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…t's the only thing it does. And so you can't integrate it with the rest of the car and the systems because of that approach. Whereas, you think the integrated approach is just definitely going to win. What's also, it's an interesting moment in time, because if you were to build a spreadsheet that looked at all the features of a classic network architecture versus us, you'd say there's actually looks like you have all the same features. But then you look at how they're created. And in our case, we have on a relative scale, a small team of software developers that control everything and we can make changes very quickly. If you have an idea, I can put it into the next release and it'll be the car in two weeks. And you compare that with something that's very, very requirements driven. So the manufacturer's requirements are sometimes years out, and it may be things like the seat will have six presets, and that gets hardwired in and it's very hard to change things or evolve things. And so I think that again, it's a moment in time where there's a huge amount of effort to try to have a similar set of features to what we do, but then they can't do cool things like we do. So we have a couple of things we do every year that try to flex this into a very easy to understand consumer— And the simplest version of it, sorry, you're probably going to say something like this. But the simplest version I see is, I'll walk out to the car and it unlocks based on phone proximity and adjust the seats to be, again, based on knowing that it's me. It's minor but it's really nice. But that's like 15 different companies. So you have to do HVAC adjustments, seat adjustment, lighting adjustment, exterior sound, interior sound vehicle state, battery state. But here's where it's exciting, is we can do something like a Halloween mode. So we do one every year and the cars get dressed up. So last year we had a Knight Rider version, we had a Back to the Future version. And when you walk up to your car and it's in that mode, it does a totally different sequence. It plays, in the case of Knight Rider, like the light on the front go, you get in the inside of the car is different lighting sequences, different sounds, and it's just for Halloween. But that's only possible if you control all those systems. And so we're at the tip of the iceberg of being able to do these very immersive, very hard to recreate modes that are just, you can't do with a traditional architecture. Knight Rider was early to having a lot of on-device compute the value of a zonal architecture and systems integration. Speaking of Knight Rider, that was a Pontiac Trans Am, if I recall. Cars used to have cool names. You have Mustang Thunderbird, all these really nice names. El Dorado, very evocative. Now we have R1, R2 model 3 X5. Have we lost a bit of the sense of adventure? Could we have some? Yeah, could we? It's a good question. Evocative names? Names alpha numeric versus name. We decided to just keep things simple and we had, it's a structured name design. Again, but you're surprised and delight company. You have a Knight Rider mode. Yeah, I don’t know, maybe we should— Is something that's befitting of an R1 or— nd we had, it's a structured name design. Again, but you're surprised and delight company. You have a Knight Rider mode. Yeah, I don’t know, maybe we should— Is something that's befitting of an R1 or— Yeah, we had those debates. You guys are super outdoorsy. Like Apple’s taken the Yosemite El Capitan naming scheme. But again, I feel like there's a lot of— So all of our cars end up having code names. Could we just use the code names as the public names? The code name for Gen 2 is Peregrine, which is— Beautiful! It’s a super fast Falcon. Would anyone here buy a Rivian Peregrine? Yeah, I’m seeing a lot of takers. But you'll laugh. So the first batch of prototypes we built, then the first one of those vehicles of R1, like production representative, the code name for that vehicle was Avocado. So that may be less of a saleable name. Okay, I can help you with the names again—back to the bikeshed point—I'm happy to advise on that. As we talk about the Rivian business. Think about a car business 20 years ago, say a US manufacturer. I think we regard it as a hard business, capital intensive. It's about getting to a significant number of units and market share. Being disciplined on price, generally trying to move people up from sedans to higher value vehicles, is at least for the American car makers, how they try to improve the business. I would characterize—there's three parts of the business. The volume of selling vehicles and the revenue associated that is quite large. And so even with each, today it's $90,000 for every sale, but let's say it's half that. It still just creates a tremendous amount of revenue and helps cover a lot of the fixed costs and allows you to develop technology that even if a small percentage of that is being put back into technology, allows you to develop a lot of technology. And so that's core to what we believe and we built a brand that people really love. So we just need to get to higher volume products to pull that together. Like 200,000 R2s times 50K per is 10 of revenue? You can really start to move up the revenue— So this year… last year I think we were just around $5 billion. So we'll see our revenue really start to climb. So that is absolutely a part of the business. Then there is technology sales and there's a lot of different ways to accomplish that, but Volkswagen is an example of that. But we look at what we're doing across our technology stack. There's a bunch of areas that we believe are things that can be monetized to generate incremental revenue and often revenue that has a higher-margin profile than, let's say, the vehicle sales. Vehicle sales, that comfortably sitting at when we get to the right steady state, 20 to 25% gross margin. And then there's a third piece, which is different business models. And a big unlock here is actually just being D2C, being direct to consumer. With the exception of us and Tesla, every manufacturer today sells through distributors and distributors then onto dealers, or in a few cases direct to dealers. But nonetheless, there's a middle layer. I didn’t realize there's two middle layers. You have to sell to distributors who sell to dealers. utors then onto dealers, or in a few cases direct to dealers. But nonetheless, there's a middle layer. I didn’t realize there's two middle layers. You have to sell to distributors who sell to dealers. Yeah. Often it's a distributor then to a dealer. Okay. This is very interesting. So a traditional car maker, part of why the business is hard is because you sell units and the business is the least recurring revenue you can imagine where you're— All the recurring revenue somebody else gets. Exactly. And so you're always in this dog fight for next year’s sales and the following year’s sales. Whereas you're saying you guys are selling cars and then you have monthly active users of Rivian out there and you have a direct service business, because you have direct relationships with those customers. And that really changes the direct business. Nevermind the B2B stuff. It depends on the brand, but if you look at it like this: for every car that's sold, whatever its sale price is, the revenue over the life of the vehicle is generally around two to two-and-a-half X the initial sale price. But that's over a 15-year time horizon. Sure, sure. But there's a lot of revenue that happens associated with the vehicle. And of course we know that. Think of all the businesses that exist that are not car companies that exist because of those cars. And so some of those businesses have less relevance in an EV world. So do I need to go to a Jiffy Lube to change the oil? No, but would I like to have a software update? Definitely. And so you see this— That's still a complex thing. There's still components that wear out.. My car is telling me to rotate my tires. Why do I need to rotate my tires? In your car? Because we are biasing the front tires when you're in efficiency mode. So it's wearing the front tires a little bit faster than the rear tires. And then Gen 2, it does this dynamically? Gen 2 on the… Yeah, it can, if you put it in what we call the all-purpose mode. And then R2 is even better because the way we do it dynamically is we—I'll go deep here for just one second. So it's a permanent magnet motor, and a permanent magnet motor generates losses if it's spinning. And so what we do is when you're in conserve mode, it automatically disconnects the rear axle. And so you're using just the front. On Gen 2 with the dual motor, we dynamically disconnect the axle, even in all-purpose. And then R2, we've been able to make it so fast that it connects and disconnects so you don't even know it's happening. So you can be in—it feels really sporty because when you hit the throttle, it all very, very quickly connects everything. Oh, that's cool. But you have to mechanically disconnect their axle. So, you think, can you do that in 140 milliseconds? It's a lot of stuff to do in 140 milliseconds. And going to two-wheel-drive rather than four-wheel-drive. That's an efficiency thing? Yeah, because you turn off—you completely disconnect the motors. So there's no losses associated with spinning the permanent magnet machine.…

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