Rivian Automotive, Inc. Q4 FY2025 earnings call

Management Statement and Operational Highlights

• 2025 was a year focused on execution to scale the business, with progress on the R2 technology roadmap, improved customer experience, and steps toward profitability.
• The R1S was the best-selling premium electric vehicle above $70,000 in several states. R2, the first mass-market vehicle, is set for customer deliveries in the near future, addressing the lack of high-quality EV choices under $50,000.
• At AI and Autonomy Day, Rivian showcased innovation in hardware, software, and autonomy, including the RAP1 chip and Universal Hands-Free feature with doubled customer utilization.
• The joint venture with Volkswagen Group advanced, with vehicles undergoing winter testing, and software and services performance remained strong, contributing significantly to revenue.
• 2025 was Rivian's first full year of positive gross profit, with adjusted EBITDA at the favorable end of guidance due to improved gross profit and cost management.

Segment Performance

• Automotive Segment: In the fourth quarter of 2025, 10,974 vehicles were produced and 9,745 were delivered from the Normal, Illinois facility, generating $839 million in automotive revenue. Automotive gross profit was negative $59 million in the fourth quarter, an improvement of $71 million from Q3 2025 due to a higher mix of commercial vans, resulting in the lowest cost of goods sold per unit in Rivian's history.
• Software and Services Segment: Reported $447 million in revenue and $179 million in gross profit in the fourth quarter. Approximately 60% of software and services revenue, or $273 million, was attributable to the joint venture with Volkswagen Group. The segment also saw strong growth from marketing and vehicle repair and maintenance.

Guidance

• Vehicle Deliveries: Expect to deliver 62,000 to 67,000 total vehicles in 2026, with 9,000 to 11,000 deliveries per quarter in the first half of 2026.
• R2 Production: R2 launch variant production starts with a single shift, with a second shift added toward the end of 2026.
• Gross Profit and EBITDA: Anticipate gross profit to increase year-over-year, but the complexity of R2 launch will negatively impact automotive gross profit in Q2-Q3 2026 before benefiting in Q4. Adjusted EBITDA loss for 2026 is expected to be between $2.1 billion and $1.8 billion.

Risks

• Production Ramp Challenges: Potential bottlenecks in ramping R2 production, including supply chain issues and ensuring timely component availability.
• Market Adoption of Autonomy: Uncertainties regarding customer adoption of new autonomy features and the impact of raw material cost fluctuations on margins.

Q: On the cadence of vehicle deliveries, is the upside in the second half from R2?

A: First deliveries of R2 in Q2, first half 2026 expects 9,000-11,000 per quarter, with the second half ramping R2, commercial vans, and R1.

Q: On R2 volume assumptions and ADAS hardware, how much does lack of new hardware impact deliveries?

A: Customers can take delivery before new ADAS hardware, as many are excited for the vehicle despite upcoming autonomy upgrades.

Q: On VW relationship and software services growth, how does VW impact software services revenue?

A: ~60% of software and services revenue is from the VW joint venture, expected to remain significant in 2026.

Q: On R2 pricing and cost structure, any impact from raw materials?

A: Adjusted EBITDA guidance accounts for raw material cost increases.

Q: On autonomy features like Universal Hands-Free, progress and future updates?

A: Universal Hands-Free expanded miles, later this year enabling point-to-point driving, with future steps to hands-off eyes off and Level 4.