Rivian Automotive Inc DE

Previous wording

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

Current wording

During the nine months ended September 30, 2024, we produced 36,749 vehicles and delivered 37,396 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 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.

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. In the third quarter of 2024, we launched the Rivian pre-owned vehicle program which expands opportunities to gain new customers. 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, 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.

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, offering the sale of Rivian pre-owned vehicles, 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. 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.

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. Following the plant retooling upgrade during the second quarter of 2024, we have experienced improved manufacturing efficiencies. As the production ramp continues, we anticipate these benefits to reduce our cost per vehicle. 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 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 improvements in supplier commercial terms. 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. 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.

Current wording

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 have expanded our service centers and spaces to allow for enhanced 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, 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.

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, in the fourth quarter of 2024 we began offering Connect+, a subscription-based streaming and connectivity service, and expect to offer Rivian Autonomy Platform+, a premium expansion of automated driver assistance support, in the future. 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 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.

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. For example, during the third quarter of 2024, Rivian began experiencing a production disruption due to a shortage of a component within our Enduro motor system on the R1 and RCV platforms. As a result of this supply shortage, Rivian produced fewer vehicles during the third quarter of 2024. We are taking steps to address the shortage and the impact on production is continuing into the fourth quarter of 2024.

Previous wording

•Seasonality. Historically, the automotive industry has experienced higher revenues in the spring and summer months. Additionally, we expect delivery volumes of commercial vehicle sales to be less in the winter months, as customers shift their focus to making last mile deliveries during holidays, rather than incorporating more vehicles into their fleet which could result in higher finished goods inventory levels during this period.

Current wording

•Seasonality. Historically, the automotive industry has experienced higher revenues in the spring and summer months. Additionally, we typically expect delivery volumes of commercial vehicle sales to be less in the winter months, as customers shift their focus to making last mile deliveries during holidays, rather than incorporating more vehicles into their fleet. Despite typical seasonality, we expect to deliver additional EDVs during the fourth quarter of 2024.

Previous wording

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

Current wording

Comparison of the Three and Nine Months Ended September 30, 2023 and 2024

Previous 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.

Current wording

Revenues increased compared to the nine months ended September 30, 2023 primarily due to an increase in deliveries of 1,246 vehicles, driven in part from our vehicle leasing program, an increase in repair and maintenance revenue, and sales of vehicle trade-ins. We also recognized $25 million in revenue for the sale of regulatory credits, compared to $34 million in the nine months ended September 30, 2023.

Previous wording

For the three months ended June 30, 2024, we incurred cost of revenues of $1,609 million, including $203 million of depreciation and amortization expense. Cost of revenues for the second quarter of 2024 included $59 million of costs we do not anticipate being part of our long-term cost structure. This was made up of $33 million of cost of revenue efficiency initiatives primarily related to certain supplier liabilities incurred and $26 million of accelerated depreciation associated with the updates made to our Normal Factory during the plant retooling upgrade.

Current wording

For the three months ended September 30, 2024, we incurred cost of revenues of $1,266 million, including $186 million of depreciation and amortization expense. Cost of revenues for the third quarter of 2024 improved primarily due to lower delivery volume. This was partially offset by an increase of $22 million of costs we do not anticipate being part of our long-term cost structure which was made up of cost of revenue efficiency initiatives primarily related to certain supplier liabilities incurred.

Previous wording

For the six months ended June 30, 2024, we incurred cost of revenues of $3,340 million, including $413 million of depreciation and amortization expense. Cost of revenues for the six months ended June 30, 2024 included $230 million of costs we not not anticipate being part of our long-term cost structure. This was made up of $160 million of cost of revenue efficiency initiatives primarily related to certain supplier liabilities incurred and $70 million of accelerated depreciation associated with the updates made to our Normal Factory during the plant retooling upgrade.

Current wording

For the nine months ended September 30, 2024, we incurred cost of revenues of $4,606 million, including $599 million of depreciation and amortization expense. Cost of revenues for the nine months ended September 30, 2024 increased by $228 million of costs we do not anticipate being part of our long-term cost structure. This was made up of $158 million of cost of revenue efficiency initiatives primarily related to certain supplier liabilities incurred and $70 million of accelerated depreciation associated with the updates made to our Normal Factory during the plant retooling upgrade. This was offset by an improvement in in materials’ costs from our second generation R1 vehicles.

Previous 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.

Current wording

The Company recorded a $114 million and $14 million charge to reflect the lower of cost or net realizable value (“LCNRV”) of inventory and losses on firm purchase commitments for the nine months ended September 30, 2023 and 2024, respectively. The decrease in LCNRV write-downs of inventory and losses on firm purchase commitments is primarily due to an increase in projected positive-margin variants and a decrease in estimated materials’ costs for the projected negative-margin variants. 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 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.

Current wording

For the three months ended September 30, 2024, we incurred R&D expenses of $350 million, including $20 million of depreciation and amortization expense. R&D expenses decreased compared to the three months ended September 30, 2023, primarily due to a $74 million decrease in stock-based compensation expense primarily related to a reversal in the accrual of a previously recorded stock-based bonus expense and decreased grants, a $57 million decrease in engineering, design, and development costs and other related project costs primarily surrounding the R1 platform design and technology upgrades, and a $30 million decrease in depreciation and amortization.

Previous wording

For the six months ended June 30, 2024, we incurred R&D expenses of $889 million, including $36 million of depreciation and amortization expense. R&D expenses decreased compared to the six months ended June 30, 2023, primarily due to an $85 million decrease in engineering, design, and development costs related to R1 platform design and technology upgrades and a

Current wording

For the nine months ended September 30, 2024, we incurred R&D expenses of $1,239 million, including $56 million of depreciation and amortization expense. R&D expenses decreased compared to the nine months ended September 30, 2023, primarily due to a $142 million decrease in engineering, design, and development costs and other related project costs primarily surrounding the R1 platform design and technology upgrades.

Previous 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.

Current wording

For the three months ended September 30, 2024, we incurred SG&A expenses of $427 million, including $53 million of depreciation and amortization expense. SG&A expenses remained relatively flat compared to three months ended September 30, 2023, with a $40 million decrease in stock-based compensation expense primarily related to a reversal in the accrual of a previously recorded stock-based bonus expense offset by a $23 million increase in depreciation and amortization and a $17 million increase in sales and marketing expenses to support go-to-market operations.

Previous wording

For the six months ended June 30, 2024, we incurred SG&A expenses of $992 million, including $105 million of depreciation and amortization expense. SG&A expenses increased compared to the six months ended June 30, 2023, primarily due to a $67 million increase in payroll and related expenses predominantly from an increase in service and sales headcount, a $53 million increase in depreciation and amortization, $33 million increase in utilities and facilities expenses driven by an increase in service centers and spaces, and $20 million increase in sales and marketing expenses to support go-to-market operations.

Current wording

For the nine months ended September 30, 2024, we incurred SG&A expenses of $1,419 million, including $158 million of depreciation and amortization expense. SG&A expenses increased compared to the nine months ended September 30, 2023, primarily due to a $76 million increase in depreciation and amortization, a $73 million increase in payroll and related expenses predominantly from an increase in service headcount, and $37 million increase in sales and marketing expenses to support go-to-market operations partially offset by a $42 million decrease in stock-based compensation expense primarily related to decreased stock-based bonus.

Previous 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.

Current wording

Interest income decreased for the nine months ended September 30, 2024 compared to the nine months ended September 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 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.

Current wording

Interest expense increased for the three and nine months ended September 30, 2024 compared to the three and nine months ended September 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

Fair value loss on convertible note, net reflects the issuance and subsequent mark-to-market valuation of the 2026 Convertible Note issued in the three months ended June 30, 2024. See Note 6 “Debt” to our condensed consolidated financial statements included in this Form 10-Q for more information.

Current wording

Fair value gain (loss) on convertible note, net reflects the issuance and subsequent mark-to-market valuations of the 2026 Convertible Note issued in the three months ended June 30, 2024. 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 (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.

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. In October 2024, we received $75 million in connection with this agreement.

Previous wording

In June 2024, we issued $1 billion principal amount of a 2026 Convertible Note in a private placement pursuant to, and governed by, a convertible promissory note purchase agreement dated June 25, 2024, between the Company and Volkswagen. The 2026 Convertible Note accrues interest at 4.75% per annum, payable semi-annually in arrears on June 15 and December 15. See Note 6 “Debt” to the condensed consolidated financial statements included in this Form 10-Q for more information on the 2026 Convertible Note. In addition, we expect to receive an additional $4 billion from Volkswagen Group comprised of $2 billion of direct equity investment which is expected to take place in two tranches of $1 billion each in 2025 and 2026, subject to the achievement of certain milestones, priced based on the 30-trading day volume-weighted average price of our Class A common stock prior to the date of investment, and $2.0 billion related to the planned formation of the VW JV, which is expected to be split between a payment to us at the inception of the joint venture, currently expected to occur in the fourth quarter of 2024, and a loan made available to us in 2026. The VW JV is subject to the parties’ entrance into definitive agreements and receipt of regulatory approvals, and there can be no assurance that such conditions will be met, or that any related milestone will be achieved. The planned additional investments by Volkswagen Group and our current cash, cash equivalents, and short-term investments are expected to provide the capital to fund our operations through the ramp of R2 in our Normal Factory as well as the launch and ramp of MSP in our Stanton Springs North Facility. In addition, we anticipate incremental benefits through savings on material costs, operating expense efficiencies, and future revenue opportunities with the VW JV.

Current wording

In June 2024, we issued $1.0 billion principal amount of a 2026 Convertible Note in a private placement pursuant to, and governed by, a convertible promissory note purchase agreement dated June 25, 2024, between the Company and Volkswagen Group. The 2026 Convertible Note will automatically convert into shares of the Company’s Class A common stock on December 1, 2024 as all conversion conditions have been satisfied as of September 30, 2024. Half of the then outstanding principal amount will convert at a price of $10.8359 per share, and the remaining half will convert at a price per share of the Company’s Class A common stock based on the Company’s 45-trading day volume-weighted average price prior to the conversion date. See Note 6 “Debt” to the condensed consolidated financial statements included in this Form 10-Q for more information on the 2026 Convertible Note. In addition, we expect to receive an additional approximately $4.0 billion from Volkswagen Group comprised of approximately $2.0 billion of direct equity investment which is expected to take place in at least two tranches of $1.0 billion currently expected in 2025 and 2026, subject to the achievement of certain milestones and obtaining relevant regulatory clearances, priced based on the 30-trading day volume-weighted average price of our Class A common stock prior to the date of investment, and approximately $2.0 billion related to the planned Rivian and VW JV, which is expected to be split between a payment to us at the inception of the Rivian and VW JV, currently expected to occur in the fourth quarter of 2024, and a loan expected to be made available to one of our subsidiaries in 2026, subject to customary financing conditions. The Rivian and VW JV is subject to the parties’ entrance into definitive agreements and there can be no assurance that any related regulatory approvals, conditions, or milestones associated with the remaining anticipated investments or financing by Volkswagen Group will be achieved. The planned additional investments by Volkswagen Group and our current cash, cash equivalents, and short-term investments are expected to provide the capital to fund our operations through the ramp of R2 in our Normal Factory as well as the launch and ramp of MSP in our Stanton Springs North Facility. In addition, we anticipate incremental benefits through savings on material costs, operating expense efficiencies, and future revenue opportunities with the Rivian and VW JV.

Previous 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.

Current wording

We have generated significant losses from operations, as reflected in our accumulated deficit of $18,558 million and $22,561 million as of December 31, 2023 and September 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 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.

Current wording

Net cash used in operating activities decreased during the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, primarily driven by higher build up of inventory levels in the prior year partially offset by lower accounts payable.

Previous 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.

Current wording

Net cash used in investing activities decreased during the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, primarily driven by higher maturities of short-term investments partially offset by purchases of short-term investments. During the nine months ended September 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 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.

Current wording

Net cash provided by financing activities during the nine months ended September 30, 2023 was primarily driven by proceeds from the issuance of the 2029 Green Convertible Notes. Net cash provided by financing activities for the nine months ended September 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 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.

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 nine months ended September 30, 2024, there were no material changes to our critical accounting policies and estimates from those discussed in the Form 10-K.