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Rivian Automotive is betting big on a new, more affordable SUV, called R2, and will be raising production capacity by 50% with a new plant it is building in Georgia, Mark Maurer reports. He writes for today’s newsletter:
Rivian’s new investments come as the U.S. electric-vehicle market is mired in a downturn following the elimination of tax credits meant to encourage sales. The first R2 SUVs recently rolled off the production line at the company’s plant in Normal, Ill., and the first phase of the Georgia plant is expected for late 2028.
In making these investments, Rivian has gone through a lot of cash: It reported more than $1 billion in negative free cash flow for the latest quarter. I talked with Chief Financial Officer Claire McDonough about reducing the burn rate, breaking into the self-driving vehicle space and starting out as a pastry chef. Edited excerpts follow.
Rivian’s cash burn remains a primary concern of investors. As you're rolling out all these new initiatives, how do you hope to fund these efforts?
We're first and foremost always focused on how we can be most efficient with our capital, but we do operate in a highly capital-intensive and long product-cycle environment. We need to make investments in manufacturing capacity and product development and technology years in advance of the opportunity to fully monetize those investments.
We do have a number of sources of capital coming in at both our existing cash on the balance sheet, which is about $4.8 billion, plus the incremental capital from our original joint-venture agreement with Volkswagen Group, where we just received an additional billion dollars of capital. We just announced the first $300 million of capital from Uber, out of a total $1.25 billion of investment. We revised down a $4.5 billion, low-cost Department of Energy loan [from $6.6 billion] as well. Those sources of capital certainly enable Rivian the opportunity to think about the long-duration investments in front of us as we approach the build-out of our Georgia site.
How far off is full-year profitability?
We anticipate that we'll be free cash-flow-positive once the Georgia site is ramped up from a production standpoint. We expect the very first builds [vehicles] out of the site to begin at the end of 2028.
Rivian is an extreme newcomer to autonomous technology, yet is promising robotaxis by the tens of thousands by the early 2030s. How do you expect to fund that?
With the introduction of the second generation of R1 we pivoted our approach to bringing more of our tech in-house. With that, we introduced an end-to-end AI-first large-driving model into our training and the development for our autonomous future. The large-driving model is developed using data from the R1 Gen2 flywheel. We believe advanced autonomy capabilities will become a key differentiator for customers and a driver of market share.
More consumers are going to be making their purchase decisions centered around the autonomous capabilities of their vehicle.
You worked as a pastry chef before going into finance. Do you apply any lessons from those days to your CFO role?
My pastry chef days were definitely a great operational execution experience, working in a lot of the top kitchens across the world. I'm always focused on the mise en place, so to speak. What is the preparation and work that all of us can do to be best prepared to go after our days’ activities or in the case of the kitchen, a highly intensive service from a customer standpoint. That's something that I certainly carry over into the world here at Rivian.
—Mark Maurer
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