00:00 Rivian is a very interesting new player in the U.S. automotive market.
00:06 Like Tesla, it's a pure EV company started by RJ Scurringe actually several years ago,
00:11 but it's in production now for about three years.
00:14 It arrived as the best funded automotive startup in U.S. history and probably in global automotive
00:20 history, raising $11 billion from private investors and then another $13 billion when
00:26 it IPO'd in 2021.
00:29 It was a bit slow in its launch because it launched right in the middle of the COVID-19
00:36 pandemic.
00:37 It, like other companies, was hit by the global supply chain crisis, which made it very difficult
00:42 and very expensive to get electronic parts.
00:45 The company, though, has weathered those storms and actually expanded pretty quickly last
00:52 year.
00:53 But the market wants a lot more.
00:55 The stock has fallen precipitously about 90 percent from its IPO in November 2021.
01:02 It's now trading for less than 20 bucks a share.
01:05 It was once trading at nearly $130 a share.
01:08 So it's really run into some problems in the market.
01:11 And that's because the market wants to see a lot of growth very quickly.
01:15 It did launch three vehicles in a very short amount of time.
01:20 The R1T pickup truck, the R1S SUV and its electric delivery van, which has been used
01:26 by Amazon, but it's now being sold to other commercial delivery companies.
01:32 The company is sort of at an interesting crossroads now where it came to market as a premium EV
01:40 manufacturer.
01:41 It's now getting ready to reposition and sell a much more broadly affordable EV, the R2.
01:50 That will also take it into direct competition with models like the Tesla Model Y and the
01:56 Ford Mach-E, the Kia EV6, all of which are sort of priced in that mid to low $40,000
02:02 range.
02:03 So I wanted to go up and meet with RJ at Rivian's Palo Alto tech offices to sort of catch up
02:09 and see how things are going.
02:15 If you look at the average transaction price of a vehicle, any vehicle in the United States,
02:20 it's around $48,000.
02:22 So we think that's a really important sweet spot to be in that range to really create
02:27 a viable option for customers that are coming out of combustion powered vehicles into something
02:31 very different.
02:32 As a company, the R1 product was intended to act as our handshake with the world.
02:38 So it introduces the way we approach technology, the way we approach product decisions, the
02:43 way we approach the positioning of the brand and the company.
02:46 But really, from a price point of view, it limits the number of customers that can actually
02:51 access the brand.
02:52 And so R2 really greatly expands the relevance of Rivian to a much broader set of addressable
02:58 market consumers.
03:01 And so this is incredibly important.
03:03 I've never been as excited as I am about a product as I feel for R2.
03:08 We're going to see 100% of new vehicle sales in the not too distant future be electric.
03:12 Now whether that's five years from now, 10 years from now, or 25 years from now, I think
03:16 that has a lot to do with both policy, which is certainly driving towards that, but also
03:21 creating really interesting choices for consumers.
03:25 And today we have a lack of choice in the market.
03:28 I think that has a lot of impact on the overall rate at which we can grow.
03:32 It's one of the reasons we're so excited about R2.
03:35 In the R1 price category, we've really done a great job of pulling a lot of customers
03:40 out of combustion powered vehicles.
03:42 Well over half of our customers have never owned an EV before.
03:45 And the opportunity in that lower price segment really exists for something that's very different,
03:50 very unique to draw new consumers into electrification.
03:59 From an adoption point of view, customers need to understand really what an electric
04:04 vehicle represents in terms of changes to your everyday living with a vehicle.
04:09 And one of the biggest is that you have effectively a refueling station in your garage.
04:14 So say when you think about filling up your car, if it's a combustion powered vehicle,
04:17 you go to a gas station.
04:18 The vast majority of charging actually happens in your home.
04:22 So somewhere between, depending on the brand and the vehicle, somewhere between 90 and
04:25 95% of charging is typically happening at home at night.
04:29 And so the infrastructure that's being created, we're building a charging infrastructure,
04:34 we call it a Rivian Adventure Network.
04:35 Tesla's done a great job with its supercharger network.
04:38 We're going to have our customers be able to access that network here very soon.
04:41 That infrastructure really supports the ability to go on longer trips.
04:45 So to go from San Francisco to LA, New York to Washington DC, these types of trips.
04:51 For us, reliability and quality are paramount to how we're developing our products.
04:55 And with a lot of new technology, new features in the vehicle, that's even more important.
05:00 A lot of times these will be customers, as I said, first exposure to an electric vehicle.
05:05 So the way that we're managing quality in our plant and the focus we put on it, and
05:09 then the way that we design quality in from a reliability point of view is really key.
05:13 And so we've built sensors into the vehicle with the specific purpose of acting as a prognostics
05:19 platform to predict service issues, damage to the vehicle, such that we avoid customers
05:27 ever being surprised.
05:28 So if there is something that's gone wrong, if the vehicle's been off-roading and something
05:31 was damaged, we can sense that and we can then schedule preemptively a repair of the
05:37 vehicle.
05:38 If we can do everything we can to try to understand customer sentiment, so we have lots of ways
05:45 of interacting directly with user groups, as well as looking at some of the third parties
05:50 that do assessments of customer satisfaction, we were really pleased to have in our first
05:55 year of production with our first product, JD Power, rank Rivian as the number one vehicle
05:59 from a customer satisfaction point of view, with the highest likelihood of a repurchase,
06:04 which is a great indication of how the ownership experience is and how much our customers are
06:08 enjoying the product and would like to buy another Rivian in the future.
06:12 We are constantly looking for how we can improve the vehicles, and one of the things we really
06:16 have leaned into is the ability to continually update the software in the vehicle.
06:20 And every three or four weeks we have an over-the-air update that adds new features, new content,
06:26 and those feature sets and improvements are coming from feedback.
06:30 So if customers are saying, "Hey, we really like this, this, and this," we sit with our
06:33 software team and we say, "Well, let's go develop some new features that deliver to
06:38 that."
06:39 And it's a very dynamic list.
06:41 Myself and our head of software, every week we sit down and go through what are our priorities,
06:45 and that priority stack can be refactored based upon what we're hearing from customers.
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