Rivian Automotive, Inc. (RIVN) Earnings Call Transcript & Summary

Okay. Great. We're going to go ahead and get started. My name is Mark Delaney, and I cover Rivian for Goldman Sachs. I'm very pleased to have with us today, RJ Scaringe, the CEO and Founder of Rivian. Thanks for joining us.

Thanks. Great to be here.

Look, I wanted to kick it off on the broader industry backdrop and what Rivian has been seeing. The company since continued to report strong preorders. You mentioned that on your last earnings call, and that's despite the weaker macroeconomic backdrop. Why do you think that's been the case? And do you think it's sustainable?

Yes. I think broadly, we're seeing a couple of compounding factors. We have consumer interest in electrification is expanding faster than I think anyone expected or anticipated, coupled with increasing level of policy focus around the world, of course, now in the United States as well. And the product set that we've developed between the R1T and the R1S, our truck and our SUV, is really connecting with customers as we're just saying as we're walking up on stage. The compounding effect of customers talking about their experience to other soon-to-be customers is creating a ballooning level of interest, and it's driving this incredible word of mouth, which we're seeing translate to continued acceleration of demand.

All right. That's great. And any insights you can share on what type of vehicle current R1 owners previously had? And are you seeing people new to the pickup truck category given some of the features that are on the R1T?

Yes. So the R1T and the R1S products for us, we really think of those as our flagship products. And when we started to develop those, this is years ago, and we're thinking about what's the targets for these vehicles, what do we want them to achieve, what's the cross-section of customers that are going to be interested, one of the things we talked a lot about was wanting to pull in a really broad base of consumers, folks coming out of a variety of different vehicles coming out of a variety of demographics, and that was the target state. And what's interesting, sitting here today, is we can now measure the target state relative to the actual state. And what we have is a really broad mix of consumers. And so as much as you might think the R1T is pulling in truck customers, most of the R1T customers have never owned a pickup before. And if you look between the R1T and the R1S, around 90% of our customers have never owned an EV before, which is great, which means we're creating new EV customers. We're pulling people out of a variety of different trucks, SUVs, sedans, hatchbacks across the space. And that diversity of customers is great for us as a brand because the brand often gets sort of defined by its customers, especially the early customers, so the fact that one customer may be coming out of a Subaru and another one to be coming out of a Land Rover is actually a good thing for us as a company.

That's great. I do want to speak on the Inflation Reduction Act. I mean, pretty substantial legislation. We're getting a lot of questions on that from investors. Maybe first, just in terms of the mission of Rivian and keeping the world adventurous forever, but getting to clean energy is a big focus for Rivian. When you think about the IRA bill, how helpful is that with some of those goals?

I mean that's -- it's -- you take a step back and look at what's just passed with the IRA bill. A few years ago, this would have been hard to imagine. This level of committed support from the United States around both electrification and the creation of the domestic supply chain, with particular focus on batteries, so we're ecstatic with this. We think it's great news, not just for us as a company, but we think it's really powerful for this rapid transition we're going to see to electrification. And there's a few elements in there. Of course, there's incentives around growth in EV demand. So there's demand side incentives, but those incentives tied to localization of battery supply chains. And then there's additional incentives to produce and set up production for localized production of both cells as well as some of the core materials that go into those cells. So of course, like all of you, and I'm sure like many other companies within the space, we've spent the last several weeks really dissecting and understanding what's in the IRA bill. But we believe it's going to have profound impacts on the rate of adoption, but also really on the topology of the supply chain and the role that domestic supply is going to play in electrification.

Yes. And if you could, could you please elaborate on what parts of the bill are potentially most helpful for Rivian?

Yes. So in terms of the consumer-facing credits and the consumer-facing benefits that are embedded in the bill, there's a number of requirements. There's income level requirements, there's vehicle pricing requirements and there's localized or domestic content or content that comes from countries for which we have a free trade agreement with, so countries like Australia or South Korea. And with that said, for us, it really affects our R2 platform on the consumer side, where the price level of those vehicles falls well below the $80,000 cap, the type of consumer buying those vehicles will more likely fall below the income cap. And the supply chain that we've been designing for those vehicles in terms of the battery, fortunately, has been developed around the idea of making sure that, that's local. So that's both through some of the internal efforts in battery cell, particularly with our lithium iron phosphate chemistries and then also with some of the partnerships that we've put in place or are putting in place for high-nickel cells. So it's very, very much aligned with our strategy on the consumer side. And then less talked about surprisingly is what the IRA bill represents for the commercial space. It does not have domestic requirements for cell production, but it has very strong incentives for the customer vehicles that ramp up quite dramatically as you move into higher payload vehicles. The largest of which moves into approximately $40,000 of credit to the buyer of the vehicle for the highest payload versions of a commercial van or a commercial vehicle. So these are very, very strong tailwinds for the commercial space to electrify, and we think is going to lead to somewhat of a binary step change in demand for electrified vehicles, especially in these large commercial vans, which, of course, we have products that fit really nicely into that with our -- what we call our EDV product, electric delivery van product.

And for Rivian, as I understand it, a big part of the strategy, it's not just selling the vehicles to begin with, but all the software and services that go along with that. And so maybe you can talk a little bit more about the value proposition Rivian provides and how that could potentially grow longer term?

Yes. We talk about the shifts happening in transportation and the easiest to visualize, of course, electrification. We often talk about that, of course, the first few minutes of this discussion. Another big transition that we're witnessing is vehicles going historically from things that are not connected to things that are incredibly connected but embedded within that connectivity is an opportunity to provide a whole host of services that enhance the customer experience. So that's both on the consumer side, where you can see additional new features, whether those be self-driving or applications. But on the commercial side, actually very easy line to draw to this future state, where we start to see a lot of what historically would exist across a disaggregated set of third parties to provide fleet management services start to become opportunities to aggregate those together holistically into a really tight set of platforms that can manage the vehicles. And so we've embodied all those into what we call our FleetOS platform, fleet operating system platform. And that FleetOS platform is part of what we provide to our really flagship customer on the commercial side, Amazon where we sell Amazon a vehicle, of course. But every vehicle that we sell comes with an attached subscription, which is a monthly recurring revenue, whereby essentially a set of algorithms are taking a whole host of different inputs and making really smart decisions or recommendations, recommendations around battery health, recommendations around maintenance, recommendations around vehicle usage. But all the things you'd historically do from a life cycle management point of view that often get made at best in a spreadsheet and at worst on a notepad, get made very holistically at a fleet level and can provide much, much higher levels of utilization of the fleet and essentially extend the life of the fleet as well.

One of the bigger opportunities within software and services is autonomous capability. Do you have a view on when Rivian may be able to provide future levels of autonomous capability and allow drivers to disengage or maybe not even be needed?

Yes, you sort of think of the third big thing that's happening in transportation, of course, it's a shift from 100% human operation to [ as methodically ] lower and lower levels of human operation within the vehicle or the need for human operation. And this applies in both, again, the consumer and the commercial side. And there's many ways to monetize that in the consumer side. It's a feature set that helps drive demand as we move into higher levels of autonomy, we see that as a feature set that's stand-alone revenue stream. And then the commercial side, it's absolutely from the get-go, it's an opportunity to reduce cost and to reduce burden on drivers. So what we've developed in our platform, which we call Driver+, as a set of cameras, radar, of course, ultrasonics that feed into some redundant compute modules. And today, deliver a Level 2 capability. On the consumer side, for any Rivian customers out there, you've experienced this, today, it's limited to highways. But of course, over time, we're unlocking more and more roads, and more and more types of routes. Now that's our -- what we would think of as our Gen 1 system. And one of the interesting things about this platform is it really benefits from the accumulation of miles. It benefits from identifying corner cases for which we can train and teach the system to better perform. And this is where the presence of both the consumer side of the business and the commercial side of the business is incredibly helpful. The commercial side of the business, different than the consumer side, those vehicles drive a lot more. So we think of all of ourselves with the consumer vehicle, we drive on average less than an hour a day. We're also relatively boring in our driving. We go to and from the same places. We go to the office and home, to the office and maybe our kids' school and home. In contrast, the commercial vehicle drive at a minimum 8 hours a day and at a maximum, perhaps 2 shifts. But importantly, the diversity of routes is very high. And if you look at it through the lens of a fleet, you're covering essentially every road in the United States in a period of weeks with a large fleet like what we're building with Amazon. So the opportunity for that to serve as a training platform in terms of the acquisition of tons of data, tons of corner cases to then rapidly raise the bar is really exciting. And so we sort of think of it as if you look at a mile in a commercial vehicle versus a mile in a consumer vehicle, then now the commercial vehicle is more valuable because the diversity of route is higher. And of course, you're going to see a lot more of those miles every day on a per vehicle basis.

I know this is really tough, but any kind of time frame that you could point to and when you think you may be able to get to higher levels of autonomous?

So we're going to continue to see sort of level -- I speak to -- we say that Level 2, Level 3 as if it's this crisp sort of integer like steps. The reality is the step between the Level 2 and Level 3, there's a broad band of capabilities, vast majority of vehicles on the road today at best are sort of a Level 2, Level 2 plus, meaning there's still the need for a driver to be in the driver's seat to serve some functions in some types of -- in some roads. So we will continue to expand the Level 2 capability within the vehicle by expanding the number of roads. And that's going to happen roughly every 3 weeks, we'll see more roads opened up. We do an over-the-air update that pushes out new software features every 3 weeks on the consumer side. And then we'll see some meaningful steps that come with additional hardware. So we have our next-generation hardware stack coming into the vehicle late next year, which, along with that brings -- we've talked about this in previous earnings calls. This is our, what we call our next-generation network architecture. But this brings additional compute, additional cameras that allow us to create essentially a higher ceiling for what the system can achieve. That will then allow us to move into Level 3 as we get into late '23, early '24 with this system.

That's great. When you think about the profits from software and services, do you think that can be additive to the industry profit pool? Or do you think some of these profits potentially get competed away?

I mean we certainly think they're going to be additive, and we're already seeing that in the commercial space. What's so interesting is a lot of the businesses we're talking about, whether it's fleet management, whether it's fleet Driver+, so autonomous platforms, specifically targeting commercial applications, these are things that the operators of these fleets, particularly large fleets are already looking for, and in many cases, paying for. So the ability to do these -- provide these features to provide this capability in a more cost-effective way, it doesn't require a lot of imagination. It's there. It's just a simplification of what's already being done. In the consumer side, we're creating -- we're seeing new models get created where you can buy new features, you can buy additional performance. And importantly, as we just talked about, you can buy time. You can buy access to -- I'm going to get -- on my commute to work every day, I'm going to -- 80% of that time, I'll get back and I can sit in the car and be on my phone. I can do things. So we think that time is a value. We see customers' willingness to pay for autonomy being something that's meaningful. Of course, it's a decision every company is going to need to take as to how much that additional feature set cost. And in some ways, while we think there's going to be an additional price associated with that, it's going to end up -- there's going to be some market element to that, that we have to watch and respond to.

That's great. Well, I mean, from my perspective, I mean, Rivian can stitch a lot of this stuff together, right? You've got the connected vehicles. You've got the customer relationships. You've got the membership programs. And so I think a lot of stuff there for you guys to build on.

Yes. When you look at the holistic set of experiences on the consumer side, there's some really big ones we haven't talked about charging is a huge part of the ownership experience. And today, the publicly-accessible charging networks are really, I would say, deterrent to buying an electric vehicle, particularly if you plan to drive more than a single charge in a trip. And so what we're building with what we call our Rivian Adventure Network, we see as a big enabler and a big part of long term, our membership platform, whereby being a member allows you access to our charging infrastructure. And then you couple that with autonomy and you couple that with additional features both on the performance side and some of the applications that will be running within the vehicle. We do see significant revenue, of course, with those features.

I wanted to touch on some news about last week or maybe 2 weeks ago now with Mercedes-Benz' potential joint venture there, maybe you can talk a little bit more around that recent announcement? And anything you can share on that, please?

Yes. So as you think about the commercial space and large fleets, the market for commercial vans, Europe is an incredibly important market. We were able to launch our commercial business with what we think is the ideal flagship customer with Amazon, primarily focused in the U.S. That's not to say we're not supporting European rollout with what we call our EDV 500, it's the shorter and narrower version of our van. But to really penetrate the European market in a significant way, localized production is critical. And so this has long been something that we wanted to accomplish and was part of our strategy. We, over the last several months, have spent a lot of time with the Mercedes folks and been incredibly impressed, not just with, of course, their capabilities, which are well known within the commercial space, but also just their attitude and alignment of our working styles. So we're really excited about the relationship that we're building there. And for us, it's an opportunity to really enhance the economics of launching into Europe, whereby both sides, us and Mercedes, can leverage joint investments into production capacity and rapidly reach scale from an economies of scale point of view to drive the really aggressive cost structure into that platform into those programs. It's worth noting that while we'll be co-investing in production and co-investing in creating a high volume plant, the products, of course, there's a separate Mercedes products, separate Rivian products. So the products will be separate, the technology stack around our network architecture, our software stack will be separate, but the opportunity to really leverage some of that joint investment is incredible.

That's really interesting. I'd love to spend some time on the production ramp and supply chain, if we could, please. Maybe talk about what Rivian's view is currently on the semi shortages and when they may ease? And if there weren't trip constraints, do you have any estimate of what type of production run rate the company would have been at for 2022?

That's a fun hypothetical. Yes, we're all seeing this the last 12 months have been perhaps the hard -- you couldn't have imagined the worst supply chain environment to be launching 4 different vehicles into especially those being the first 4 vehicles with the new facility. So we've talked about this quite a bit, but this has been incredibly challenging for us. And just to put some sort of context around this, if you think of a completed vehicle, let's say, our truck at Rivian, an R1T, or our SUV, an R1S, both these vehicles have more than 2,000 components coming from suppliers. In both cases, around 400 suppliers feeding those parts together or feeding those parts in. And if any single one of those parts is short, of course, we can't build a vehicle with 99.99% of the parts, 100% of the components are required. And the volume of parts coming in and the sort of turning on of this orchestra means that if one part is short, you have a bunch of stuff that still shows up and has to go somewhere, but it can't go into a vehicle because you don't have all the parts. So I'm sort of simplifying in here, but the management of the turn on of a supply chain is complex in any backdrop. In this backdrop, it's been particularly challenging because there's been surprises that are hard to predict across a variety of components, some of those traditional just with the challenges of operating in a COVID environment. But a lot of those have been centered around semiconductors. And that's been where we felt the most acute pain because the shortages have led to supply really largely based around allocation, meaning suppliers are not able to 100% satisfy all of their customers. They have to decide who they're going to satisfy the most and who they're going to satisfy the least. And for us, starting with that as a backdrop, it meant we had to rapidly go basically grab allocation, which meant someone was going to get less for us to get more. And we didn't have the working relationships and rhythms that you would have had if you were working with a semi supplier for years and years and years prior. So that took a lot of effort, to say the least, a lot of time for myself and our senior leadership team with the senior leadership teams at a wide variety of different semi suppliers. Now as that's happened, a few good things have occurred. One is we've built a lot of confidence with those suppliers. Fortunately, a number of the executive team members at these suppliers are big Rivian fans and customers, which is really helpful. So we, to the extent possible, make sure that they were getting their orders as quickly as we could. But we also -- with that, really built that operating rhythm and the trust between the teams and we've seen them lean in, in a meaningful way, really starting at sort of near the sort of end of the second quarter, which I think we talked about in our last earnings call. But along with that, we've also seen some of the supply constraints start to ease up. And it's very easy to sort of say semiconductors and sort of treat business one homogenous type of semiconductor. But the reality is there's a wide range of semis. And so when you think of constraints, they're really tied to the specific node that you're talking about. So if you're at a 50-plus nanometer node, you're more likely to be constrained than some of the more newer nodes, let's say, sub-10-nanometer. So the challenge in a vehicle is we have semiconductors across all nodes, and some of the most constrained and most painful are some of the ones that understandably are not seeing a lot of desire to invest in additional capacity because they're nearing end of life or they're not the newest technology. So it's just led to some of the more commoditized parts being some of the most challenging parts. All that said, we do see this easing. I think probably many of the business in many of the businesses you all have invested in are seeing elements of that. But it's not as if it's a light switch where it's all of a sudden not an issue. And this will continue to be something we have to pay very close attention to, something that we're focused on very heavily. We think this will persist the tightness across some of these core nodes into 2023.

One of the concerns we've heard from some people in the industry and the investment community is perhaps as the semiconductor situation eases, there can be new issues from the supply chain in Europe is one of the things in focus with the potential energy crisis. Maybe you can speak a little bit on Rivian specifically. Do you have meaningful exposure to European suppliers and other steps, Rivian is taking to mitigate any potential reductions of supply out of Europe.

Fortunately, we haven't had sort of huge challenges associated with some of what's going on in Europe. That's not to say it doesn't have impacts on us. The nature of some of the supply chains are they're so interlinked that even if we don't have components that are coming direct from Europe, the constraints that exist in Europe create constraints in some of the non-European supplied components because there's now competition for those components. So we are certainly seeing that. We're paying very close attention to it. Some of the ones that have seen the most coverage, things like wire and harnesses that are very labor-intensive that leverage Eastern European countries for assembly, fortunately, our -- all of our wire and harnesses and the labor-intensive components are coming from North America. So we don't see that as a huge risk, but it's not to say we're not paying very, very close attention to it.

Maybe talk about what the key steps are that are needed to scale production further in 2023. And are there any temporary headwinds to output? You mentioned the new network architecture or any other low-cost components, facility upgrades, things like that, investors need to be aware of?

As we -- if you look out through the end of the year, we continue to be confident in our overall guidance, confident of our overall guidance. But we're also really excited about some of the things that are coming. We've talked about our new single motor drive unit, which -- and the consumer side will use the dual motor configuration, one motor in the front, one motor in the back. In the commercial vehicle application will be used as single motor in the front. And this is a significant cost savings. These are going to drive meaningful improvements from a performance point of view, particularly around range and efficiency. And bringing up that line is something that we're in the process of doing now. We built a large expansion to our facility in our Illinois plant. So that's something that's not just bringing up the production of the motors, but then those motors need to be ingested, if you will, into the vehicle lines. So that process is going to be playing out first in the commercial side of the business through the end of the year. Along with that, we're also bringing up lithium iron phosphate battery pack. This is really important from a cost point of view in our commercial vehicles. And it's a significant cost improvement. It's also from a performance characteristic, the chemistry really works nicely in the commercial space. The cycle life aging of lithium iron phosphate really works well in commercial. So roughly 3x more resistant to wear. So really excited about that. That's also coming up as we go into the end of this year. So those are fully expected. We have, of course, been planning for those for quite some time. But those are items that we're navigating as we're also at the same time running and ramping the rest of the plant.

The company is, I believe, streamlined the number of vehicles it's working on at the moment. Is that just around saving cost and cash flow? Or is that actually helping you to better execute on some of these ramps?

Yes. We -- in our normal facility, we talked about it is if it's a plant. It's really 2 plants on 1 site. So there's a commercial vehicle line, which builds 2 different vehicles, the 700 and the 500. We call the EDV 700, EDV 500. Different length, different width between those two. And then we have a consumer vehicle line, which is the truck and the SUV, the R1T and the R1S. And launching those 2 lines across those 4 products, in our first year was -- has been -- with this backdrop, it's been very challenging to say the least. We talked about this already. Within those, on the commercial side, fortunately, there's very little product variation. So we're focusing today on our flagship partner and launch customer, which is Amazon. So the number of build combinations is very narrow. On the consumer side, we had a number of build combinations that we've worked to simplify and narrow really with the focus on maximizing production output. And we're able to make some of the decisions around simplification of trim packages and content configurations really with the knowledge of what are the most popular configurations. And to put it really simply, we just removed some of the things that were lower take rate, and we're driving complexity into the plant. That, of course, required us to communicate that thoughtfully to consumers. And I think we did a good job of being transparent with the need for us to optimize for ramp and the need for us to optimize for scale with some of those decisions.

Hoping we could revisit what I think was a pretty difficult decision that you had to make along with the broader Rivian team about sticking with the original pricing indications on preorders even as the costs were going up materially. I mean, can you speak a little bit more on what led you and the Rivian team to make that decision? And what has feedback been from customers?

Sure. So just to wind the clock back in -- beginning of March of this year, we announced a price increase and we wrongly made the decision to apply it both the future customers and existing preorder customers. And it was clear very quickly that we made a mistake in breaking trust with customers that had an expectation on a certain price level that we were increasing the price. So we took the hard decision to honor -- reflect the original pricing that those customers had made their configurations around. And that was a hard decision, of course. And it was something we very publicly admitted fault in, and hard for all of us, hard for us inside the organization, very hard for me. But it's a great learning opportunity for us is incredible. And one of the things that came out of it was really to activate some of the direct dialogue we have with customers so that when we navigate changes like this, content changes, trim package configurations, things of that nature, to make sure those great relationships we have are being mobilized to get feedback as we go through that process. So some of our internal customer councils, some of that work has really been solidified. We see it. We see it with much cleaner rollouts of changes like what I just talked about in some of the trim packages that we've seen in the last few months. But the other thing that we've shifted learning from that is when we had originally designed our configuration process essentially the way we were accumulating preorder demand. We didn't do it contemplating this level of demand backlog or this type of an inflationary environment. So a customer come in and configure a vehicle and build their exact combination. I want a blue vehicle with a black interior and these wheels and this off-road package. And so we were creating the perception of a very locked-in build combination, which just doesn't work in the operating environment that we're in today, where the thing you think you're going to order today, we may not make 2 years from now when you come up in line. So the length of backlog is -- the scale of our demand is stronger than what we had anticipated. So a couple of months ago, we switched to what we now call a reservation process, whereby you reserve a slot, you reserve a place in line. But you don't make your configuration until much closer to your delivery date, which allows your configuration to be made around the then current pricing and importantly, around the then current content offerings. So the current drivetrain offerings, current battery offerings, current pricing. So that shift was something that we were excited to roll out and is now on a go-forward basis. It is a larger and larger percentage of our demand backlog becomes post March 1 prices and post-March 1 configurations or post March 1 reservations, this gives us a lot more flexibility and I think allows a much easier process with customers.

It's exciting. You've got vehicles on the road. We were talking just before this started that you haven't seen a lot of them around now. So that's great, but they need service. So maybe you can talk about how the service organization is ramping relative to your expectations?

Yes, that's a really important question. And it's an area of the business where the need to forward invest creates -- for all of you, as investors, of course, creates the challenge of seeing a lot of investment going to building a lot of infrastructure before that infrastructure becomes COGS, before it's running and providing service operations. And we see that investment really manifest in a few ways. We see physical brick-and-mortar service locations. And so by the end of the year, we'll have approximately 30 of those in the U.S. And then we also see the build-out of what we call mobile service vans and trucks. And so we have a lot of those. And a lot of our service actions can be done in your driveway, it's your place of work, but essentially done in a mobile fashion done. We meet you where your vehicle is. And so the build-out of brick-and-mortar service infrastructure, coupled with Rivian-owned brick-and-mortar service infrastructure, coupled with Rivian-owned mobile service capability, which represents the vast majority of service activities, coupled with, of course, the team is something we're doing as quickly as we can. So it's building rapidly. But it's not as if you can press a button and have every single market and every single ZIP code covered immediately. This does take time. And our brand is about exploring. Our brand is about going places. So some of the most acute challenges are someone buys a vehicle in L.A., which is great. We have lots of service coverage in L.A. But decides to drive to middle of, I don't know, let's say, middle of South Dakota. And middle of South Dakota, we don't have a service operation close to. So we're seeing some of those pain points. Using an extreme example, that's not an overly common occurrence. But you can quickly understand some of the challenges of infilling service infrastructure. Now one of the advantages we have is our service infrastructure build and the utilization of that service infrastructure is benefiting from the need to build that on the commercial side. And because we have a single, very large customer on the commercial side as our starting customer, it allows us to be very coordinated. So the markets that Amazon is unlocking and we're introducing vans into are coordinated with the densest consumer markets for us as well. And that coordination is proving to be -- I mean it's incredible. It's really helping us forward invest in a thoughtful way. But as we think about the next 18 months, this is going to be a big build. I mean, thousands of service techs, hundreds of additional service vans and vehicles, a lot of additional service of brick-and-mortar locations. So that's going to be something we'll continue to see.

There's a packed audience here. So I'm going to ask one more question and then give 1 or 2 people a chance to ask you a question after that in the remaining time. But one more for me. Is there anything that you believe could surprise industry observers or investors over the next year?

I think we've got a really fun year of exciting surprises this year just in terms of backdrop. But looking out at the next 12 months for us, the thing that we're most excited about, I was just talking with some of our team yesterday, is the pipeline of additional technology that we have coming. So on the -- we've talked about our next-gen network architecture, which brings with it additional compute, additional sensor set. It also brings with it our new family of drive units. So we'll be internally called Enduro. This is the single motor driving I talked before. The range implications that, that brings, coupled with some of the new battery packs that we have coming. And then, of course, the host of software features that are being rapidly developed, and we're sort of seeing the rhythm of every 3 weeks, something new or cool drops. We're excited and we think the market will be surprised at the speed at which we introduced some of these new technologies, which the nature of where we are today is not a good way to think about where we'll be in terms of product set a year from now. So from a competitive point of view, from a market point of view, we're really bullish on where the product is going. And here, I'm just referring to what's been -- what we see so far. So that's on the R1 platform, and that's on our commercial van platform. Of course, we also have work happening on future platforms as well, which we'll start to talk more about, which we're, of course, really excited about.

That's great. If you have a question, please. Yes, we have a question over there. I think there's mic runners. Wait 1 second, please. Why don't you say it and we can repeat the question if we need to.

[indiscernible]

So I'll just repeat the question, make sure everybody heard it. So the question was just around the IRA bill and what that's going to translate to in terms of production sources for batteries and how we think about it as a company.

Yes, it's a great question. And I do think we are -- we as an investment community, I think, as an industry are still fully digesting the implications of this. But in our view, this is an incredibly powerful piece of legislation that's going to dramatically shift what the topology of battery supply chain looks like, not just the U.S. but globally. And it's going to -- we're going to see that manifest through both battery cells and where the cells are produced. So we're certainly going to see more investment in cell production in the United States. You can imagine that every car company has spent the last month really focused on analyzing what the investments are going to be around battery cell production. So that's us on in-house cell technology as well as some of the JVs and partnerships and coinvestment opportunities that are in front of us. And I'd say that's true for the whole industry. The second piece is the source of materials. So everything from lithium hydroxide, lithium carbonate, nickel, some of the core materials that go into the cells. And what we see happening is there's going to actually be some bifurcation between raw materials that satisfy IRA requirements that are produced in the U.S. or produced in a country for which we have a free trade agreement with, Australia being an example, Chile being an example. And there's going to be price differentiation between those two because of the value of having IRA-compliant raw material. And so I've spent a lot of time with some of our upstream raw material suppliers. And I don't think the world has yet figured out how to price for that. A lot of these spaces take the lithium space, it's not a material supply space that's mature enough to even have a commodities market, let alone sort of a bifurcated commodities market with IRA compliant and non-IRA compliant. So there's going to be a tremendous amount of work and us and others are spending time dissecting this, working with policymakers to think about how do you even monitor this. Traceability in a lot of these commodities is not an easy thing. Even from an ESG point of view, it's hard from an IRA point of view, it only adds another layer of challenge. So with that said though, we are going to see a more complex upstream raw material environment, sources that are produced either domestically, which is very, very little, or through countries that we have free trade agreements with are going to become more valuable. And competition for those supply -- for that supply is going to go up. And so I would say you're going to -- for us, we're very much focused on relationships across the supply chain, the types of partnerships, the type of everything from offtake to offtakes with ceilings and floors and pricing. So there's a lot of new innovation that's happening around pricing and supply in the upstream presell space.

That's great. Well, unfortunately, we have run out of time. RJ, thank you very much for joining us.

Thank you.