Rivian CEO RJ Scaringe on R2 launch day: level 4 autonomy by 2028, 200 build combos vs hundreds of thousands on R1

Speaker 1: You're not just you're not just consuming you're you're not just consuming salami. You're setting records. You should be the next world record eater of salami or whatever. This is good. Anyway, we have our next guest, RJ from Rivian with us in the TV Pin Ultradome. RJ, how are you doing? Welcome back.

Speaker 4: Good to see you guys. Thanks for having me on. Thank you so much for hopping on. Congratulations

Speaker 2: on the launch. Look at these pictures. This is a great great setup.

Speaker 1: It's in your blood. Are are these all you driving go karts as a kid? It's actually a mix. There's one of me and then they're mostly my kids. Oh, that's amazing.

Speaker 4: Yeah. But it's it's cool because it's like and some of them it's the same go kart that I was driving and then there's a few other go karts. Okay. But but I'm seeing something very controversial behind you. One of those pictures looks like it's gas powered. What's going on? Yeah. Oh, you know, I was That was the spark. Had to fix so there weren't electric go karts back then. Oh, okay. Okay. Have you been tempted to make a Rivian

Speaker 2: go kart?

Speaker 4: My guess is that good? We have we actually have an electric go kart that we bought now. Okay. Cool. But too busy I know. But think of the Rivian if I assembled it. It can't possibly compare to the Rivian equivalent. I agree.

Speaker 1: But far too busy to work on go karts because you're launching the r two today. Take us through it. How is it going? What does this launch signify for the business? And what was, like, the key the key idea value prop? How long has this been in the tank?

Speaker 4: Well, I mean, the idea of r two has been sort of part of the business since the very, very early days. And, essentially, the product strategy that we have is launched with the flagship set of products. That's our r one s and our r one t. Yeah. We launched those in late twenty twenty one, early twenty twenty two. And that was really the think of it like the handshake with the world that established the brand, but these are these are expensive products. The average selling price in r one is over $90,000. Yeah. So r two is really our mass market product and what like, the whole business has been designed around this because it's what brings us scale. And so, you know, that's not just getting the vehicle ready that you just show the images of, but also getting the rest of the business. So service infrastructure, distribution infrastructure, obviously, manufacturing footprint suppliers. But today, we start deliveries to external customers. We've been delivering to internal customers, employees for a while, but these are the first external deliveries starting today. The ultimate employee perk. I love it.

Speaker 1: Why is 330 miles of range the right number? Like psychologically, you could see sort of like the inverse of the nine ninety nine and go three zero one or three zero five. But three thirty, is there some rationale for that? Is it bounded by the batteries or is it bounded by the lifestyle of your customers? How do you land there?

Speaker 4: It's a good question. I I I have not been asked that question at why three thirty versus three zero one. Yeah. Well, it's actually a it's an output rather than an input. The input was we needed to be greater than 300 Yeah. On all configurations. And so Oh. We have an off road tire that takes the range down to three zero seven. Sure. And then the on road tire gets us to three thirty. At the beginning of the program, you're sizing you're making a bunch of decisions around, like, battery size, target for vehicle weight, target for vehicle efficiency. And in the end, we ended up exceeding a number of targets such that the the the least efficient version is 307 miles, and the most efficient version, which is actually the the base version with rear wheel drive, is 345, and then the all wheel version, which we're launching with, is, is three thirty.

Speaker 1: Do the door handles actually matter? I've become completely normalized to the flat door handles. I prefer them now. They were controversial early on and the excuse that was, you know, given by anyone who was doing flat door handles was, well, it'll give you more range. But is it like 15 feet of range? It just doesn't feel like it can be 20 miles of range. It's little more than 15 feet. It is. Like I like range. It's good. It saved the energy. But at the same time, it just feels like of all the things that you could change, that can't be that big. But is it is it actually material or is it just like the flat It's not I mean, it's not gonna make or break the vehicle. It it also is a design decision. It it allows,

Speaker 4: you know, the the surface language of the vehicle to be carried through the handle. So it's Yeah. As you said, it's a lot of folks who have adopted this type of a handle. Even even in non EVs, you're now seeing them. Yeah. Yeah.

Speaker 1: I I was so fascinated. Like, one of the most impressive things about Rivian is the fact that the full size SUV and the truck launched basically in the same year, like very, very quickly. I don't know the exact shipping dates, like that is shipping one car is crazy, but shipping two vehicles the same time is obviously, there are redundancies and But walk me through the decision not to do a small truck as fast. Is that market demand? I'm not really sure where the market for small trucks is, but take me through the thinking.

Speaker 4: Yeah. I mean, to your point, we we actually launched the the r one t, the r one s, and we have a commercial van as well that we produce for Amazon. Big customer. Yeah. And there's a whole launch within three months of each other. That's crazy. And, you know, the classic question of, like, what would you do differently if you were to build the company again? And, you know, and often you try to give a non answer to those kinds of questions, but the but the honest real answer is don't launch three cars at the same time. Gotcha. That is, like, the singular biggest, thing I would change. It was it was enormously complex to ramp up the supply chain and get the you know, especially this was during COVID for one vehicle, but to do that times three, we were, like, like, choking on it. Mhmm. And so learning from that with r two, we have a launch edition that we're launching with. We have a narrower set of colors we're launching with. There's actually the whole r two program only has has less than 200 build combinations. Wow. And just to put that into perspective on r one when we launched, this is say this is a learning. We had hundreds of thousands of different possible build combinations we Yeah. And so, yeah, in theory, you don't build everything, but, like, if you click every box in different ways, like, there's enough combinations that we had to support that level of complexity. And so r two is this extreme exercise in being very aggressive on driving cost out of the vehicle in every possible way and learning from some of those challenges on r one. So to your question, there's lots of cool variants we can imagine of r two. Yeah. And any of that platform, including things we've shown, like, have an r three. Yeah. But as tempting as it was, and I I guarantee you we had lots of debates, I've been tempted. Yeah. We decided not to pull r three in to launch at the same time as r two, but to let r two launch, ramp,

Speaker 1: have some breathing room, and then bring r three in. But I can still do that aftermarket. If I want to wrap it in corporate SaaS logos, you're not going to sue me? I can do whatever I want aftermarket?

Speaker 4: Yeah. If you want to wrap it in

Speaker 1: Make it look like a NASCAR for Silicon Valley. Maybe that's I don't know if I love it, but you can do it.

Speaker 2: You'll yeah. Last time you're on, you you talked about like just how different, you know, Rivian is Mhmm. The way that you guys have built it from the ground up to be, you know, a singular singular, basically, computer, singular software system, all this stuff. And and the advantages that you get from that maybe taking a legacy car design and then trying to electrify it. Yeah. With the recent with with a number of high profile EV launches Mhmm. In the last, let's say, this year, I would love for you to kind of like revisit that and just because I I thought it was a fascinating explanation and particularly interesting now as we've seen these other manufacturers just try to enter the the category and come in with products that I don't believe are are incredibly compelling.

Speaker 4: Yeah. Well, there's there's a lot embedded in that. I think at the core, there's a number of things that more by coincidence than by necessity when for a new EV, let's say, a Rivian, and and I'd say Tesla falls in this category. When you architect a vehicle from a clean sheet, you end up approaching a number of things differently. Obviously, there's the battery and electric drivetrain that's different than an engine. But I'd say the the biggest other difference that is probably not appreciated or talked about as much, but it manifests certainly in terms of customer features and things like over the air updates is around software and electronics. And the software and electronics that exist in really every vehicle from a legacy existing manufacturer, so it's every manufacturer outside of a Tesla or Rivian. What what they look like is is really a reflection of a long, multi decade evolutionary track, which started ironically with the first computer that made its way into a car, which was to power or to or to drive the fuel injection system, which is somewhat ironic. But, you know, prior to, you know, early nineteen sixties, cars were completely analogs. There was no there was no microcontrollers. There was no computers in the car. The first computer came in, and it was specific to the domain of fuel injection. So, that was designed to support, you know, just putting the electronics in for the fuel injector. Subsequent to that, you know, starting in the nineteen sixties and all the way through today, as different functions started to have software capabilities embedded in them, let's say, seats that have memory or power windows that have intelligence to not, like, crimp your fingers or HVAC systems that had settings and things that were not just mechanically controlled. Each of those functional domains had a little ECU that was created for by the supplier. And over time, this has grown. I I describe it sort of like a field of weeds. And so it's not a planned garden. It was not architected. You ended up with what you have today in most cars, which is, sometimes upwards of a 100 to a 150 little computers, what we call little electronic control units that correspond to a very specific function or domain. Yeah. And those little computers have their own little island of software written by a separate team. Often, it's not even written by the supplier. It's written by a third party, often overseas, often in India. And so you have this, like, mess, like, apps truly a mess of software where you have multiple different, you know, little islands of code, none of which are coordinated, all of which now to deliver complex features that have things working together require a lot of coordination between suppliers. And it's for precisely that reason that you see very few significant over the air updates on traditional cars Because to, like, let's say, update the sequence of events that occur when you walk up to the car, you know, where the the horn makes an audible noise, the door unlocks, the HVAC comes on, the seat adjusts, the steering wheel adjusts. Let's say there's a the music adjusts inside the car, the battery system, you know, comes to life. All those are different controllers. So just to change the order of events, it's very hard. You gotta coordinate, like, between 10 to 15 companies, in a classical sense. And so what we built is something where you can solve it all that compute onto a very small number of computers. We now call those zonal controllers because they work in a physical zone of the car. And it runs one OS, which we built, and that single OS allows us to very easily change things. And that that architecture is what underpins not only Rivian's, but we did a a large $5,800,000,000 software licensing deal with Volkswagen Group to take that technology and help them on their journey with their future electric products. That's very cool.

Speaker 1: Thank you. So the Re explaining. So the R2 boasts more AI infotainment compute power than any vehicle currently available in North America. And I'm interested with the backdrop of WWDC. What does the future of AI infotainment in a vehicle look like? Because you're starting to bump up against the ability to run on device models, I'm sure. And Yeah. There's this trade off. We saw it with Apple where there's some stuff you can do on any phones, basically. Any there's other things you can do with 12 gigs of RAM just on the latest phones. Other things that's going to go to their cloud. I'm sure you have, you know, a series of abilities at But varying when I get to the examples, I don't necessarily know that, like, people were sort of laughing at you get a text message that asks you a question and it summarizes and it just asks you the same question. And you don't you probably don't want to be the CEO that's going around to the employees saying like stuff AI everywhere. Like people are going to want to you know have AI decide how far the window goes up or the windshield windshield wiper's gone. But there probably are interesting ideas. So how do you see that evolving? What's the role of the car as a compute source versus cloud? How do you think about that?

Speaker 4: Yeah. Well, I'd separate the features that we deliver from the platform. Okay. And the way we've architected r two is thinking of it really as a platform. So we want to embed in it enough headroom for features to grow dramatically and for things to evolve in ways that even today we can't imagine. Yeah. And so on everything that's infotainment related, putting a really powerful turner tops, you know, platform into the vehicle allows us to run much larger models in the vehicle than, like, let's say what we can run-in r one. So r one, we just launched a Rivian assistant. And for the we can run a small model on board, but for anything that's, you know, more complex, we have to go up to the cloud because we just don't have enough pewd in the vehicle to be able to run these larger models. R two is quite different. So r two has a much higher headroom, so we can run a lot more a much larger model in the car. And it it is it helpful because it reduces latency? So suddenly you can have much more, you know, natural back and forth conversations without having to wait for things to send up to the cloud and back. And so we built that in knowing that we're gonna add more over time. What we have today is a better version of our Rivian assistant that'll be going into the car. We have that'll be actually continually getting updated as well and continually getting better. And you'll start to see, as you just described it in the case of iPhones, you're gonna see differences in, like, our gen one our gen two r ones and our gen one r ones aren't gonna have the same hardware capability that we have with r two.

Speaker 1: How are you thinking about self driving and what the next few years looks like there? I've been Yeah. Surprised that we've seen this, like, insane capital war in the foundation model companies and and hyperscalers spending hundreds of billions of dollars. And Yeah. Yeah. We saw that a little bit in automotive years ago with the Cruise acquisition by GM and there's been Yeah. Initiatives and the technology is on a good track, but it feels no one has self driving psychosis. Like no one no one is saying that like, oh, every automaker is gonna go bankrupt because they're investing too much in this. Everyone's like, yeah. The the self driving is getting better and we're on a smooth path and in a couple of years, the cars are you're gonna be really not touching the steering wheel at all. But is that is that conscious? Is that based on the research trajectory? Do you expect that to accelerate? Like, how are you thinking about self driving these days?

Speaker 4: It's a great question. And it's important just to talk about, like, the history of self driving and how much the technology has changed. And so self driving has been a I mean, it's been a topic of science fiction for for many decades, but it's been a topic of of real applied work, you know, since, like, early twenty ten. So call it, you know, 2013, 2014, it started to emerge as something that people were working on. And the way those early models were being built, And and that this was true up until 2022, 2023 where you would essentially take the the knowledge of driving and try to codify it. You try to put that into code that would then have you'd have cameras and a perception stack, maybe cameras plus radar plus LiDAR depending on the vehicle. Yeah. But that would perceive the world. It would handle that information to a planner, the planner's code that's representing

Speaker 1: human knowledge or driving that's coded by humans. Yeah. It was almost all c plus plus, and it was, other than other than processing management. Is, like, highly rules based environment. Yeah. And then output,

Speaker 4: controls Yeah. Control directives to the vehicle to then steer, brake, accelerate, what have you. That approach has been completely superseded Yeah. By a foundation model based approach. So instead of trying to write code to represent driving, we're training these multi billion parameter models. And when I say we, I mean the people who are doing this correctly. Would say, to be honest, it's not everyone falls in this category, but the right way to do this is clearly to build a large neural net multi billion parameter model where you're training the model with the benefit of millions and millions of miles from vehicles being driven. That model is getting better and better over time through the learning of the installed car park. And so the way we designed R2 was we wanted to put a lot of compute into the vehicle, so a lot of inference. We want to have a really robust sensor set that's not just there to drive the car, but importantly allows us to collect a lot of data and to allow us because we want to have really high data quality to allow us to catch up rapidly where Tesla is and ultimately be a leader in the path to level four. So the path to the idea of the vehicle driving empty. You know, are you sitting in the back seat or picking up groceries for you or dropping you at the airport? And so the timeline for us on that is getting to level four in 2028. And backing up from that, we have point to point capabilities, which will launch later this year. So that's you're in the car. You're in the driver's seat. You type the address in. The car will completely navigate to that address. Your hands are not on the wheel. You're still, you know, alert and aware of what's happening in the driver's seat, but you're not driving the car. That's what we call as hands hands off, eyes on. Next year, go level three, which is hands off, eyes off. So you do all that, but you no longer have to look at the road at all. You can be on your phone. You can be reading a book. But you have to be there in case the car asks you to take over. Right? Exactly. And that's that's level three. And then level four is where the car won't ask you to take over in any situation. It's it's fully on its own. Are there any But but one thing I really wanna make clear, if if if everything I just said, was ignored, the thing to keep in mind is when you think about, like, technical progress on a topic, it's it's very natural. It's like human nature to look at previous progress and use that as a way to extrapolate what future progress is gonna look like. And the reason we so naturally do this is it's generally true. So if you look at, like, how we're building homes today, we can look at the last five years and say, well, that's probably how we're gonna build homes for the next five years. Yeah. That ceases to be true when you have these big technical inflection points, and those don't happen often. Like, so the like, the invention of semiconductor, a big tech inflection point. In the case of autonomy, the invention of what we think of today in terms of modern AI, so transformer based encoding, the idea of these large scale foundation models has completely shifted how autonomy is being developed. And so I would characterize it as the progress that was made over the last five years, let's say, from 2021 to 2026, is not at all representative, not even a little bit representative of what I think the progress is gonna be over the next five years, so from 2026 through 2031. And I actually think that the progress is gonna be faster than society will be able to ingest. And so today, you know, if, you know, we're in San Francisco, it's it's easy to go, like, hop in a Waymo and experience this. That's a, you know, it's a tourist attraction for people that don't live in San Francisco. Yeah. That is just gonna be cars. Like, I I mean, in my view, I think, like a car that you buy in 2030, 2031, you will expect it to have capabilities similar to that. And it's sort of hard to, like, believe it because you're like, oh, we've been saying things like this for a while, but there was a big shift in how the models were developed, and and it is we're seeing it firsthand. Like, the rate of progress we're making on our own platform is materially different than what we've been doing for, you know, the last two years.

Speaker 2: That's super exciting. The I had an interesting conversation with someone who owns like, I think, five to 10 car dealerships. None Okay. None of the none of the brands that he sells has any type of like meaningful autonomy. Maybe they have a team working on it, but not not really tangible progress. And I asked him, how much do buyers really care about autonomy right now? Do they come in and say, well, I love the look of this car, but it doesn't drive me, so I'm not super interested. And he gave and and his his dealerships are in in like the Midwest. And he gave me an interesting answer. Said, like, I don't like, it's not really a big concern. It's not like a top Mhmm. Priority for our buyers right And I think it was because a lot of a lot of the people in that area have like a fifteen minute commute, twenty minute commute, something like Interesting. And I compared that to friends of mine. And and I live about forty minutes outside of like LA area. And I have two friends who just could not fathom driving anything but like their model y because they're just addicted to autonomy now. They're just like, I don't care what any other car looks like. And so I think like one of the big kind of wake up calls is gonna be for the big manufacturers over this next five year period, where even if they're lagging like one to two years behind Mhmm. As companies like Rivian kind of like achieve these new levels of autonomy Yep. It will be it will be just so hard to compete purely No. On aesthetics and and how does what is the internal leather look and feel, things like that. Historically, it mattered. So

Speaker 4: I couldn't I couldn't agree more with everything you just said, including today, it's not a huge it doesn't drive a huge percentage of purchases. And I think part of the challenge is even with, like, Tesla's FSD, it's a it's a very, very good level two, but you're still required to be in the driver's seat. Mhmm. Still required to be alert. I think the big inflection point is the moment you start to without the car dinging at you, you're asking you to look at the road with, like, where you truly get your time back, where you can, like, be on an iPad the whole ride, not look at the road once. And I think that you experience that once or twice and you don't think you needed it, you didn't think it was part of your purchase criteria, then you're like, wow. I, like, must have that in my next car to your point. And I and I think you see with early adopters within the Tesla ecosystem, like, that's definitely true. If someone's been using FSD for a while, it's very hard for them to imagine a car that doesn't have at least those capabilities.

Speaker 2: Yeah. Final final question. I I I'm sure you have to jump, but the car enthusiast for in me would love for the r two to be such a massive success for you to sell so many units that you guys have the ability to fund maybe something like the the nine eleven equivalent of an EV, you know, somewhat accessible

Speaker 1: Taycan monk.

Speaker 2: You know, something like an accessible sporty EV for enthusiasts. What's on the box? Hearing hearing everything that you've said, I just feel like you're never gonna actually be able to fully justify that, but I can dream. Is there any about a track only I'm a show. On eleven right now. So you've got that. Yeah. It is. What what about track only version of the Amazon delivery van?

Speaker 1: That's what I'm in the market for. Very small market for that. Very small market. I wanna wing on the back. Some active era. Yeah. Let's do it.

Speaker 2: No. But I think I think Probably like five people. No. But I think the I think the like $80,000 enthusiast

Speaker 1: Yeah. Car for the EV market will eventually I mean, I I I would actually take the take the other side of this just to, you know, steal, man. It's just like the focus on the categories that you've chosen have clearly been remarkably prescient and accurate in the sense that like more and more Americans are buying full size SUVs for their families. Trucks are still incredibly popular. Midsize SUVs are popular. And as much as the car nerds love the old sedans and the sports cars and the two doors and the convertibles, like, those are just a different tool. They're a recreational It's like a special Yeah. That's right. And like Jay Leno loves them but like there aren't that many Jay Lenos if you're trying to build a big business and maybe this comes down the pipe but we're not gonna

Speaker 10: Yeah. I'm

Speaker 2: praying for millions and millions and millions of Me too. Car twos on the road. Me too. And so RJ can justify the go kart. Yes. Of So you can justify the go kart. So you can justify the the the nine eleven equivalent.

Speaker 4: So we'll be praying for that. Think if I were to stack rank them though and things we would do, the nine eleven equivalent would be higher than the go kart and higher than the Supervan that you described. Track only okay.

Speaker 1: So so we we got only upwards to go. So that's good. Yeah. So so it's more likely than the other options. Yeah. Well well, I'm getting one. Thank you so much for coming on. We really appreciate it. Great great to get the update and congrats It's to the whole

Speaker 2: a Oh, thank

Speaker 1: Yeah. We're very excited. Have a great rest Congratulations. Of your Goodbye. Let me tell you about Console. Console builds AI agents that automate 70% IT, HR, and finance support giving employees instant resolution for access requests and password resets.