Rivian Automotive Inc DE

Previous wording

In the consumer market, we launched the R1 platform with our first generation of consumer vehicles: the R1T, a two-row five-passenger pickup truck, and the R1S, a three-row seven-passenger sport utility vehicle (“SUV”).

Current wording

In the consumer market, we launched the R1 platform with our first consumer vehicles: the R1T, a two-row five-passenger pickup truck, and the R1S, a three-row seven-passenger sport utility vehicle (“SUV”).

Previous wording

During the three months ended March 31, 2024, we produced 13,980 vehicles and delivered 13,588 vehicles.

Current wording

During the six months ended June 30, 2024, we produced 23,592 vehicles and delivered 27,378 vehicles.

Previous wording

•Ability to Develop and Launch New Offerings. The R1T, R1S, and EDV appear to resonate with customers based on positive responses to vehicles delivered and our historic order bank. We believe the Rivian brand is becoming established in the most attractive consumer and commercial vehicle market segments. However, our ability to grow revenues and expand margins will also depend on our ability to develop and launch new vehicle platforms and programs, including our midsize platform (“MSP”). In the first quarter of 2024, we unveiled our new MSP which underpins our R2 and R3 product lines and enabled the opportunity for customers to make reservations for the R2 with a cancellable and fully refundable deposit of $100. We expect to start production of the R2 in 2026. We believe the MSP will be foundational to Rivian’s long-term growth and profit potential. It positions Rivian to address new, global market segments and is designed to build upon our industry-leading technology platform as well as focus on reducing manufacturing complexity. We expect MSP to benefit from the key vertically integrated technologies developed for R1 including our in-house software stack, propulsion technology, network architecture, and vehicle electronics. In addition, the platform has been designed for cost efficiency, with a focus on part consolidation or elimination. Our future financial performance will also depend on our ability to offer services that deliver an intuitive, seamless, and compelling customer experience profitably.

Current wording

•Ability to Develop and Launch New Offerings. The R1T, R1S, and EDV appear to resonate with customers based on positive responses to vehicles delivered and our historic order bank. We believe the Rivian brand is becoming established in the most attractive consumer and commercial vehicle market segments. However, our ability to grow revenues and expand margins will also depend on our ability to develop and launch new vehicle platforms and programs, including our midsize platform (“MSP”). In the first quarter of 2024, we unveiled our new MSP which underpins our R2 and R3 product lines and offered the opportunity for customers to make reservations for the R2 with a cancellable and fully refundable deposit of $100. We expect to start production of the R2 in 2026. We believe the MSP will be foundational to Rivian’s long-term growth and profit potential. It positions Rivian to address new, global market segments and is designed to build upon our industry-leading technology platform as well as focus on reducing manufacturing complexity. We expect MSP to benefit from the key vertically integrated technologies developed for R1 including our in-house software stack, propulsion technology, network architecture, and vehicle electronics. In addition, the platform has been designed for cost efficiency, with a focus on part consolidation or elimination. In the second quarter of 2024, we began offering our second generation R1 vehicles, which have been reengineered for more efficiency and higher performance. We also expect to launch a Rivian pre-owned vehicle program in the near future. Our future financial performance will also depend on our ability to offer services that deliver an intuitive, seamless, and compelling customer experience profitably.

Previous wording

•Ability to Attract New Customers. Our growth will depend in large part on our ability to attract new consumer and commercial customers. We have invested heavily in developing our ecosystem and plan to continue to do so. We currently have low brand awareness but through our investments in marketing and our communication strategy, we expect to see substantial increases in brand awareness and for that to translate into more orders for our vehicles and as a result increase our base of Rivian customers. Marketing activities include brand campaigns, community events, and partnerships along with digital marketing campaigns. When we launched and began selling our R1 vehicles, we generated a large order bank of reservations. In 2023, the increased volume of produced and delivered R1 vehicles and increased order cancellation rate has notably reduced this R1 vehicle order bank. For 2024, we expect our total deliveries to be both derived from our existing order bank as well as new orders generated during the year. However, our current incoming order rate for our R1 vehicles must improve for us to meet our delivery targets. To support demand generation, we are in the process of implementing new capabilities, such as expanding our retail customer engagement spaces (“spaces”), expanding our demonstration drives, offering leasing programs, and building our sales and marketing team, technology, and infrastructure, which increases our costs and adversely impacts our profitability. To generate and maintain demand, we expect to incur significantly higher and more sustained marketing and promotional expenditures than we have previously incurred to attract customers. An inability to attract sufficient new customers at appropriate vehicle pricing points would substantially impact our ability to grow revenues or improve our financial results.

Current wording

•Ability to Attract New Customers. Our growth will depend in large part on our ability to attract new consumer and commercial customers. We have invested heavily in developing our ecosystem and plan to continue to do so. We currently have low brand awareness but through our investments in marketing and our communication strategy, we expect to see substantial increases in brand awareness and for that to translate into more orders for our vehicles and, as a result, increase our base of Rivian customers. Marketing activities include brand campaigns, such as MSP and second generation R1 introduction events in the first and second quarter of 2024, respectively, community events, partnerships, and digital marketing. When we launched and began selling our R1 vehicles, we generated a large order bank of reservations. In 2023, the increased volume of produced and delivered R1 vehicles and increased order cancellation rate has notably reduced this R1 vehicle order bank. For 2024, we expect our total deliveries to be both derived from our existing order bank as well as new orders generated during the year. However, our current incoming order rate for our R1 vehicles must improve for us to meet our delivery targets. To support demand generation, we are in the process of implementing new capabilities, such as expanding our retail customer engagement spaces (“spaces”), expanding our demonstration drives, offering leasing programs, and building our sales and marketing team, technology, and infrastructure, which increases our costs and adversely impacts our profitability. To generate and maintain demand, we expect to incur significantly higher and more sustained marketing and promotional expenditures than we have previously incurred to attract customers. An inability to attract sufficient new customers at appropriate vehicle pricing points would substantially impact our ability to grow revenues or improve our financial performance.

Previous wording

•Ability to Manage Costs. Selling our vehicles profitably requires successful and timely execution against multiple cost reduction objectives across the vehicle and our manufacturing operations. The production capacity at our manufacturing facility in Normal, Illinois (“Normal Factory”) is operating significantly below full vehicle production rate capacity. This lower utilization of plant capacity results in the cost of revenues to operate the plant being much higher per unit of production than would be the case if we were manufacturing at capacity. In the first quarter of 2024, we announced that initial production of R2 will be at our Normal Factory and our expansion of production capacity to approximately 215,000 units of annual production. This shift of initial R2 production to our Normal Factory temporarily pauses construction of our planned future manufacturing facility near Atlanta, Georgia (“Stanton Springs North Facility”) in order to focus on the expansion of our Normal Factory. Our future profitability depends upon our ability to scale our production and delivery operations more efficiently at a lower cost per unit. In April 2024, we executed a planned shutdown of our Normal Factory to introduce new technologies and cost-oriented material changes into our R1 platform and retool the R1 production line which we expect to deliver greater plant efficiency resulting in lower costs during the second half of 2024. As a result of the updates being made to our Normal Factory during the shutdown, we have accelerated depreciation during the first quarter of 2024 and will continue to have accelerated depreciation and higher overhead per unit costs due to lower production in the second quarter of 2024. We may have to incur impairments of our equipment in the plant if the utilization of our plant capacity does not increase in the future. Achieving these cost reductions requires, among other things, scaling our production volume, a timely launch and associated ramp of R2, timely introduction of new components and technologies into production, negotiation of unit price reductions with suppliers, and management of our labor and logistics costs. Should we not achieve such cost reductions in a timely manner, we could experience adverse impacts to our gross margin and consequently overall profitability.

Current wording

•Ability to Manage Costs. Selling our vehicles profitably requires successful and timely execution against multiple cost reduction objectives across the vehicle and our manufacturing operations. The production capacity at our manufacturing facility in Normal, Illinois (“Normal Factory”) is operating significantly below full vehicle production rate capacity. This lower utilization of plant capacity results in the cost of revenues to operate the plant being much higher per unit of production than would be the case if we were manufacturing at capacity. In the first quarter of 2024, we announced that initial production of R2 will be at our Normal Factory and our expansion of production capacity to approximately 215,000 units of annual production. This shift of initial R2 production to our Normal Factory temporarily pauses construction of our planned future manufacturing facility near Atlanta, Georgia (“Stanton Springs North Facility”) in order to focus on the expansion of our Normal Factory. Significant capital expenditures will be required to support the integration of R2 into our Normal Factory. Our future capital requirements are subject to uncertainty and our actual capital requirements may be different from or greater than those we currently anticipate. Our future profitability depends upon our ability to scale our production and delivery operations more efficiently at a lower cost per unit. In the second quarter of 2024, we executed a plant retooling upgrade to introduce new technologies and cost-oriented material changes into our R1 platform and retool the R1 production line which we expect to deliver greater plant efficiency resulting in lower costs starting in the second half of 2024. As a result of the updates made to our Normal Factory during the plant retooling upgrade, we accelerated depreciation during the first and second quarter of 2024 and had higher overhead per unit costs due to lower production in the second quarter of 2024. We may have to incur impairments of our equipment in the plant if the utilization of our plant capacity does not increase in the future. The introduction of our second generation R1 vehicles has reduced material costs as a result of engineering design changes and commercial improvements. In addition, we expect to leverage previous technologies and platforms while growing sales and service infrastructure to support R2. Achieving cost reductions requires, among other things, a timely launch and associated ramp of R2 and scaling our overall production volume, timely introduction of new components and technologies into production, negotiation of unit price reductions with suppliers, and management of our labor and logistics costs. Should we not achieve such cost reductions in a timely manner, we could experience adverse impacts to our gross margin and consequently overall profitability.

Previous wording

•Ability to Scale our Ecosystem and Brand Experience. Our go-to-market strategy requires us to scale our ecosystem quickly and effectively, including our technology platform and product development and operational infrastructure. Our future success will also depend on our ability to further develop and leverage our proprietary technology platform. Our ability to enhance our product design, engineering, and manufacturing capabilities and expand our production capacity, delivery and service operations, customer service, spaces, Rivian Adventure Network Direct Current fast charging sites (“Rivian Adventure Network”), and charging accessibility will be critical for supporting growth. During the first quarter of 2024, Rivian vehicles gained integrated access to over 15,000 Tesla Superchargers in the United States on the North American Charging Standard. We also plan to open up the Rivian Adventure Network to non-Rivian EVs in late 2024 allowing us to leverage the fixed costs associated with each charging site which we expect will turn each charging site into a profit center over time and allows us to meet one of the key requirements for the government grants associated with expanding domestically manufactured fast chargers across the country. We believe our long-term ability to achieve our financial targets will depend on our ability to cost-effectively scale our ecosystem, while also delivering a unified customer and brand experience consistent with our adventurous brand commitment.

Current wording

•Ability to Scale our Ecosystem and Brand Experience. Our go-to-market strategy requires us to scale our ecosystem quickly and effectively, including our technology platform and product development and operational infrastructure. Our future success will also depend on our ability to further develop and leverage our proprietary technology platform. We believe our planned joint venture with Volkswagen Group (the “VW JV”) announced in June 2024 reaffirms our strategy to vertically integrate our technology platform. The VW JV, which remains subject to the parties entering into definitive agreements and receipt of required regulatory approvals, is expected to substantially expand the market applications for our software and associated zonal electrical architecture. Our ability to enhance our product design, engineering, and manufacturing capabilities and expand our production capacity, delivery and service operations, customer service, spaces, Rivian Adventure Network Direct Current fast charging sites (“Rivian Adventure Network”), and charging accessibility will be critical for supporting growth. During the first quarter of 2024, Rivian vehicles gained integrated access to over 15,000 Tesla Superchargers in the United States on the North American Charging Standard. We also plan to open up the Rivian Adventure Network to non-Rivian EVs in late 2024 allowing us to leverage the fixed costs associated with each charging site which we expect will turn each charging site into a profit center over time and allows us to meet one of the key requirements for the government grants associated with expanding domestically manufactured fast chargers across the country. We expect to expand our service centers, and spaces and leverage them for product education and customer engagement. We believe our long-term ability to achieve our financial targets will depend on our ability to cost-effectively scale our ecosystem, while also delivering a unified customer and brand experience consistent with our adventurous brand commitment.

Previous wording

•Ability to Convert our Customers to Subscribers of our Services. Services are a key part of our growth strategy. We offer a variety of services, including financing, leasing, and insurance, vehicle maintenance and repair, charging, and FleetOS solutions that we believe will grow our revenues outside of vehicle sales. As we increase our base of Rivian customers and expand our services portfolio, we expect our customers to expand their usage of our service offerings over the full lifecycle of their vehicle ownership. We believe the services portion of our business will have the benefit of enabling a higher-margin, recurring revenue stream for each vehicle, therefore improving our margin profile. Our ability to grow revenues and our long-term financial performance will depend in part on our ability to drive adoption of these offerings at profitable price points.

Current wording

•Ability to Convert our Customers to Subscribers of our Services. Services are a key part of our growth strategy. We offer a variety of services, including financing, leasing, insurance, vehicle maintenance and repair, charging, and FleetOS solutions that we believe will grow our revenues outside of vehicle sales. In addition, we expect to begin offering Connect+ in the second half of 2024, which is designed to provide additional paid connectivity features, as well as Rivian Autonomy Platform+, which is a paid premium expansion of automated driver assistance support. As we increase our base of Rivian customers and expand our services portfolio, we expect our customers to expand their usage of our service offerings over the full lifecycle of their vehicle ownership. We believe the services portion of our business will have the benefit of enabling a higher-margin, recurring revenue stream for each vehicle, therefore improving our margin profile. Our ability to grow revenues and our long-term financial performance will depend in part on our ability to drive adoption of these offerings at profitable price points.

Previous wording

•Ability to Invest in our Production and Capabilities. We believe that customer acquisition and retention is contingent on our ability to produce innovative offerings, including vehicles that deliver the broadest combination of performance, utility, and capability, as well as services that enhance the ownership journey through new features, functions, and a best-in-class customer experience. To this end, we intend to continue making investments, including technology updates, to drive growth as we scale vehicle production and deliveries, expand our offerings, and strengthen our core capabilities. We executed a planned shutdown of our Normal Factory in April 2024 to introduce new technologies and cost-oriented material changes into our R1 platform and retool the R1 production line, which temporarily impacted our production. As we invest in our business for long-term growth, leading to increases in operating expenses as well as capital expenditures, we may experience further manufacturing shutdowns and additional losses, which could delay our ability to achieve profitability and positive operating cash flow. In March 2024, we announced that initial production of R2 will occur at our Normal Factory and the expansion of our production capacity to 215,000 units of annual production, which we believe will allow us to drive greater capital efficiency. Any delays in the timing or execution of these investments could have an adverse impact on our prospects, financial condition, results of operations, and cash flows. Furthermore, we anticipate that these future investments could require significant external debt and/or equity financing.

Current wording

•Ability to Invest in our Production and Capabilities. We believe that customer acquisition and retention is contingent on our ability to produce innovative offerings, including vehicles that deliver the broadest combination of performance, utility, and capability, as well as services that enhance the ownership journey through new features, functions, and a best-in-class customer experience. To this end, we intend to continue making investments, including technology updates, to drive growth as we scale vehicle production and deliveries, expand our offerings, and strengthen our core capabilities. We executed a plant retooling upgrade in the second quarter of 2024 to introduce new technologies and cost-oriented material changes into our R1 platform and retool the R1 production line, which temporarily impacted our production. As we invest in our business for long-term growth, leading to increases in operating expenses as well as capital expenditures, we may experience further manufacturing shutdowns and additional losses, which could delay our ability to achieve profitability and positive operating cash flow. For example, we plan to shut down our Normal Factory in the second half of 2025 to integrate key elements of our manufacturing process in preparation for the R2 launch, which will temporarily impact our overall production. In the first quarter of 2024, we announced that initial production of R2 will occur at our Normal Factory and the expansion of our production capacity to 215,000 units of annual production, which we believe will allow us to drive greater capital efficiency. Any delays in the timing or execution of these investments could have an adverse impact on our prospects, financial condition, results of operations, and cash flows. Furthermore, we anticipate that these future investments could require significant external debt and/or equity financing.

Previous wording

•Ability to Develop and Manage a Resilient Supply Chain. Our ability to manufacture vehicles and develop future solutions is dependent on the continued supply of input materials (e.g., lithium and nickel) and product components (e.g., semiconductors). Any inability or unwillingness of our suppliers to deliver necessary input materials or product components at timing, prices, quality, and volumes that are acceptable to us could have a material impact on our business, prospects, financial condition, results of operations, and cash flows. Fluctuations in the cost of input materials or product components and supply interruptions or shortages could materially impact our business. We have experienced and may continue to experience cost fluctuations and disruptions in supply of input materials and product components that could impact our financial performance. Over the prior year, the cost of key metals, including cobalt, lithium, resin, aluminum, nickel, and steel, declined significantly. Even though prices for lithium and other battery metals have seen recent sustained decreases from peak levels, prices are expected to remain volatile for the foreseeable future. Given the supplier changes related to the introduction of new vehicle technologies to the R1 platform, which occurred during April 2024, we believe our production ramp and rate in our Normal Factory may be limited by supply chain factors in the near-future. Additionally, we have received claims from our suppliers related to supplier contract changes for which we have incurred payment obligations and may in the future incur additional payment charges. See Note 11 “Commitments and Contingencies” to our condensed consolidated financial statements included in this Form 10-Q for more information on supplier contingencies. We also must manage the risk of field service actions, including product recalls, with respect to components from suppliers. We continue to work diligently and collaboratively with suppliers to identify and proactively address problems or constraints.

Current wording

•Ability to Develop and Manage a Resilient Supply Chain. Our ability to manufacture vehicles and develop future solutions is dependent on the continued supply of input materials (e.g., lithium and nickel) and product components (e.g., semiconductors). Any inability or unwillingness of our suppliers to deliver necessary input materials or product components at timing, prices, quality, and volumes that are acceptable to us could have a material impact on our business, prospects, financial condition, results of operations, and cash flows. Fluctuations in the cost of input materials or product components and supply interruptions or shortages could materially impact our business. The imposition of tariffs and other trade barriers may make it more costly for us to import raw materials and product components for our vehicles. We have experienced and may continue to experience cost fluctuations and disruptions in supply of input materials and product components that could impact our financial performance. Given the supplier changes related to the introduction of new vehicle technologies to the R1 platform, which occurred during the second quarter of 2024, we believe our production ramp and rate in our Normal Factory may be limited by supply chain factors in the near-future. Additionally, we have received claims from our suppliers related to supplier contract changes for which we have incurred payment obligations and may in the future incur additional payment charges. See Note 11 “Commitments and Contingencies” to our condensed consolidated financial statements included in this Form 10-Q for more information on supplier contingencies. We also must manage the risk of field service actions, including product recalls, with respect to components from suppliers. We continue to work diligently and collaboratively with suppliers to identify and proactively address problems or constraints.

Previous wording

•Government Incentives. There are various government policies, subsidies, and economic incentives designed to increase EV adoption. For example, the Inflation Reduction Act of 2022 offers a tax credit for EV purchases or leases contingent upon pricing limits, customer income limits, and assembly, manufacturing, and sourcing requirements. There is no guarantee these incentive programs will be available in the future. In May 2024, we entered into a REV Tax Credit Agreement with the State of Illinois acting by and through the DCEO in which we are eligible for an incentive package valued at up to $827 million which includes tax credits, exemptions and grants which will go towards plant expansion, improvements in public infrastructure, and job training programs. See Note 13 “Subsequent Events” to our consolidated financial statements included in this Form 10-Q for more information regarding the REV Tax Credit Agreement. Any reduction or elimination of these incentive programs could have a direct impact on demand for our vehicles. In addition, failure to meet the tax credit eligibility requirements may place our vehicles at a price disadvantage and could have a material adverse impact on our business, prospects, financial condition, results of operations, and cash flows.

Current wording

•Government Incentives. There are various government policies, subsidies, and economic incentives designed to increase EV adoption. For example, the Inflation Reduction Act of 2022 offers a tax credit for EV purchases or leases contingent upon pricing limits, customer income limits, and assembly, manufacturing, and sourcing requirements. There is no guarantee these incentive programs will be available in the future. In May 2024, we entered into a REV Tax Credit Agreement with the State of Illinois acting by and through the Department of Commerce and Economic Opportunity (“DCEO”) through which we are eligible for an incentive package valued at up to $827 million which includes tax credits, exemptions and grants which will go towards plant expansion, improvements in public infrastructure, and job training programs. Any reduction or elimination of these incentive programs could have a direct impact on demand for our vehicles. In addition, failure to meet the tax credit eligibility requirements may place our vehicles at a price disadvantage and could have a material adverse impact on our business, prospects, financial condition, results of operations, and cash flows.

Previous wording

•Inflation and Rising Interest Rates. The United States economy has experienced inflation in various market segments. In order to help slow inflation, the Federal Reserve Bank in the United States has raised interest rates rapidly and substantially in recent years, and it is expected that interest rates will remain elevated for longer than previously anticipated. This may result in vehicle financing becoming less affordable to customers, influence customers’ buying decisions to less expensive vehicles, or cause tightening of lending standards. If we are unable to fully offset higher costs through price increases or other measures, especially in the near-term as we continue to work through the order bank, we could experience an adverse impact to our business, prospects, financial condition, results of operations, and cash flows.

Current wording

•Inflation and Interest Rates. The United States economy has experienced elevated inflation in various market segments over the last several years. In order to help slow inflation, the Federal Reserve Bank in the United States raised interest rates rapidly and substantially and interest rates have remained elevated. This has impacted vehicle financing affordability to customers and may influence customers’ buying decisions to less expensive vehicles, or may cause tightening of lending standards. If we are unable to fully offset higher costs through price increases or other measures, especially in the near-term as we continue to work through the order bank, we could experience an adverse impact to our business, prospects, financial condition, results of operations, and cash flows.

Previous wording

Comparison of the Three Months Ended March 31, 2023 and 2024

Current wording

Comparison of the Three and Six Months Ended June 30, 2023 and 2024

Previous wording

Revenues increased compared to the three months ended March 31, 2023 primarily due to an increase in deliveries of 5,642 vehicles driven in part from our vehicle leasing program, increased average selling prices, and sales of non-Rivian vehicle trade-ins.

Current wording

Revenues increased compared to the six months ended June 30, 2023 primarily due to an increase in deliveries of 6,792 vehicles, driven in part from our vehicle leasing program, and sales of non-Rivian vehicle trade-ins. We also recognized $18 million in revenue for the sale of regulatory credits, compared to $34 million in the six months ended June 30, 2023.

Previous wording

The decrease in LCNRV write-downs of inventory and losses on firm purchase commitments compared to the three months ended March 31, 2023 is primarily due to a decrease in the cost to manufacture our products as a result of increased vehicle deliveries and lower material costs. We expect LCNRV write-downs of inventory and losses on firm purchase commitments to continue to decrease over time as we further reduce the cost to manufacture our products.

Current wording

The Company recorded a $220 million and $53 million charge to reflect the lower of cost or net realizable value (“LCNRV”) of inventory and losses on firm purchase commitments as of June 30, 2023 and June 30, 2024 compared to the six months ended June 30, 2023, respectively. The decrease in LCNRV write-downs of inventory and losses on firm purchase commitments is primarily due to a decrease in the cost to manufacture our products as a result of increased vehicle deliveries and lower material costs. We expect LCNRV write-downs of inventory and losses on firm purchase commitments to continue to decrease over time as we further reduce the cost to manufacture our products.

Previous wording

For the three months ended March 31, 2024, we incurred R&D expenses of $461 million, including $18 million of depreciation and amortization expense. R&D expenses decreased compared to the three months ended March 31, 2023, primarily due to a $52 million decrease in engineering, design, and development costs related to R1 platform design and technology upgrades and $25 million decrease in payroll and related expenses for lower headcount and restructuring activities partially offset by a $40 million increase in stock-based compensation expense primarily related to increased grants in 2023.

Current wording

For the three months ended June 30, 2024, we incurred R&D expenses of $428 million, including $18 million of depreciation and amortization expense. R&D expenses decreased compared to the three months ended June 30, 2023, primarily due to a $33 million decrease in engineering, design, and development costs related to R1 platform design and technology upgrades and an $18 million decrease in depreciation and amortization partially offset by a $25 million increase in stock-based compensation expense primarily related to increased grants in the second half of 2023.

Previous wording

For the three months ended March 31, 2024, we incurred SG&A expenses of $496 million, including $52 million of depreciation and amortization expense. SG&A expenses increased compared to three months ended March 31, 2023, primarily due to a $32 million increase in payroll and related expenses resulting from an increase in headcount predominantly from an increase in service and sales headcount, $27 million increase in depreciation and amortization as well as other miscellaneous operating expenses to support go-to-market operations and corporate initiatives.

Current wording

For the three months ended June 30, 2024, we incurred SG&A expenses of $496 million, including $53 million of depreciation and amortization expense. SG&A expenses increased compared to three months ended June 30, 2023, primarily due to a $33 million increase in payroll and related expenses predominantly from an increase in service and sales headcount and a $26 million increase in depreciation and amortization.

Previous wording

Interest income decreased for the three months ended March 31, 2024 compared to the three months ended March 31, 2023, primarily due to lower average cash equivalents and short-term investments partially offset by higher interest rates.

Current wording

Interest income decreased for the six months ended June 30, 2024 compared to the six months ended June 30, 2023, primarily due to lower average cash equivalents and short-term investments partially offset by higher interest rates.

Previous wording

Interest expense increased for the three months ended March 31, 2024 compared to the three months ended March 31, 2023, primarily due to the issuance of the Green Convertible Notes in 2023 and higher interest rates. We expect interest expense to increase in the near term as a result of the elevated interest rate environment. See Note 6 “Debt” to our condensed consolidated financial statements included in this Form 10-Q for more information.

Current wording

Interest expense increased for the three and six months ended June 30, 2024 compared to the three and six months ended June 30, 2023, primarily due to the issuance of the Green Convertible Notes in 2023 and higher interest rates. See Note 6 “Debt” to our condensed consolidated financial statements included in this Form 10-Q for more information.

Previous wording

In May 2024, we entered into a REV Tax Credit Agreement with the State of Illinois acting by and through the DCEO in which we agreed to renovate and expand our existing manufacturing operations at our Normal Factory, make capital expenditures of at least $1.5 billion by December 31, 2029, create new full-time jobs, and also to retain a number of existing full-time jobs in Illinois. As consideration for and as a condition to the Company Commitments, the Company is eligible for an incentives package valued at up to $827 million, including tax credits and exemptions, and grants to offset eligible costs of the Project. Tax credits will be eligible for issuance for an initial period of 15 years, with an opportunity for an additional fifteen-year extension. See Note 13 “Subsequent Events” to our consolidated financial statements included in this Form 10-Q for more information regarding the REV Tax Credit Agreement.

Current wording

In May 2024, we entered into a REV Tax Credit Agreement with the State of Illinois acting by and through the DCEO in which we agreed to renovate and expand our existing manufacturing operations at our Normal Factory (the “Project”), make capital expenditures of at least $1.5 billion by December 31, 2029, create new full-time jobs, and also to retain a number of existing full-time jobs in Illinois. As consideration for and as a condition to the commitments defined within the agreement, we are eligible for an incentives package valued at up to $827 million, including tax credits and exemptions, and grants to offset eligible costs of the Project. Tax credits will be eligible for issuance for an initial period of 15 years, with an opportunity for an additional fifteen-year extension.

Previous wording

We have generated significant losses from operations, as reflected in our accumulated deficit of $18,558 million and $20,004 million as of December 31, 2023 and March 31, 2024, respectively. Additionally, we have generated significant negative cash flows from operations and investing activities as we continue to support the growth of our business. We anticipate continuing to make significant capital investments over the next several years to focus on ramping up production as we strategically expand infrastructure, including additional manufacturing capacity. We also anticipate continuing to make significant investments in future growth initiatives, including vehicle and other technology and software, tooling for current vehicle platforms, future vehicle manufacturing lines, and our service and retail network.

Current wording

We have generated significant losses from operations, as reflected in our accumulated deficit of $18,558 million and $21,461 million as of December 31, 2023 and June 30, 2024, respectively. Additionally, we have generated significant negative cash flows from operations and investing activities as we continue to support the growth of our business. We anticipate continuing to make significant capital investments over the next several years to focus on ramping up production as we strategically expand infrastructure, including additional manufacturing capacity. We also anticipate continuing to make significant investments in future growth initiatives, including vehicle and other technology and software, tooling for current vehicle platforms, future vehicle manufacturing lines, and our service and retail network.

Previous wording

Net cash used in operating activities decreased during the three months ended March 31, 2024 compared to the three months ended March 31, 2023, primarily driven by higher build up of inventory levels in the prior year partially offset by timing of accounts receivables for deliveries made the last few days of the quarter.

Current wording

Net cash used in operating activities decreased during the six months ended June 30, 2024 compared to the six months ended June 30, 2023, primarily driven by higher build up of inventory levels in the prior year.

Previous wording

Net cash used in investing activities increased during the three months ended March 31, 2024 compared to the three months ended March 31, 2023, primarily driven by the purchase of short-term investments, partially offset by maturities of short-term investments. During the three months ended March 31, 2024, we continued to invest in the growth of our business at our Normal Factory, our next generation vehicle platforms and technologies, and our go-to-market infrastructure.

Current wording

Net cash used in investing activities decreased during the six months ended June 30, 2024 compared to the six months ended June 30, 2023, primarily driven by the higher purchases of short-term investments, partially offset by maturities of short-term investments. During the six months ended June 30, 2024, we continued to invest in the growth of our business at our Normal Factory, our next generation vehicle platforms and technologies, and our go-to-market infrastructure.

Previous wording

Net cash provided by financing activities during the three months ended March 31, 2023 was primarily driven by proceeds from the issuance of the 2029 Green Convertible Notes.

Current wording

Net cash provided by financing activities during the six months ended June 30, 2023 was primarily driven by proceeds from the issuance of the 2029 Green Convertible Notes. Net cash provided by financing activities for the six months ended June 30, 2024 was primarily driven by the 2026 Convertible Note.

Previous wording

The discussion and analysis of our financial condition and results of operations are based upon our condensed consolidated financial statements, which have been prepared in accordance with U.S. GAAP. In preparing the condensed consolidated financial statements, we make estimates and judgments that affect the reported amounts of assets, liabilities, stockholders’ deficit or equity, revenues, and expenses, and related disclosures. We re-evaluate our estimates on an ongoing basis. Our estimates are based on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Because of the uncertainty inherent in these matters, actual results may differ from these estimates and could differ based upon other assumptions or conditions, and such differences may be material. The critical accounting policies that reflect the more significant judgments and estimates used in the preparation of our condensed consolidated financial statements include those described in Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Form 10-K. During the three months ended March 31, 2024, there were no material changes to our critical accounting policies and estimates from those discussed in the Form 10-K.

Current wording

The discussion and analysis of our financial condition and results of operations are based upon our condensed consolidated financial statements, which have been prepared in accordance with U.S. GAAP. In preparing the condensed consolidated financial statements, we make estimates and judgments that affect the reported amounts of assets, liabilities, stockholders’ deficit or equity, revenues, and expenses, and related disclosures. We re-evaluate our estimates on an ongoing basis. Our estimates are based on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Because of the uncertainty inherent in these matters, actual results may differ from these estimates and could differ based upon other assumptions or conditions, and such differences may be material. The critical accounting policies that reflect the more significant judgments and estimates used in the preparation of our condensed consolidated financial statements include those described in Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Form 10-K. During the six months ended June 30, 2024, there were no material changes to our critical accounting policies and estimates from those discussed in the Form 10-K.