The Exchanges

Q Southwest, you talked about the importance of having more choice for consumers, right? And you've always been, every time we've had you on the show, you've always been super supportive of Tesla and an admirer of what they do. And all electric car manufacturers, but you really want to see an even more competitive EV landscape, which is a bit counterintuitive, right? Because you're, you're trying to capture market share.

A Boy, I love this question. There's almost an obsession, I'd say, of trying to find a way to pit different efforts in electrification against one another, and this incorrect view that there's going to be a single winner, and for one, someone to win, everyone else has to lose, and so if we want to see electrification grow from eight percent to a hundred percent, customers need lots of choices, and the lack of choice Is best demonstrated by Tesla's extreme market share. You know, they have fifty-ish percent market share, because they have two great products. The Model Three and Model Y are great products. But not everybody wants those form factors, that design, that look, that brand. And so we need to have an equivalent level of diversity of choice that we have on the combustion side. And so, of course, we're trying to help with that with R-II. And R-three, and you can imagine R-four, R-five, as we continue to build out the portfolio. But for, for us as an industry, we need Rivian to be successful, Tesla to be successful, GM to be successful, Ford to be successful. For that reason, we were really excited about the partnership we put together with Volkswagen Group.

AI assessment note: “if we want to see electrification grow from eight percent to a hundred percent, customers need lots of choices”

Q On the road, yeah. And how much of your business, I mean, do you, do you imagine in the future that is actually going to be the biggest part of your business?

A No, the, the consumer side will always be quite a bit larger just because the, the addressable market on consumer vehicles is, is so much larger. But the, the commercial van, you know, was important for us when we launched, decided to go into that business to have a core anchor customer, a flagship customer, if you will. And, you know, Amazon is, A great first customer. One of the things I always talk about in the context of that product is even for customers that haven't yet decided to buy an electric vehicle, if you buy a package through Amazon and it's delivered with an electric vehicle, you're an electric vehicle customer without even knowing it. And so I think that's a really exciting manifestation of our mission to see it come to life through the lens of a van.

AI assessment note: “No, the, the consumer side will always be quite a bit larger”

Q smart approach because I, I guess you wound up getting in touch with an MIT alum, uh, a guy named Muhammad Jamil, right? I think he's, he's the CEO of, of a company called Abdul Latif Jamil. It's a, a huge family owned corporation, uh, from Saudi Arabia. Um, I think a big part of their businesses is an automotive. And, and so what you pitched him on, on Rivian.

A Yeah. I remember I went out and met with him. And, uh, it was just a great meeting because we ended up having a conversation around the future of transportation. And at the end of it, I had a hunch that they would be willing to support us. And ultimately that played out. So it wasn't as if they walked in and said, RJ, here's fifty million dollars. It was, they walked in and said, here's a very small amount of money. Let's see what you can do. And let's build a business plan. And that, once that was completed, they said, okay, this makes sense. Now let's build a more sophisticated prototype, built that. Okay. That, that seems to be working. Let's engage with more suppliers. And we would then add to that more capital, but it was like less than a million dollars to, you know, a million dollars to slightly, you know, to five million dollars to ten million dollars. So it was a very gradual growth because the risks were so high.

AI assessment note: “we ended up having a conversation around the future of transportation.”

Q going to publicize it. We're not going to go to the media. We're not going to. And was that connected to what you had done in Florida, where you actually did talk to the media and you said, hey, we've got this awesome car. We're going to make them in Florida. Did that inform this, this strategy of just going into stealth mode and not talking about it at all?

A Yeah, absolutely. When I first started, we had targets, and as you would expect, the targets were not realistic. And You can find things where we said, we're going to launch this thing by 2012 or 2013. And I realized that the number of unknowns was so significant, uh, as we were beginning this sort of second part of this new part of the journey that it would just be silly to talk at all about what we're doing externally. I mean, we didn't even have a website at this point. We just went completely dark. Uh, and it was actually really helpful because it, it avoided us getting overly married To any specific aspect of the strategy or any specific aspect of our timeline. And it also created its own challenges. Recruiting was a challenge because people would joke with me. So I'm going to go home and tell my spouse, I'm going to join this company that doesn't have a website that doesn't appear to have a lot of money and intends to launch vehicles sometime in the future. I was like, yeah, some version of that. Yes. So it, it was, it was challenging to say the least.

AI assessment note: “Yeah, absolutely. When I first started, we had targets, and as you would expect”

Q RJ, any, any, any last minute thoughts for Rob on, on how he could get this out of the world?

A I mean, a lot of the things we said here, which I'm, I'm sure you've thought about some as well, Rob, but I do think one of the things I, I spend some time reflecting hard on is what's the vision for the business and what are the details you're willing to be flexible on? And what are the things that you really are fixed on? And the reason I raised that is the technology and the product you're developing have lots of other applications as we, you know, quickly brainstormed here. And They're, you know, creating a few different surfaces through which you could be successful may be really helpful, but, but again, it's like you have to really reflect to say, does that fit the overall vision? And I think this idea of like movement in the back country fits really nicely.

AI assessment note: “one of the things I spend some time reflecting hard on is what's the vision”

Q All right. Fair enough. RJ, we can answer the question eventually, but do you have any questions for Rob first?

A I guess just as context, I love to ski. And just a few years ago, I started trying backcountry skiing, which is wonderfully fun. But as you said, you can only do so many runs. I guess it's a stamina question with how much you can skin up and down. So I understand the product concept. You know, thinking about it, it's, it takes, in terms of like product market scale, it takes a part of a sport. So it takes skiing and backcountry skiing. So it's a niche sport within skiing. And then it takes that even further down to say someone is going to do multiple runs. And so, like my first question would be, are there ways to broaden the portfolio to have other offerings that could appeal to someone who's maybe not backcountry skiing or other, other, like answer products you could add to it, or, or if you're only selling to folks who are backcountry skiing, are there other ways to create more attachment for other things into your portfolio?

AI assessment note: “my first question would be, are there ways to broaden the portfolio”

Q So was it, I mean, now that you had a, had the Prototype of that sports car, you know, now that you proved a concept, even though you weren't doing that anymore, was it, was it a little bit easier to attract capital?

A In a way it was. Um, we were able to show as a very small team, highly undercapitalized that, you know, that we could build something. And so if the risk was extremely high before that, it was now very, very high. So it, yeah, it allowed us to start having different types of discussions with investors. But I, I think the other thing you have to remember at this time is it wasn't at all clear That electrification was going to happen yet. And so that was, that was something we also had to overcome was to convince, to convince people that there was actually going to be a big market for electrified products. And now, of course, it's a very different world. It's, it's universally accepted that a hundred percent of, of the world's vehicle production in the very near future will be electric. So, yeah, but that wasn't the case seven, eight years ago.

AI assessment note: “In a way it was. Um, we were able to show as a very small team”

Q So, all right, you had to raise money just to get this started, and I know you got, and, and how, how much money did you, I mean, even just to get to, I don't know, just start, I can't imagine how much money you needed. Did you start with a small amount or with 50 or a hundred million?

A No, no, no, I wish we started with that. So, so the way, the way it played out is we, as we were pivoting into this, into this new space, I, I sort of, Zoomed out and said, we're really far away from raising the amount of capital we need. Again, if you're being honest with yourself, you know, you look in the bank and it, it has, you know, more than a million dollars. If you're like, oh, this is great. And then you're like, but wait a second, we need more than a billion dollars to actually ramp. So I started thinking about, well, how do I meet the people or the person that's going to help take this to the next level? And ultimately the approach that That actually worked the best was I went back to MIT and I met with some of the senior leaders there who I, who I had, and I still have a great relationship with. And I said, I need some help. I've, I've started this company. We need a lot of capital and I need to connect with people that might be able to help me in that way.

AI assessment note: “No, no, no, I wish we started with that.”

Q these every, you want to appeal to everybody. You want, you want everyone from the most conservative, the most liberal people, not even thinking about their politics. They buy a car, they just buy a great car. Is there a way to, you know, it may be Ford's F-one 50 electric vehicle that does it, right? That kind of opens the floodgates and, and actually opens a market for everyone.

A As we, as we go to electrify, I think we're going to have the need for lots of choice and, and the driving experience helps get people excited. I mean, one of the things that is interesting with electrification is it completely changes performance boundaries that we previously accepted. So our, our pickup is faster than most hyper cars. I was, I was on the PCH, uh, the Pacific coast highway in California. This was maybe three, four weeks ago. I pulled up to a light. It was early morning. And a brand new Ferrari pulled up right next to me, and the guy looks over at me, I look over at him and said, hey, you want to see what we can do here? And so, we both accelerated quickly off the line, and I out accelerated by quite a margin.

AI assessment note: “the driving experience helps get people excited. I mean, one of the things that is interesting”

Q Yeah. But, but were you, I mean, put on your business hat for a second, not, not the engineering hat. Did you see a market opportunity and focusing on SUVs and trucks? I mean, because this is still the biggest, I think the biggest segment of cars sold in the U.S., SUVs and trucks. Did you realize that and say, wait, we should really go in that direction?

A Oh, I mean, we were, yeah, very much analyzing the different segments you can go into, analyzing the size of the segments, the efficiency of those segments, but what, um, Was incredibly clarifying as we thought about what to do, was we knew the right question to answer, and it was a single question, and the question was, whatever we do, it needs to have the most positive impact, and that even if the company wasn't successful, if we were working on problems that were big enough and hard enough, that inspired competition, that inspired Existing OEMs to change the way they looked at things. That would be a success from the measure of, you know, reducing the amount of carbon emitted into the world. So, I mean, the, this was one of my, in the moment, most perplexing and challenging times, but looking back, it was actually one of my favorite times in Rivian's history because it was so freeing to say, we're trying to solve for impact. Now let's go iterate through lots of different concepts and ideas and strategies that can do that.

AI assessment note: “we were, yeah, very much analyzing the different segments... but what was incredibly clarifying”

Q Are you seeing that in things like pre-orders?

A I'm so glad you asked this question, because I think often in really complex systems, we try to oversimplify the dynamics of a system, and there's a few big drivers. So first, I'd say broadly, in looking across all manufacturers, combustion vehicles and electric vehicles, interest rates being where they are, creates pressure on purchasing expensive assets. So things like vehicles that have a high Percentage of financing. You're just going to start to feel that, and you're going to see it manifest with people being more price sensitive than they historically would have been. The second thing is there's actually very limited supply of great EV products, and that, that may seem surprising when I say that, because there's a number of manufacturers have launched products, but when I say great EV products, products that are truly represent A meaningful step forward in terms of features, attributes, a cohesive brand story and product story. And so I, I think we have a gap as an industry where we need a lot more choices at affordable price points. And so competition is the ultimate way to get there. And we need to have multiple highly successful car companies that are capable first conceiving of, and then developing products that strike a chord. That are interesting.

AI assessment note: “often in really complex systems, we try to oversimplify the dynamics of a system”