And of course, at the scale of R1, it has a high fixed cost associated with it, but with R2 coming online, we really see significant structural cost advantages by owning these areas and by building these areas in-house.
Dan Levy: Thank you. That’s helpful color.
Operator: Thank you. Our next question comes from George Gianarikas with Canaccord Genuity. Your line is open.
George Gianarikas: Hi. Good afternoon and thank you for taking my questions. I think you mentioned in your prepared remarks that you’re bringing the lines back up. Curious as to what you can share in terms of the experience there and also how the new supply relationships have gone? I know you’ve decided to switch out some suppliers and any detail there would be appreciated. Thank you.
RJ Scaringe: Thanks, George. It was interesting. At the start of the month at the start of April, we stopped production of our launch vehicle and walking through the plant and seeing it without a single vehicle on the line was a unique feeling. We hadn’t seen that since we started production and sort of gave you a bit of a feeling in your stomach as you walk-through. And the precision in the execution of integrating so much new equipment, new process design as you saw in the letter, hundreds of new robots and hundreds of updated or modified robots into the plant to allow the plant to run at a 30% higher line rate. And to have the orchestra of all those activities both in the plant and then across our supply base to have a very large number of new suppliers come on-board and a significant portion of the bill of materials change over to these new suppliers and updated part designs to have executed that full effort with the intensity and the focus to drive that efficiency into the plant and into our overall COGS structure.
It was really, it was an exciting April to say the least. And it’s amazing to see the plant running again, to see the changes we put in place solving some of the, some of the challenges that existed in the line before, solving some of the areas where we felt the costs were not appropriate at the vehicle level. And we’re excited to see those changes manifest in the improvements in our cost of goods sold, and of course, in the roadmap to our positive gross margin?
George Gianarikas: Great. And maybe as a follow up, I know you had mentioned that R2 is coming in the first half of ’26. So what are the opportunities to potentially pull that forward in terms of timing? Thank you.
RJ Scaringe: The decision to launch R2 out of normal was to those many things that drove it. Claire talked before about the $2.25 billion in capital savings associated with it. But beyond that and what’s harder to measure in the numbers was just the ability to leverage the existing teams and the operations that we have in normal. And those teams it’s taken us a lot of time. We’ve built strong team, strong leadership at the shop level. And I spend a lot of time at the plant, a lot of time on the floor with the team, with our team members and that buildup of training capabilities, learning capabilities, leadership at the team leader, group leader, manager and director level across the plant is something we’ll now be able to leverage and it takes not only risk out of the R2 timing, but allowed us to pull R2 into the — into the first half of 2026.
Now there’s not a single person within Rivian that isn’t trying to find ways to pull R2 forward, but we would love to see R2 sooner. The amount of excitement for the product is palpable, notwithstanding the excitement that we all have for it on our own, but we also want to ensure that the product when it hits the market is exceptional and making sure our supply base is robust, making sure there aren’t supply issues as we launch is really important to ensure we have as smooth of a launch as possible. Of course, learning from the R1T launch, the R1S launch, the EDV launch, the relaunch of EDV with post cost downs and now the relaunch of R1 post cost downs. We’ve gone through a number of launch events with each one getting better and stronger.
And the clarity we have on the importance of robustness of the supply chain, both from a quality point of view, but also from a ramp efficacy point of view that is driving us to make sure that as we think about that 2026 launch, it’s not just what we can control in our plant, but it’s through all the many relationships across our supply base to ensure we’re ready to step from not producing R2 at-scale to producing at-scale very quickly.
Operator: Thank you. Our next question comes from Alex Potter with Piper Sandler. Your line is open.
Alexander Potter: Perfect. Thanks, guys. So I’m wondering if you could talk about what the next, call it, three months to six months in normal will look like, now that you’ve gone through a lot of the heavy lifting with the retooling. To what extent is there any remaining execution or ramp risk with the plant as it exists right now?
RJ Scaringe: Thanks, Alex. Coming out of the launch and I was just online with the team going through how things are running post relaunch. The energy within the plant is palpable. The excitement to deliver on improved quality and improved cycle time is real. And with the changes we made around the overall efficiency, the layout, the efficiency material flow, but we’re really excited to see that pull forward into reduction in cost of goods sold. Now with that, it’s not as if the plant turns back on immediately at full rate. So there is a ramp associated with it. We’re following a prescribed and planned ramp of the facility. And that as I said in my previous discussion, that ties to the suppliers. So we also need to make sure our suppliers are ramping at the same rate.
And given the number of changes we’ve made with our supply base, those suppliers in many cases, new suppliers are ramping along with us. And so that, as that’s all happening, we’re also really remain focused on ensuring that the plant in normal is also getting ready to ingest R2. And so there’s a number of investments we’re making into normal to ensure the R2 ramp is seamless and as capital efficient as possible as well.
