy stack comes, we don't think that that's going to be a significant issue. And for those that wanna wait for it, they certainly can, and for others that are gonna be, you know, excited to get into the vehicles in a shorter timeframe, you know, it'll be available prior to that.

Dan Levy
Dan Levy
Senior Equity Research Analyst at Barclays

Okay, great. Thank you. As a follow-up, I wanted to ask about partnership or licensing deals with other automakers, and maybe you could just give us a sense of the tone or tenor of discussions on licensing the network architecture to others. And you said at your autonomy day that one of the opportunities on your in-house processor was not only that it could be used for your vehicles, but you could also sell this to others. It's a better, what you said, bang for buck. So I know it's early days, that's still an out, and the initial, you know, units of that processor are gonna need to be for you, but what types of discussions are you having with automakers on potentially selling that or licensing that to them?

RJ Scaringe
CEO and Founder at Rivian

So, as I said in opening remarks, we've had in the first 13 months of establishing a joint venture with Volkswagen, we've started winter testing on multiple VW Group products. And I think the true demonstration, and you know, existence proof, if you will, of the scalability of our technology in terms of being able to work across multiple form factors, different price points, different brands, and importantly, be productized into a platform that can go across a large existing OEM. This Volkswagen relationship is really important for that. And so that's our focus, but of course, we have great relationships with a broad spectrum of other manufacturers.

RJ Scaringe
CEO and Founder at Rivian

I've said this many times, but I deeply believe that over the course of the next several years, every manufacturer has to make the decision as to whether or not to get to a software-defined vehicle, whether or not they're going to develop it themselves, secure it from a third-party source, of which we will be the only demonstrated example of having scaled this technology outside of our own, you know, outside of our own products, or accept that without that technology, you will lose market share. So we're quite bullish on the potential for this technology platform, and we see it as really an important part of our portfolio going forward.

Dan Levy
Dan Levy
Senior Equity Research Analyst at Barclays

Great. Thank you.

Operator

Next question comes from Ben Kallo with Baird. Please unmute your line and ask your question.

Ben Kallo
Ben Kallo
Senior Research Analyst at Baird

Hey, thank you, guys, very much. Congrats on all the progress so far. Maybe first, can we talk about just the VW relationship and, you know, there was an uptick in revenue from that. And just if you can give us a sense of, you know, how that progresses and, you know, the potential to expand the relationship or how we should, should think about it growing. And then the second question is just around Georgia, the DOE loan guarantee, how you're looking at that, maybe just liquidity in general as you start working on that. Thank you.

RJ Scaringe
CEO and Founder at Rivian

Thanks, Ben. I spoke a little bit about this in a previous response, but I understand we've had a few technical difficulties here. So, at risk of repeating myself, I'll just say, recover a few things that I said earlier. The Volkswagen relationship continues to progress. We're now 13 months since the joint venture started. With that, we've started winter testing on several different Volkswagen Group products, and of course, we're working towards the first launch of those vehicles in 2027. The relationship has been very, very strong. We had a great session, in fact, coincidentally last week, with a broad set of the Volkswagen Group leadership team.

RJ Scaringe
CEO and Founder at Rivian

Seeing this be used and deployed across not just vehicles of similar price point to Rivian's vehicles, but across the price point across a wide band of price points and across a range of form factors is really important, and it really demonstrates the scalability of the technology. So ultimately, you know, we're gonna continue working towards delivering multiple Volkswagen Group products, but this does, of course, open the door for opportunity with other manufacturers as well.

Claire McDonough
Claire McDonough
CFO at Rivian

And then to put some of the financials behind the software and services outlook as a whole, we anticipate seeing that we'll approach about 60% year-over-year growth in our software and services business, and it will be a significant driver of our gross profit outlook as well, with margins that we expect to be in the, you know, mid-30% area as a whole. Then as your second question, which was on the capital roadmap, as I mentioned in my prepared remarks, we ended 2025 with $6.1 billion of cash, cash equivalents, and short-term investments. We expect that we'll receive another $2 billion from Volkswagen Group throughout the course of 2026.

Claire McDonough
Claire McDonough
CFO at Rivian

There's still roughly another $500 million payment associated with the original joint venture transaction as well that will happen, we anticipate in 2027. And then, as it pertains to our broader, you know, capital roadmap, we'll continue to remain opportunistic as well on that front. On the DOE loan question, similar to what we've shared in the past, we certainly share the president's desire to bring jobs back to the United States. We're excited to keep up our work on creating new American manufacturing jobs. We'll be adding approximately 2,000 new jobs at our Normal, Illinois plant for the ramp up of R2, an additional 7,500 jobs at our future Georgia plant as well.

Claire McDonough
Claire McDonough
CFO at Rivian

Similar to the comments RJ just made, Rivian's working to help drive innovation and technology leadership in the U.S. automotive industry for consumers, and also associated with our joint venture with Volkswagen Group, enabling this technology for the industry as a whole.

Ben Kallo
Ben Kallo
Senior Research Analyst at Baird

Thank you.

Operator

Our next question comes from George Gianarikas with CG. Please unmute your line and ask your question.

George Gianarikas
Managing Director and Senior Analyst at CG

Hey, good afternoon, everyone. Thank you for taking my question. As it relates to your guidance for vehicle sales this year, to the extent you see a strong conversion in your backlog for the R2, could you see upside to that, or are there certain production bottlenecks that you'll have to work through towards the end of the year? Thank you.

RJ Scaringe
CEO and Founder at Rivian

Thanks, George. The process of ramping a vehicle is something we've spent a lot of time talking about in this forum, but certainly internally, we're really putting a lot of effort on making sure we have a very smooth production launch and then associated ramp. We often think of the plant as being the bottleneck for the ramp, but in fact, we have to remember there's hundreds of other companies that are providing components into Rivian that ultimately really contribute and are a key part of the ramp. Ramping our supply base is something that we're very focused on and planning around. You can only ramp as fast as your slowest part, so to speak. With that said, as you heard earlier, we're starting with a single shift.

RJ Scaringe
CEO and Founder at Rivian

We're bringing on a second shift. That'll be happening near the end of the year. And then in 2027, we'll be adding our third shift. And this has been very methodically laid out to make sure that we're ramping consistently and evenly across the supply chain. And so it certainly, and as you alluded to, there's gonna be a large demand backlog that we're working through, and a tremendous amount of excitement for the R2 vehicle. And as more reviews come out about it and more people get exposure to it, we expect that to continue to expand and grow. You know, it's worth noting some of the pre-production reviews that came out last week, the feedback has been universally super positive.

RJ Scaringe
CEO and Founder at Rivian

And so we're acutely aware of that, but we are working very carefully to coordinate the ramp and the growth of output with our supply base.

George Gianarikas
Managing Director and Senior Analyst at CG

Thank you. Maybe as a follow-up, as you sort of crystallized your, your selling prices and your cost structure for the R2, can you just maybe speak to the guidance you gave at your analyst day last year about reaching EBITDA positivity in 2027 and your long-term vision about having, you know, 25%-ish gross margins and high teens EBITDA margins? Thank you.

Claire McDonough
Claire McDonough
CFO at Rivian

Thanks, George. As prepared in or as discussed in our prepared remarks, we believe that 2026 is gonna be a transition year for the automotive gross profit segment. And our North Star for the Normal plant is going to be getting our production and deliveries up to about 4,000 units per week. While there's a lot of execution required, as RJ just walked through from the team, in order to achieve that outcome, if we're successful, we believe it would put the company in a strong position to achieve our adjusted EBITDA goals. And as we look at the broader outlook, we certainly see there being, you know, 20% gross profit target for our automotive segment.

Claire McDonough
Claire McDonough
CFO at Rivian

As we think about the overall contribution of software and services, there's many outcomes or licensing deals that Rivian could do that could allow gross profit to be much higher than the 25% in our end state as well.

George Gianarikas
Managing Director and Senior Analyst at CG

Thank you.

Operator

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

Joseph Spak
Joseph Spak
Managing Director at UBS

Thank you. Good afternoon, everyone. Just a couple of questions. Claire, I know you said the second shift starts in the back half. Does the guidance contemplate, like, exiting the year at a full 2-shift rate for the R2? Just want to sort of understand how we should think about a jumping off point for 2027.

Claire McDonough
Claire McDonough
CFO at Rivian

Sure. As you can imagine, Joe, we'll be in the process of ramping up the second shift. So as you think about the exit rate of 2026, we won't yet be at full production across two shifts. We'll be getting there, as we continue to progress all of our operational efficiencies and get the team ready to ramp up throughout the course of 2027.

Joseph Spak
Joseph Spak
Managing Director at UBS

Thank you. And then, I guess, RJ or Claire, just, you know, you mentioned, you know, more details on March third. I'm assuming that's also when reservation holders will be invited to configure, but is there any update you can give us on that order book? And then on the pricing side, you know, one of the things we've seen, again, not Rivian specific, just to the industry and the world really is the cost side between metals and memory. So curious to sort of wonder how you're thinking about that impacting either your pricing for the vehicle or whether that's contemplated in the EBITDA guidance for the year.

RJ Scaringe
CEO and Founder at Rivian

Yes, on March 12th, we'll be providing the full picture around the overall portfolio of products that'll exist for R2, and that'll include the launch configuration, which as I've said, is a dual motor performance variant with a premium trim. The different combinations of trim, powertrain performance and battery size are what we'll be describing in detail on the 12th. And then along with that, allowing customers to start configuring their vehicles and allows us to start getting ready to be making deliveries later in Q2.

RJ Scaringe
CEO and Founder at Rivian

I think important here, as you think about the overall demand profile for the vehicle, we've put a lot of time into thinking about the different combinations and recognizing what different folks are gonna want, and having the benefit of having lots of conversations, and also the benefit of seeing, you know, what are the most popular trends and configurations in R1. And so we're really excited to go through that, but it's something that we do wanna go through as a, you know, presented as the full meal, as opposed to giving little bits and pieces. So other than talking about the launch configuration, the rest of the configuration is gonna be something we talk about in detail in about a month.

Claire McDonough
Claire McDonough
CFO at Rivian

Then, Joe, our adjusted EBITDA guidance does contemplate some of the increases that we've seen in raw material costs and the current supply chain backdrop as well, correct.

Joseph Spak
Joseph Spak
Managing Director at UBS

Thank you very much.

Operator

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

Mark Delaney
Mark Delaney
Analyst at Goldman Sachs

Yes, good afternoon. Thank you very much for taking the question. I was hoping to speak more about automotive COGS. Maybe you can help us better understand what led to the reduction in cost per vehicle, both sequentially as well as year-over-year. And then as you look forward, Claire, you just alluded to some of the supply chain challenges around DRAM and other input costs, these that are embedded into your guidance. But where do you ultimately think the R2 costs can get to? And is the 50% reduction in the BOM cost compared to R1 still the right level to think about?

Claire McDonough
Claire McDonough
CFO at Rivian

Sure. For Q4, we were able to deliver $92,000 of COGS per unit, and that was about a $4,000 per unit improvement relative to the third quarter. One of the key drivers was associated with the mix shift. So we had higher penetration of commercial vans in the fourth quarter relative to the third quarter. And then beyond that, the ongoing operational efficiencies that we continue to execute across our normal operations as well, that also contributed to the reduction in our COGS per unit. As we look at the full year-over-year improvement, the biggest driver that we saw was associated with the reduction in our material cost. That was both the transition for us to move fully to Gen 2 vehicles.

Claire McDonough
Claire McDonough
CFO at Rivian

We also, in addition, saw a significant step down in terms of a lot of our raw material costs, and importantly, a step down in the cost of our lithium prices. That was another contributor for us as well, as we looked over at the full year-over-year step down in terms of COGS per unit, coupled with the ongoing operational efficiencies that we continued to progress throughout the course of the year. As we look forward to R2, one of the key factors for us with R2 is the opportunity for us to have also, over the course of the last year, started to see some meaningful benefit from our joint venture joint sourcing opportunities associated with our low voltage electronics that we're sourcing for the R2 vehicle.

Claire McDonough
Claire McDonough
CFO at Rivian

And that's really been a key enabler for us to continue to progress the material cost trajectory of the R2 product as well. And then as we approach the Georgia plant, we'll have further opportunity to drive additional synergies or efficiencies as we start to source future vehicle volumes as well, that will share the fundamentals of the mid-size platform as a whole. So those are a couple of the puts and takes. The other call out that I would highlight as well is we do anticipate seeing a reduction in terms of our tariffs per unit. So we didn't have the full benefit of the Section 232 offsets for the entirety of the fourth quarter.

Claire McDonough
Claire McDonough
CFO at Rivian

So we'll see further benefit from a tariff per unit standpoint as we progress forward, and R2 will also benefit from that in the future.

Mark Delaney
Mark Delaney
Analyst at Goldman Sachs

Thanks for all that, Claire. My other question was on EDV, and I understand probably flattish volumes there for 2026, based on your, your comments earlier on the call. But you did speak to a plan for some additional variants, including one with more range for Amazon. So maybe help us better understand when to expect that new product for the commercial segment, and what that might mean for van deliveries and the broader commercial opportunity going forward. Thank you.

RJ Scaringe
CEO and Founder at Rivian

We do expect some growth in our EDV demand in 2026, and as you called out, there's an all-wheel drive version of the van and a larger battery pack variant as well, and both of those are to help unlock you know, specific use cases within the Amazon network. We're working really closely with Amazon in defining the requirements of those and excited to get those launched. The relationship with Amazon continues to be very positive, and certainly the EDV continues to perform extremely well.

Mark Delaney
Mark Delaney
Analyst at Goldman Sachs

Thank you.

Operator

Our next question comes from Chris Pierce with Needham. Please unmute your line and ask your question.

Chris Pierce
Chris Pierce
Senior Analyst at Needham

Oh, hey, as you talk about adding the second shift, then adding the third shift, can you kind of just walk through setting up hiring for these workers in the Normal area? I'm just not sure if we should think about that as a barrier or a burden or just kind of is it already in motion, or do you already have these and you kind of move people from one shift to another? Just kind of any detail around that, please.

Javier Varela
COO at Rivian

Yeah. Hello, Chris. Thank you for your question. The hiring process is in place, proceeding according to plan. We have enough candidates. At the beginning, we're receiving spontaneous candidates that wanted to work for us. So, we are good from that end. There's part of the team that will populate the R2 line that is coming from the existing flows, but it's an important part as well, that is hired from outside. We have reinforced our training programs. We have even a before hiring the people, a pre-hiring activity, just to let them know what is working in the lines and what they should expect there.

Javier Varela
COO at Rivian

And, so far, we are very happy with the response of the talent pool and the people pool that we have seen there. So,

Chris Pierce
Chris Pierce
Senior Analyst at Needham

Perfect. Thank you. And then just—I guess, I just kind of wanna understand, you've had the reviews this week. You're kind of flipping over the card as far as first trim and other trims in a month, and then we could see initial deliveries sometime in the second quarter, I guess. I'm just kind of curious, I'm just thinking about maybe Apple and the iPhone or the iPad, and it's just sort of, boom, here it is, you can buy it now. I guess I'd just love to hear about why the spacing. Is there a psychological effect, or it just comes down to what you can produce, when you can produce it at the plant, but just the timing of the cadence as you move towards the launch?

RJ Scaringe
CEO and Founder at Rivian

Well, thanks, Chris. You know, one of the amazing things about the R2 program is there's an enormous backlog. But that does create a challenge for us with making sure, you know, essentially, how do we select who receives their vehicles first and having a process around that. And so opening up the reservation or opening up the configuration process allows us to start taking this demand backlog and organizing around when we make deliveries and who gets their vehicles first. It's not as if you could, like, press a button and instantly have, you know, thousands and thousands of vehicles available. So we start producing, we are ramping production, but the demand will outpace our ability to produce.

RJ Scaringe
CEO and Founder at Rivian

That process allows us to organize in a thoughtful way, learning a lot from some of the past launches we've had, how do we prioritize and how do we sequence deliveries to our broad base of customers?

Operator

Our next question comes from Itay Michaeli with TD Cowen. Please unmute your line and ask your question.

Itay Michaeli
Itay Michaeli
Equity Analyst at TD Cowen

Great, thanks. Hi, everybody. Wanted to actually ask on the Universal Hands-Free, you know, curious how initial feedback has been since December, how we should think about feature improvements and OTA updates this year, and maybe what you're also assuming for paid subscriptions this year.

RJ Scaringe
CEO and Founder at Rivian

We're really excited to talk about this. This is a huge effort within the business, and Autonomy and AI Day was, of course, focused on all the work that we're doing here. But our Universal Hands-Free is really think of it as the first step in a whole series of steps that expand the capability. And so Universal Hands-Free, you know, expanded the number of miles where you can drive with hands off the wheel, but eyes on the road, to around 3.5 million miles, essentially any road with marked lanes. And later this year, we'll be unlocking the ability or enabling the ability for the vehicle to drive point-to-point. So, you know, you put your address into the vehicle, and the vehicle navigates to that address.

RJ Scaringe
CEO and Founder at Rivian

And then the next steps, ultimately, are driving towards what we think of as Personal Level 4, but between point-to-point and Personal Level 4, we'll have hands-off, eyes-off, so you'll be able to take your eyes off the road and do other things, starting first on the highway and then expanding from the highway. And then following that, we'll have our first Level 4 applications, you know, within a geofence area to start, but ultimately expanding over time. And our view, and really strong conviction, is that over the course of the remainder of this decade, we're gonna see autonomy go from something that today with hands-off capabilities certainly is a nice feature to have.

RJ Scaringe
CEO and Founder at Rivian

But as we start to move to hands off and eyes off, and then ultimately to Level 4, where the vehicle can operate itself entirely on its own, including, you know, driving empty, it really creates a whole new customer experience, and we think it becomes a critical part of the purchase decision. And this will—this is gonna drive significant change in how we think about the business model. It's gonna drive significant change in how consumers think about what vehicles they want to purchase.

Itay Michaeli
Itay Michaeli
Equity Analyst at TD Cowen

Thank you, RJ. That's very helpful. As a quick follow-up on the financials, Claire, any sense of how we should think about working capital flows this year, particularly as you go through the initial R2 ramp?

Claire McDonough
Claire McDonough
CFO at Rivian

Sure. We will see our working capital be an outflow of cash for us over the course of 2026. That is in part driven by the buildup of our inventory balance associated with the launch of R2.

Itay Michaeli
Itay Michaeli
Equity Analyst at TD Cowen

Got it. Very helpful. Thank you.

Operator

Our next question comes from Andrew Percoco with Morgan Stanley. Please unmute your line and ask your question.

Andrew Percoco
Andrew Percoco
Executive Director of Equity Research at Morgan Stanley

Great. Thanks so much for, for taking the question. I actually just want to come back, RJ, to, to what you just said on autonomy really driving, you know, the value proposition and, and driving experience over the next few years. And, and I guess I'm just curious, like, can you share your thoughts around whether or not there will be a retrofit opportunity for existing, you know, or new R2 customers that don't have Gen 3 with LiDAR and existing R1 customers? And any thoughts of when you'll introduce LiDAR onto, onto R1 production?

RJ Scaringe
CEO and Founder at Rivian

We're not, you know, in terms of a retrofit, this isn't something that's contemplated or planned. Certainly there will continue to be over-the-air updates for our Gen 2 vehicles, our R1 Gen 2 vehicles and our launch R2 vehicles. But in terms of hardware upgrades, those are not planned. The hardware upgrades that we've talked about in the past, we talked about at our Autonomy and AI Day, these are gonna be on vehicles in the early part of 2027. And certainly very excited about those, but the capabilities and even the demo that we had at our Autonomy and AI Day, which was a point-to-point demo, that's being done. That demo was on a Gen 2 of our R1 vehicles.

RJ Scaringe
CEO and Founder at Rivian

That will be available on any Gen 2 R1 vehicle, as well as the R2 vehicles we'll be launching with.

Andrew Percoco
Andrew Percoco
Executive Director of Equity Research at Morgan Stanley

Got it. Okay, can you get to— is the plan to get to eyes-off point-to-point with Gen 2, or is that something that's gonna require Gen 3?

RJ Scaringe
CEO and Founder at Rivian

I think the important thing to keep in mind on our upgraded architecture, which is, as I said, coming in 2027, is that has a, a few really important purposes. One, of course, is it raises the ceiling on what's possible, so it, it grows the, the opportunity to add even more capability beyond point-to-point. But it also serves as a, an even more enhanced part of our data flywheel, where we have enhanced cameras, a higher level of inference in vehicle, but importantly, we add a LiDAR, as you referenced, which is, turns essentially every vehicle into part of our ground truth fleet, which is really helpful for training our end-to-end model.

RJ Scaringe
CEO and Founder at Rivian

And so the way that the model continues to improve is we're benefiting from the thousands and thousands of drivers and that are on the road and the vehicles that are on the road, pulling in interesting and unique events back off the vehicles and allowing us to feed that into the overall training loop that we have for our what we call our Large Driving Model.

Andrew Percoco
Andrew Percoco
Executive Director of Equity Research at Morgan Stanley

Got it. Okay, and just one quick clarification. When you say Gen 3 will be available early 2027, will that include R1, or is that just still R2?

RJ Scaringe
CEO and Founder at Rivian

This is for R2.

Andrew Percoco
Andrew Percoco
Executive Director of Equity Research at Morgan Stanley

Okay. Thank you. Appreciate it.

Operator

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

Analyst at Deutsche Bank

Hi, this is Winnie on for Edison. Can you guys hear me?

Claire McDonough
Claire McDonough
CFO at Rivian

Yes.

Analyst at Deutsche Bank

Hi. Yes, thank you so much. My first question is on the relationship with VW as it matures. Was wondering if the topic of how to best utilize vehicle data come up? And more asking this in the context of VW naturally having a much larger fleet, and Rivian being able to potentially benefit from getting access to that data for training. So just curious at your thoughts on that topic. Thanks.

RJ Scaringe
CEO and Founder at Rivian

The Volkswagen fleet and what ultimately we're delivering to Volkswagen from a technology platform doesn't include our autonomy platform, so it's our embedded software platform, our topology of ECUs, including our zonal architecture, but it doesn't include our self-driving architecture.

Analyst at Deutsche Bank

Got it. And then maybe just on the RAP1 chip, curious to hear your maybe longer term inspirations for that. Is it something you think that will be limited to Rivian, or do you envision maybe this being used by some of your partners or other OEMs? And whether it could be potentially applied to non-automotive products like humanoids. Thanks.

RJ Scaringe
CEO and Founder at Rivian

I, I guess I'll answer it really broadly. This is, When we think about our self-driving and autonomy efforts, this is a, a enormous focus for the business and, represents our most significant, area of capital investment from an R&D point of view. And so when we look at this through the lens of the next several years, we do believe that as, as we continue to demonstrate progress and work towards that growing capability set that I talked about before, ultimately culminating in Level 4, this is a platform that certainly beyond Rivian, has applications. And so we do envision a world in which this becomes something that we can monetize through a few different ways. We can monetize it through increased market share and, and growing number of vehicle sales.

RJ Scaringe
CEO and Founder at Rivian

We can, of course, do that through new and unique business models and new ways of thinking about consuming transportation. And we can do that through selling and providing the technology to other manufacturers. Now, specifically to our RAP1 processor, as well as its future variants of that processor, we do see applications for vision-based robotics, you know, well beyond the vehicle. Of course, the vehicle is a great near-term vision-based robot, but even within Mind Robotics, which is a new company that we created, that is also an example of a great customer application, a great use case application for our RAP1 processor.

Analyst at Deutsche Bank

That's helpful. Thank you.

Operator

Our next question comes from Tobias Beith with Rothschild & Co Redburn. Please unmute your line and ask your question.

Tobias Beith
Tobias Beith
Analyst at Rothschild & Co Redburn

Hi. Thank you both for your time. May I ask what Rivian's management's latest thoughts are on captive battery cell manufacturing and assembly are, considering the recent development in the price of lithium salts? I know that this activity was contemplated at one point at your forthcoming plant in Stanton Springs.

RJ Scaringe
CEO and Founder at Rivian

Well, thanks, Toby. We've we've found great working partnerships with our battery cell suppliers and have taken a very active role in securing and sourcing some of the upstream precursor materials. So you called out lithium. That's a really great example of an area that we, from a sourcing point of view, spend a lot of time on. But being able to work with the these key battery partners and leveraging the investments they've made in production capacity and in their own cell construction and cell design, has been really helpful for us in terms of efficiently deploying capital.

Tobias Beith
Tobias Beith
Analyst at Rothschild & Co Redburn

Great. Thank you.

Operator

Our last question comes from James Picariello with BNP Paribas. Please unmute your line and ask your question.

James Picariello
James Picariello
Director and Head of US Autos Research at BNP Paribas

Can you hear me?

Claire McDonough
Claire McDonough
CFO at Rivian

Yes, James, we can hear you.

James Picariello
James Picariello
Director and Head of US Autos Research at BNP Paribas

Can you hear me? Oh, great. Thanks. Just curious on your thoughts regarding R1's potential to see additional demand from, you know, one of your major competitors announcing the end of its two high-end models next quarter, right? We're talking about 20,000 annualized units essentially up for grabs in the U.S. Just seems like the R1 can be a natural home for, for many of those buyers. Curious your thoughts. Thanks.

RJ Scaringe
CEO and Founder at Rivian

Yeah, the Tesla Model X, which as you said, will stop production, at least what's been said is next quarter. Yeah, the Model S was a really important product from a electrification point of view, and was one of the first more at scale products to show customers how exciting electrification can be. And so as that leaves the market, along with the Model X, it does create an opportunity. There's... I've talked about this a lot in the context of R2, the lack of choice, but this also is true in the case of R1. And R1, as it stands, our R1S is, I called out in my opening remarks, it's an enormously successful product in this premium price category.

RJ Scaringe
CEO and Founder at Rivian

So it's the best-selling premium SUV, electric or non-electric, in the state of California. And then it's the best-selling premium electric SUV in the United States, and the best-selling premium electric vehicle, SUV or non-SUV, in a number of states across the U.S. And so with even less choice now in that price category, it does represent an opportunity for us. But I just say very proudly that the overall lack of choice, and this is really true, in the price category of R2, we think is an enormous opportunity for us to capture market share and, of course, provide something really exciting to customers.

James Picariello
James Picariello
Director and Head of US Autos Research at BNP Paribas

Yeah, makes a lot of sense. Thank you. My, my follow-up, just for the strong gross profit contribution slated for this year, can you help dimension at all what the expected contribution might look like from VW as you think about that 60% year-over-year growth? Thanks.

Claire McDonough
Claire McDonough
CFO at Rivian

Sure. As you think about the software and services segment, roughly half of our revenue comes from revenue streams associated with our joint venture with Volkswagen Group, and we expect that to largely remain true as we look ahead to 2026 as well. And it is a more disproportionate share of the overall gross profit dollars that we earn out of the software and services segment as a whole.

James Picariello
James Picariello
Director and Head of US Autos Research at BNP Paribas

Thanks.

Operator

This concludes this Q&A section of the call. I would now like to turn the call back to RJ Scaringe for closing remarks.

RJ Scaringe
CEO and Founder at Rivian

Well, thanks, everybody, for joining the call, and we apologize for some of the technical difficulties that we had at the start. But we are hopefully a takeaway from this is just how excited we are about R2. As I said, I've had a chance to spend a lot of time in the car, and in a variety of ways, whether it's taking my kids to sports games or loading up the back with gear. And it is just such an incredible embodiment of the Rivian brand and captures so much of the essence of what makes R1 a special vehicle. But at a price point that, as we said, starts at $45 and will allow much, you know, much larger number of customers to access the vehicle.

RJ Scaringe
CEO and Founder at Rivian

As we think about the next couple of months, we as a company remain incredibly focused on the launch ramp for this vehicle, along with the continued development of the technology we're building, both on the software side, which we talked a bit about, but certainly also on our autonomy side. With that, thanks again for joining the call, and we're looking forward to a lot of folks being able to experience the R2 themselves.

Executives
Analysts
    • Andrew Percoco
      Executive Director of Equity Research at Morgan Stanley
    • Ben Kallo
      Senior Research Analyst at Baird
    • Chris Pierce
      Senior Analyst at Needham
    • Dan Levy
      Senior Equity Research Analyst at Barclays
    • Emmanuel Rosner
      Managing Director and Senior Autos and Auto Tech Analyst at Wolfe Research
    • George Gianarikas
      Managing Director and Senior Analyst at CG
    • Itay Michaeli
      Equity Analyst at TD Cowen
    • James Picariello
      Director and Head of US Autos Research at BNP Paribas
    • Javier Varela
      COO at Rivian
    • Joseph Spak
      Managing Director at UBS
    • Mark Delaney
      Analyst at Goldman Sachs
    • RJ Scaringe
      CEO and Founder at Rivian
    • Tobias Beith
      Analyst at Rothschild & Co Redburn
    • Analyst at Deutsche Bank
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