Rivian Automotive 2026 Q2 Earnings Call

Good afternoon. Thank you for joining us for Rivian's second quarter 2026 earnings call. Today, I'm joined by RJ Scaringe, our CEO and Founder, Claire McDonough, our Chief Financial Officer, and Javier Varela, our Chief Operations Officer. Before we begin, matters discussed on this call, including comments and responses to questions, reflects 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 earnings presentation we filed with the SEC today. 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 earnings presentation and press release.

Just before the earnings call, we posted our earnings presentation, 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.

Thanks, Chip. Good afternoon, everyone. Thanks for joining us for today's call. In the second quarter, we began deliveries of R2 vehicles to external customers. We expect R2 to be a game changer for our customers and a driver of Rivian's long-term growth and profitability. Importantly, in the U.S. automotive marketplace, starved for high-quality EV choice, I strongly believe R2 is an attractively priced option for everyday adventurers that will resonate with a broad set of consumers. Many reviews of R2 are outstanding. One journalist wrote, quote, "R2 is one of the best new cars I've driven in years." Another praised R2 as among the finest vehicle designs in the world. Early customer feedback of R2 is positive, and I have to say, I love it as my daily driver. Strong R2 reviews and increasing brand awareness are directly translating into accelerating customer touchpoints with our products.

In the second quarter, we hosted over 57,000 demo drives, a Rivian record. While it's early in our ramp, we are pleased with the reservation conversion we've seen to date for Launch Edition R2s. Turning to our manufacturing footprint, our team in Normal is focused on the production ramp of R2. As a reminder, R2 production started with a single shift, and we expect to scale to two shifts by the end of the third quarter. We are seeing good progress in new team member training and process improvements for the ramp of the first R2 shift. Additionally, members of our supply chain team are spending time on-site with suppliers as we look towards supporting the ramp in the back half of the year and into next year. In Georgia, construction of our next manufacturing site is progressing well.

The combination of our Normal and Georgia facilities provides Rivian the path to scale to 515,000 units of annual capacity, with plenty of room for future expansion. As an update on our Amazon partnership, Amazon now has over 40,000 Rivian electric delivery vans active in its fleet, delivering packages across thousands of cities in North America. In addition to the EDV Standard pack variant already on the road, we're developing new variants with a larger battery pack and all-wheel drive to support Amazon's needs. In the second quarter, we surpassed 1 billion miles driven on the Rivian commercial van platform. Turning to our technology roadmap, autonomy remains one of the most important areas of investment at Rivian. In the not-too-distant future, we believe advanced assisted driving capabilities will be a key differentiator for customers and a substantial driver of market share.

Our autonomy development is on track, and we expect to begin rolling out point-to-point capabilities by the end of this year. We believe our rapidly expanding car park with R2 will accelerate our data flywheel to enable delivering hands-off, eyes-off capabilities in 2027, and ultimately Level 4 capabilities in consumer and robotaxi variants of R2. Since we began monetizing Autonomy+ in April, take rates are trending positively for the service, and we believe further feature releases will drive continued increased uptake of Autonomy+. Later this year, we will host another Autonomy and AI Day, where we'll provide more updates around our exciting autonomy and AI progress. At the end of 2026, we are targeting the launch of our third-generation autonomy hardware. This includes RAP1, our first in-house design silicon, and the addition of lidar.

The development of our RAP1 chip is on track, and we've begun final testing phases of production silicon. Finally, in May, we rolled out our Rivian Assistant on all R1 vehicles and plan to launch the feature on R2 with an over-the-air update later this year. Rivian Assistant is our new AI-powered voice assistant that is built to be a digital co-pilot, with integration into the vehicle ecosystem and other external apps. Customers love this new feature and its intuitive functionality across applications like Spotify and Google. In closing, I want to thank our team for their continued execution this quarter. We are laying the foundations for a future that we believe will be fully electric, autonomous, and AI defined. The reviews for R2 affirm that our category-defining brand and vertically integrated and extensible technology resonates deeply with customers. I couldn't be more excited about the opportunity ahead.

With that, I'll pass the call over to Claire to discuss our financial results.

Thank you, RJ, and good afternoon, everyone. As RJ shared, we started external customer deliveries of R2 in June. My family took a road trip in our R2 earlier this summer, and we put the storage capacity to the test by piling in four large suitcases, backpacks, golf clubs, tennis rackets, and groceries. Road tripping with Universal Hands-Free is outstanding, making long car rides relaxing.

I'm looking forward to the launch of point-to-point capabilities later this year. As I discussed previously, delivering a strong 2026 exit rate for R2 production and deliveries is a key focus for our team, as we believe it will directly translate into positive automotive gross profit for the business. Turning to the results for the second quarter, our consolidated revenue was $1.66 billion, a 27% increase over the same quarter last year. Consolidated gross profit was $179 million, and our gross margin was 11%. Gross profit included $138 million of depreciation and amortization and $31 million of stock-based compensation expense. Adjusted EBITDA losses for the quarter were $379 million, driven by our $179 million of gross profit and increased adjusted operating expenses as we prepare to scale R2 and invest in our autonomy roadmap.

In the second quarter, we produced 12,613 vehicles at our plant in Normal, Illinois, and delivered 12,194 vehicles. Delivery results topped our 9,000-11,000 vehicle expectations due to robust growth quarter-over-quarter in EDV and R1, coupled with the introduction of R2 deliveries. Our $1.14 billion of automotive revenue, a 23% increase over the same quarter last year, were primarily driven by a 14% increase in vehicle deliveries and a $103 million increase in revenues related to automotive regulatory credits, partially offset by a decline in average selling prices from a higher mix of commercial van and R2 deliveries.

Automotive gross profit loss was $36 million, compared to a gross profit loss of $335 million for the same quarter last year, a $299 million improvement, primarily due to increases in delivery and production volumes, an increase in revenues related to automotive regulatory credits, and an IEEPA tariff refund receivable, partially offset by the ramp of R2 production. In the quarter, we recognized approximately $100 million in incremental cost of revenue due to the ramp of R2 production as compared to the production at more normalized levels. Current macro and geopolitical factors are creating added complexity, cost, and uncertainty, our team continues to work hard to manage supply chain risks and increasing commodity and memory costs. Our software and services segment reported another strong quarter.

During the second quarter, the segment generated $515 million of revenue, a 37% year-over-year increase, primarily due to an increase in vehicle electrical architecture and software development services by the joint venture, repairs and maintenance, and Autonomy+, offset by lower remarketing sales. $308 million or 60% of software and services revenue was attributable to our joint venture with Volkswagen Group. Software and services gross profit was $215 million, a 42% margin due to higher vehicle electrical architecture and software development services by the joint venture. Looking at our balance sheet, we ended the quarter with approximately $5.3 billion of cash equivalents, and short-term investments.

In July, we sold 86.25 million Class A shares in a follow-on equity offering to raise approximately $1.3 billion for general corporate purposes, including the funding of equity commitments and reserves for our $4.5 billion Department of Energy loan associated with the construction of our Georgia plant. Additionally, later this year, we expect to receive $1 billion in non-recourse debt from Volkswagen Group and an additional $250 million equity investment from Uber, both subject to the completion of certain conditions. Our total available liquidity and targeted future capital is over $14 billion to support Rivian's investments in growth initiatives. This includes current liquidity, the Department of Energy loan, and additional targeted equity investments from Uber and Volkswagen Group, which are all subject to certain conditions.