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Item 8. Financial Statements and Supplementary Data

2023-02-28 compared with 2022-03-31 · 354 added, 351 removed, 471 unchanged (60% of the section changed)

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We have audited the accompanying consolidated balance sheets of Rivian Automotive, Inc.

and subsidiaries (the Company) as of December 31, 2021 and December 31, 2020, the related consolidated statements of operations, comprehensive loss, changes in contingently redeemable convertible preferred stock and stockholders’ (deficit) equity, and cash flows for each of the years in the three-year period ended December 31, 2021, and the related notes (collectively, the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and December 31, 2020, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2021, in conformity with U.S.

and subsidiaries (the Company) as of December 31, 2022 and 2021, the related consolidated statements of operations, comprehensive loss, changes in contingently redeemable convertible preferred stock and stockholders’ (deficit) equity, and cash flows for each of the years in the three-year period ended December 31, 2022, and the related notes (collectively, the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2022, in conformity with U.S.

generally accepted accounting principles.

Change in Accounting Principle

As discussed in Note 3 to the consolidated financial statements, the Company has changed its method of accounting for leases as of January 1, 2020 due to the adoption of Accounting Standards Codification Topic 842, Leases .

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 28, 2023 expressed an adverse opinion on the effectiveness of the Company’s internal control over financial reporting.

Basis for Opinion

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Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

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The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Fair value of common stock

As discussed in Note 9 to the consolidated financial statements, the Company has granted restricted stock units (RSUs).

The grant-date fair values of RSUs, as well as the modification-date fair value of RSUs that were modified and remeasured in June 2021, were estimated based on the fair value of the Company’s common stock on the date of grant or modification.

Through July 2021, the fair value of the Company’s common stock underlying the RSUs was based on an independent appraisal.

The appraisal incorporated weighting of a backsolve method and a probability-weighted expected return method based on the anticipated probability of an initial public offering (IPO) as of each valuation date.

The Company recorded stock-based compensation expense of $570 million for the year ended December 31, 2021, which included expense associated with the RSUs remeasured in June 2021 and certain other RSUs granted through July 2021.

We identified the evaluation of the estimated fair value of common stock used to remeasure the modified RSUs in June 2021 and measure certain other RSUs granted through July 2021 as a critical audit matter.

Complex and subjective

auditor judgment was required to evaluate (1) the selection and weighting of valuation methods used to estimate the fair value of common stock, and (2) the estimated equity value in a potential IPO.

Sufficiency of audit evidence

As discussed in Item 9A.

Controls and Procedures, material weaknesses were identified as of December 31, 2022 and included in management’s report on internal control over financial reporting.

The description of the material weaknesses states that the Company’s risk assessment process was not effective in implementing controls on a timely basis in response to changes to the business operations, personnel and other factors affecting certain financial reporting processes and related information technology systems.

As a result, the Company had ineffective information technology general controls (ITGCs) related to certain systems, applications, and tools used for financial reporting;

and the Company did not establish effective user access and segregation of duties controls across financially relevant functions.

Therefore, the automated and manual process level controls over financial reporting which were dependent upon these ITGCs could not be relied upon.

As of December 31, 2021, material weaknesses were identified and described in management’s assessment as being related to controls to address segregation of duties across financially relevant functions and ITGCs over enterprise resource planning systems, applications, and tools used in financial reporting.

We identified the evaluation of the sufficiency of audit evidence as a critical audit matter.

Evaluating the sufficiency of audit evidence obtained required especially subjective auditor judgment because of the pervasiveness of the material weaknesses noted above.

The following are the primary procedures we performed to address this critical audit matter.

We involved valuation professionals with specialized skills and knowledge, who assisted in evaluating the selection of the valuation methods used by the Company by considering the Company’s equity structure, proximity to a recent financing round, and possible exit scenarios.

We evaluated the weighting of valuation methods based on the anticipated probability of an IPO as of the valuation date by:

• observing the Company’s actions taken to prepare for an IPO

• inspecting the Company’s written plans and other relevant documentation, such as minutes and presentations

• assessing the Company’s ability to carry out particular courses of action, including the timeline to a liquidity event (including an IPO) and whether the Company had the financial resources, personnel, and other means to achieve a liquidity event.

We evaluated the Company’s estimate of equity value in an IPO scenario, by assessing:

• the effect of the Company’s operations and organizational changes on the value of its common stock since its latest funding round, including changes in peer company market capitalizations over a similar time frame

• the Company’s valuation using forecasted revenue multiples by comparing them to those of relevant peer companies

• information provided by underwriters as part of initial discussions in anticipation of an IPO

• the sensitivity of changes in estimated equity value in an IPO scenario on the fair value of common stock used to remeasure the modified RSUs in June 2021 and measure certain other RSUs granted through July 2021.

We applied auditor judgment to determine the nature and extent of procedures to be performed over financial statement account balances and we:

• obtained and inspected the Company’s remediation plan to address the prior year material weaknesses that had been identified

• increased the number of sample selections compared to what we would have otherwise made if the Company’s controls were designed and operating effectively

• tested the underlying records of selected transaction data obtained from the impacted information technology systems to support the use of the information in the conduct of the audit

• inspected supporting documentation and evidence of authorization for a selection of manual and automated journal entries.

We evaluated the sufficiency of audit evidence obtained by assessing the results of procedures performed, including the appropriateness of the nature and extent of such evidence.

We have served as the Company’s auditor since 2021.

Detroit, Michigan

March 31, 2022

February 28, 2023

Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors

Rivian Automotive, Inc.:

Opinion on Internal Control Over Financial Reporting

We have audited Rivian Automotive, Inc.

and subsidiaries’ (the Company) internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

In our opinion, because of the effect of the material weaknesses, described below, on the achievement of the objectives of the control criteria, the Company has not maintained effective internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2022 and 2021, the related consolidated statements of operations, comprehensive loss, changes in contingently redeemable convertible preferred stock and stockholders’ (deficit) equity, and cash flows for each of the year in a three-year period ended December 31, 2022, and the related notes (collectively, the consolidated financial statements), and our report dated February 28, 2023 expressed an unqualified opinion on those consolidated financial statements.

A material weakness is a deficiency, or a combinations of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis.

The following material weaknesses have been identified and included in management’s assessment.

The Company’s risk assessment process was not effective in implementing controls on a timely basis in response to changes to the business operations, personnel and other factors affecting certain financial reporting processes and related information technology systems.

As a result, the Company had ineffective information technology general controls (ITGCs) related to certain systems, applications, and tools used for financial reporting;

and the Company did not establish effective user access and segregation of duties controls across financially relevant functions.

Therefore, the automated and manual process level controls over financial reporting which were dependent on these ITGCs could not be relied upon.

The material weaknesses were considered in determining the nature, timing, and extent of audit tests applied in our audit of the 2022 consolidated financial statements, and this report does not affect our report on those consolidated financial statements.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting.

Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.

Our audit also included performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A Company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and

that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Detroit, Michigan

February 28, 2023

RIVIAN AUTOMOTIVE, INC.

CONSOLIDATED BALANCE SHEETS

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Total assets $ 22,294 $ 17,876

LIABILITIES, CONTINGENTLY REDEEMABLE CONVERTIBLE PREFERRED STOCK, AND STOCKHOLDERS’ (DEFICIT) EQUITY

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

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Accrued liabilities ( Note 8 )

Customer deposits 28 74

Current portion of long-term debt ( Note 6 )

Current portion of lease liabilities and other current liabilities 163 270

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Commitments and contingencies ( Note 13 )

Contingently redeemable convertible preferred stock, $ 0.001 par value;

508 and 10 shares authorized, and 504 and 0 shares issued and outstanding as of December 31, 2020 and 2021, respectively (N ote 11)

Stockholders' (deficit) equity:

Stockholders' equity:

Preferred stock, $ 0.001 par value;

10 shares authorized and 0 shares issued and outstanding as of December 31, 2021 and 2022

Common stock, $ 0.001 par value;

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Accumulated deficit ( 6,374 ) ( 13,126 )

Total stockholders' (deficit) equity ( 1,384 ) 19,514

Total liabilities, contingently redeemable convertible preferred stock, and stockholders' (deficit) equity $ 4,602 $ 22,294

Accumulated other comprehensive loss — ( 2 )

Total stockholders' equity 19,514 13,799

Total liabilities and stockholders' equity $ 22,294 $ 17,876

See accompanying notes to these consolidated financial statements.

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Revenues (Note 2)

$ — $ 55 $ 1,658

Cost of revenues (Note 2)

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Loss on convertible notes, net (Note 7)

Other (expense) income, net ( 1 ) 1 ( 1 )

Other income (expense), net 1 ( 1 ) 18

Loss before income taxes ( 1,018 ) ( 4,688 ) ( 6,748 )

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Net loss attributable to common stockholders, basic and diluted $ ( 1,019 ) $ ( 4,688 ) $ ( 6,752 )

Net loss per share attributable to common stockholders, basic and diluted (Note 13)

Net loss per share attributable to Class A and Class B common stockholders, basic and diluted (Note 14)

$ ( 10.09 ) $ ( 22.98 ) $ ( 7.40 )

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Net loss $ ( 1,018 ) $ ( 4,688 ) $ ( 6,752 )

Other comprehensive (loss) income — — —

Other comprehensive loss — — ( 2 )

Comprehensive loss $ ( 1,018 ) $ ( 4,688 ) $ ( 6,754 )

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(in millions)

Contingently Stockholders' (Deficit) Equity

Convertible Additional

Preferred Stock Common Stock Paid-In Accumulated

Shares Amount Shares Amount Capital Deficit Total

BALANCE—December 31, 2018 — $ — 75 $ — $ 154 $ ( 242 ) $ ( 88 )

Capital stock issuance 343 2,750 — — — — —

Warrants issuance — — — — 13 — 13

Conversion of convertible notes — — 25 — 126 — 126

Net loss — — — — — ( 426 ) ( 426 )

Stockholders' (Deficit) Equity

Contingently Redeemable Convertible Preferred Stock Common Stock Additional Paid-In Capital Accumulated Deficit Accumulated Other Comprehensive Loss

Shares Amount Shares Amount Total

BALANCE—December 31, 2019 343 $ 2,750 100 $ — $ 293 $ ( 668 ) $ — $ ( 375 )

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BALANCE—December 31, 2021 — — 900 1 25,887 ( 6,374 ) — 19,514

Capital stock issuance including employee stock purchase plan — — 26 — 102 — — 102

Stock-based compensation — — — — 937 — — 937

Other comprehensive loss — — — — — — ( 2 ) ( 2 )

Net loss — — — — — ( 6,752 ) — ( 6,752 )

BALANCE—December 31, 2022 — $ — 926 $ 1 $ 26,926 $ ( 13,126 ) $ ( 2 ) $ 13,799

See accompanying notes to these consolidated financial statements.

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(in millions)

Year Ended December 31,

Years Ended December 31,

2020 2021 2022

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Loss on convertible notes, net — 441 —

Write-down of inventory — — 95

Inventory write-downs and losses on firm purchase commitments — 95 920

Other non-cash activities 41 36 82

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Accounts payable and accrued liabilities 121 461 623

Customer deposits 14 10 46

Other current liabilities 11 83 104

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Proceeds from share issuance upon initial public offering, net of underwriting discounts and commissions and offering costs — 13,530 —

Proceeds from issuance of capital stock 2,750 2,506 2,658

Proceeds from issuance of capital stock including employee stock purchase plan 2,506 2,658 102

Proceeds from issuance of convertible notes — 2,500 —

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Net cash provided by financing activities 2,500 19,828 99

Effect of exchange rate changes on cash and cash equivalents — — ( 2 )

Net change in cash 738 15,412 ( 6,324 )

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The nature of the Company’s operations during the years ended December 31, 2020 and 2021 was primarily research and development activities related to vehicle development and its related technologies, and pre-production activities related to manufacturing and sales.

However, the Company began making deliveries of the R1T, R1S, and EDV in the United States in 2021.

The nature of the Company’s operations during the year ended December 31, 2022 was primarily the production and sale of EVs in the United States of America (“United States”).

Segment Information

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The accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“U.S.

GAAP”) and, in the opinion of management, reflect all normal recurring adjustments necessary to fairly present the financial position, results of operations, cash flows, and change in equity for the periods presented.

Results for the periods presented are not necessarily indicative of the results that may be expected for any subsequent period.

GAAP”) and the applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding annual financial information.

The accompanying consolidated financial statements, in the opinion of management, reflect all normal recurring adjustments necessary to fairly present the financial position, results of operations, cash flows, and change in equity for the periods presented.

Certain amounts in the prior period consolidated financial statements have been aggregated to conform to current period presentation.

Basis of Consolidation

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Initial Public Offering

In November 2021, the Company completed its underwritten IPO of approximately 176 million shares of Class A common stock at a public offering price of $ 78.00 per share, which included the exercise in full by the underwriters of their option to purchase approximately 23 million additional shares of Class A common stock.

The net proceeds to the Company from the IPO were $ 13.5 billion.

See Note 11 “ Contingently Re deemable Convertible Preferred Stock and Stockholders ’ (Deficit) Equity ” for more information regarding the IPO.

In November 2021, the Company completed its underwritten initial public offering (“IPO”) of approximately 176 million shares of Class A common stock at a public offering price of $ 78.00 per share, which included the exercise in full by the underwriters of their option to purchase approximately 23 million additional shares of Class A common stock.

The net proceeds to the Company from the IPO were $ 13,530 million.

See Note 12 “Stockholders’ Equity” for more information regarding the IPO.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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Accounting estimates are an integral part of the consolidated financial statements.

These estimates require the use of judgments and assumptions that may affect the reported amounts of assets, liabilities, and expenses in the periods presented.

Estimates are used for, but not limited to, inventory valuation, property, plant, and equipment, leases, income taxes, stock-based compensation, and commitments and contingencies.

The Company believes that the accounting estimates and related assumptions employed by the Company are appropriate and the resulting balances are reasonable under the circumstances.

However, due to the inherent uncertainties involved in making estimates, the actual results could differ from the original estimates, requiring adjustments to these balances in future periods.

These estimates require the use of judgments and assumptions that may affect the reported amounts of assets, liabilities, revenues, and expenses in the periods presented.

Estimates are used for, but not limited to, inventory valuation, property, plant, and equipment, warranty reserves, leases, income taxes, stock-based compensation, and commitments and contingencies.

The Company believes that the accounting estimates and related assumptions employed by the Company are appropriate and the resulting balances are

RIVIAN AUTOMOTIVE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

reasonable under the circumstances.

However, due to the inherent uncertainties involved in making estimates, the actual results could differ from the original estimates, requiring adjustments to these amounts in future periods.

Cash and Cash Equivalents

Cash and cash equivalents include cash on hand, cash in banks, payments due from financial institutions for the settlement of credit card and debit card transactions, and money market funds with maturities of three months or less.

All short-term, highly liquid investments that are both readily convertible to known amounts of cash and so near their maturity that they present insignificant risk of changes in value because of changes in interest rates also are classified as cash equivalents.

Accounts Receivable, Net

Receivables are reported at the invoiced amount, less an allowance for any potential uncollectible amounts.

The Company had no allowance for uncollectible amounts as of December 31, 2020 and 2021.

Cash and cash equivalents include cash on hand, cash in banks, and short-term, highly liquid investments with maturities of three months or less.

The Company’s cash equivalents are measured at fair value and classified within Level 1 of the fair value hierarchy because they are valued using observable inputs that reflect quoted prices in active markets for identical instruments.

The cost of the Company’s cash equivalents approximated their fair values as of December 31, 2021 and 2022.

The following table presents the fair value of the Company’s “Cash and cash equivalents” on the Consolidated Balance Sheets (in millions):

December 31, 2021 December 31, 2022

Cash $ 5,438 $ 2,604

Money market funds 11,827 7,147

Commercial papers 268 845

United States Treasury securities 150 822

Certificates of deposits 450 150

Total cash and cash equivalents $ 18,133 $ 11,568

Restricted Cash

Cash and cash equivalents that are restricted as to withdrawal or use under the terms of certain contractual agreements are classified as restricted cash and are primarily recorded in “Other non-current assets” on the Company’s Consolidate d Balance Sh eet s .

Restricted cash primarily consists of the balance of an account under the dominion and control of the administrative agent under the ABL Facility, which will be used to repay outstanding borrowings under the ABL Facility if certain specified events of default occur, and cash held in reserve accounts related to contractual obligations.

Cash and cash equivalents that are restricted as to withdrawal or use under the terms of certain contractual agreements are classified as restricted cash and are recorded primarily in “Other non-current assets” on the Company’s Consolidated Balance Sheets .

Restricted cash primarily consists of the balance of an account under the dominion and control of the administrative agent under the senior secured asset-based revolving credit facility (“ABL Facility”).

See Note 7 “Debt” for more information on the ABL Facility.

Total restricted cash was $ 290 million and $ 531 million as of December 31, 2021 and 2022, respectively.

Subsequent to December 31, 2021, the balance of restricted cash increased by $ 250 million due to requirements under the ABL Facility.

Inventories are stated at the lower of cost or net realizable value (“LCNRV”) and consist of raw materials, work-in-progress, finished goods, and service parts.

The Company primarily calculates inventory value using standard cost, which approximates actual cost on the first-in, first-out (“FIFO”) basis.

Net realizable value (“NRV”) is the estimated selling price of inventory in the ordinary course of business, less estimated costs of completion, disposal, and transportation.

The Company assesses the valuation of inventory and periodically adjusts its value for estimated excess and obsolete inventory based upon expectations of future demand and market conditions, as well as damaged or otherwise impaired goods.

During the year ended December 31, 2021, the Company recorded a $ 95 million charge to reduce the carrying value of inventory to net realizable value, with the charge reflected in “Cost of revenues” in the Company’s Consolidated Statement of Operations .

As of December 31, 2020 the Company’s inventory was not material.

As of December 31, 2021, the $ 274 million carrying value of inventory consisted primarily of raw materials.

Impairment of Long-Lived Assets (Held-and-Used Long-Lived Assets)

We review property, plant and equipment and finite-lived intangible assets for impairment whenever events or changes in circumstances occur that indicate that the carrying amount of an asset may not be fully recoverable.

Events that trigger a test for recoverability include material adverse changes in projected revenues and expenses, present cash flow losses combined with a history of cash flow losses and a forecast that demonstrates significant continuing losses, significant negative industry or economic trends, a current expectation that a long-lived asset group will be disposed of significantly before the end of its useful life, a significant adverse change in the manner in which an asset group is used or in its physical condition, or when there is a change in the asset grouping.

We initially assess the risk of impairment based on an estimate of the undiscounted cash flows at the lowest level for which identifiable cash flows exist against the carrying value of the asset group.

Impairment is indicated when the carrying value of the asset group exceeds the estimated future undiscounted cash flows generated by those assets.

When impairment is indicated, the Company records an impairment charge for the difference between the carrying value of the asset group and its estimated fair market value.

Depending on the asset, estimated fair market value may be determined either by use of a discounted cash flow model or by reference to estimated selling values of assets in similar condition.

Accounts Receivable, Net

Accounts receivable primarily consist of amounts due from customers from the sale of EVs and are reported at the invoiced amount, less an allowance for any potential uncollectible amounts.

The Company’s allowance for uncollectible amounts was not material as of December 31, 2022.

Derivative Instruments

In the normal course of business, the Company is exposed to global market risks, including the effect of changes in certain commodity prices, interest rates, and foreign currency exchange rates, and may enter into derivative contracts, such as forwards, options, swaps, or other instruments, to manage these risks.

Derivative instruments are recorded on the Consolidated Balance Sheets in either Other current assets or Current portion of lease liabilities and other current liabilities and are measured at fair value.

They are classified within Level 2 of the fair value hierarchy because they are valued using observable inputs other than quoted prices in active markets.

For commodity contracts, the Company records gains and losses resulting from changes in fair value in “Cost of revenues” in the Consolidated Statements of Operations and cash flows in “Cash flows from operating activities” in the Consolidated Statements of Cash Flows .

The Company also may enter into master netting agreements with its counterparties to allow for netting of transactions with the same counterparty.

The Company does not utilize derivative instruments for trading or speculative purposes.

The Company has entered into commodity contracts and the resulting asset, liability, and aggregate notional amount is not material as of December 31, 2022.

These derivatives are economic hedges used to manage overall price risk and have not been designated as hedging instruments.

During the year ended December 31, 2022, losses resulting from changes in fair value were not material.

RIVIAN AUTOMOTIVE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company primarily recognizes revenue from the sale of EVs to consumers.

Revenue from the sale of EVs is recognized upon delivery, when control of the EV transfers to the customer.

Payment for EV sales is due prior to or upon delivery, and an insignificant amount of revenue is recognized after delivery for performance obligations satisfied over time.

Sales are subject to a right of return and involve variable consideration for certain sales to employees.

The expected value of variable consideration is used to estimate the transaction price.

Variable consideration is included in the transaction price only to the extent it is probable that a significant reversal of revenue recognized will not occur.

The transaction price is allocated based on the estimated relative standalone selling price of each performance obligation.

The Company utilizes directly observable standalone selling prices when possible.

If not available, the standalone selling prices are estimated using appropriate methods, such as the “adjusted market assessment” approach, “expected cost plus a margin” approach, and others.

The Company’s revenues primarily include revenue from the sale of EVs and specific services that meet the definition of a performance obligation, including over-the-air (“OTA”) vehicle software updates.

Revenue from the sale of EVs is recognized at a point in time when control transfers to the customer, which generally occurs upon delivery.

Payment for EV sales is typically received at or prior to delivery or according to payment terms customary to the business.

Sales tax is excluded from the measurement of the transaction price.

As the OTA vehicle software updates represent a stand ready obligation to provide these services, revenue related to OTA vehicle software updates is recognized ratably throughout the performance period, beginning when control of the vehicle is transferred to the customer and continuing through the estimated useful life of the EV.

The standalone selling prices of performance obligations are estimated by considering costs to develop and deliver the good or service, third-party pricing of similar goods or services, and other available information.

The transaction price is allocated among the performance obligations in proportion to the standalone selling prices.

Contract Liabilities

The Company recognizes contract liabilities when payments are received or due before the related performance obligation is satisfied.

The Company’s contract liabilities are primarily related to payments for vehicles collected prior to delivery of the EV, generally satisfied within one quarter or less, and OTA vehicle software updates.

The Company’s contract liabilities exclude fully-refundable customer deposits.

The Company’s contract liabilities were not material during the year ended December 31, 2021 and were recorded in Current portion of lease liabilities and other current liabilities ” on the Consolidated Balance Sheets .

The increase in contract liabilities resulted from sales to customers with payment due prior to delivery of the EV.

Because the Company’s contracts generally have an original expected duration of one year or less, the Company has not disclosed the aggregate amount of the transaction price in contracts with customers that is related to unsatisfied or partially unsatisfied performance obligations as of December 31, 2021.

The Company’s contract liabilities as of December 31, 2021 and 2022 were not material and were recorded in “ Current portion of lease liabilities and other current liabilities ” and “Other non-current liabilities” on the Consolidated Balance Sheets .

Cost of Revenues

Cost of revenues also includes adjustments to write down the carrying value of inventory when it exceeds its estimated NRV and to provide for on-hand inventory that is either obsolete or in excess of forecasted demand.

Costs to develop software that is integral to the Company’s EVs are recognized as expenses as they are incurred.

Cost of revenues primarily relates to the cost of EVs and includes direct parts, material and labor costs, manufacturing overhead (e.g., depreciation of machinery and tooling), shipping and logistics costs, and reserves including for estimated warranty costs related to the production of consumer and commercial vehicles, adjustments to write down the carrying value of inventory when it exceeds its estimated net realizable value (“NRV”), losses on firm purchase commitments, and to adjust for excess and obsolete inventory based upon expectations of forecasted demand.

Additionally, we started recognizing recurring non-cash stock compensation charges in the quarter ended December 31, 2021 in connection with the performance-based vesting condition of RSUs and stock options being met upon the IPO.

Product Warranty and Field Service Actions

The Company provides a product warranty on new consumer vehicles.

The estimated costs related to product warranties include management’s estimate of the cost of materials, labor, and other costs to facilitate warranty claims.

These costs are accrued when probable that a liability has been incurred and the related amount can be reasonably estimated, which is generally at the time vehicles are sold or once a specific field service action has been approved and is announced.

These estimates are established based on an analysis of relevant benchmark data and historical information on the nature, frequency, and average cost of actual claims incurred to date and future assumptions by vehicle model.

Revisions are made when necessary and are based on changes in these estimates.

Due to the uncertainty and potential volatility of the factors contributing to developing estimates for product warranties and field service actions, changes in these estimates could materially affect the warranty reserve.

The Company’s warranty reserve as of December 31, 2022 was approximately $ 100 million and was recorded in “ Current portion of lease liabilities and other current liabilities ” and “Other non-current liabilities” on the Consolidated Balance Sheets .

Concentration of Risk

Counterparty Credit Risk

Financial instruments that potentially subject the Company to concentration of counterparty credit risk consist of cash and cash equivalents, restricted cash, customer deposits, derivative instruments, and debt.

We are exposed to credit risk to the extent that the Company’s cash balance with a financial institution is in excess of Federal Deposit Insurance Company insurance limits.

The degree of counterparty credit risk will vary based on many factors including the duration of the transaction and the contractual terms of the agreement.

Management evaluates and approves credit standards and oversees

RIVIAN AUTOMOTIVE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

the credit risk management function related to investments.

As of December 31, 2021 and 2022, all of the Company’s cash, cash equivalents, and restricted cash were placed at financial institutions that management believes are of high credit quality.

These amounts are typically in excess of insured limits.

In addition, the counterparties to the Company’s derivative instruments are financial institutions that management believes are of high credit quality.

The Company is subject to risks related to its dependence on its suppliers, the majority of which are single-source providers of parts or components for the Company’s products.

Any inability or unwillingness of the Company’s suppliers to deliver necessary input materials or product components, including semiconductors, at timing, prices, quality, and volumes that are acceptable to the Company could have a material impact on Rivian’s business, prospects, financial condition, results of operations, and cash flows.

Fluctuations in the cost of input materials or product components and supply interruptions or shortages could materially impact the Company’s business.

Impairment of Long-Lived Assets (Held-and-Used Long-Lived Assets)

The Company reviews property, plant, and equipment and finite-lived intangible assets for impairment whenever events or changes in circumstances occur that indicate that the carrying amount of an asset group may not be fully recoverable.

Events that trigger a test for recoverability include material adverse changes in projected revenues and expenses, present cash flow losses combined with a history of cash flow losses or a forecast that demonstrates significant continuing losses, significant negative industry or economic trends, a current expectation that a long-lived asset group will be disposed of significantly before the end of its useful life, a significant adverse change in the manner in which an asset group is used or in its physical condition, or when there is a change in the asset grouping.

When an indicator of impairment is present, the Company assesses the risk of impairment based on an estimate of the undiscounted cash flows at the lowest level for which identifiable cash flows exist against the carrying value of the asset group.

Impairment exists when the carrying value of the asset group exceeds the estimated future undiscounted cash flows generated by those assets.

The Company records an impairment charge for the difference between the carrying value of the asset group and its estimated fair market value.

Depending on the asset, estimated fair market value may be determined either by use of a discounted cash flow model or by reference to estimated selling values of assets in similar condition.

Fair Value Measurements

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• Level 3 – Instruments with model-derived valuations whose significant inputs are unobservable

The Company’s money market funds are classified within Level 1 of the fair value hierarchy because they are valued using quoted prices in active markets.

As of December 31, 2020 and 2021, money market funds totaled $ 2,782 million and $ 13,048 million, respectively.

The carrying values of the Company’s accounts receivable, accounts payable and accrued expenses approximated their fair values at December 31, 2020 and 2021, due to the short period of time to maturity or repayment.

The Company’s debt instruments are classified within Level 2 of the fair value hierarchy because they are valued using quoted prices for inactive markets or have significant inputs that are observable.

As of December 31, 2020 and 2021 the fair value of debt approximated their carrying value.

See Note 6 “Debt” for more information.

During the year ended December 31, 2021, there were no transfers between the levels of the fair value hierarchy.

RIVIAN AUTOMOTIVE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Employee Benefit Plan

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Research and Development Costs

Research and development (“R&D”) costs consist primarily of personnel costs for teams in engineering and research, prototyping expenses, contract and professional services, amortized equipment costs, and allocation of indirect costs.

R&D costs are expensed as incurred.

Research and development (“R&D”) costs consist primarily of personnel costs for teams in engineering and research, prototyping expenses, consulting and contractor expenses, amortized equipment costs, and allocation of indirect costs.

Most R&D costs are expensed as incurred.

RIVIAN AUTOMOTIVE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Selling, General, and Administrative

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Other Expenses

Upon the IPO, the Company donated approximately 8 million shares of Class A common stock and $ 20 million cash to Forever by Rivian.

Upon the IPO, the Company donated approximately 8 million shares of Class A common stock and $ 20 million cash to Forever by Rivian, Inc., a 501(c)(4) social welfare organization (“Forever by Rivian”).

As a result, $ 663 million was recorded in “Other expenses” in the Consolidated Statement of Operations during the year ended December 31, 2021.

Concentration of Risk

Counterparty Credit Risk

Financial instruments that potentially subject the Company to concentration of counterparty credit risk consist of cash and cash equivalents, restricted cash, deposits, and loans.

We are exposed to credit risk to the extent that our cash balance with a financial institution is in excess of Federal Deposit Insurance Company insurance limits.

The degree of counterparty credit risk will vary based on many factors including the duration of the transaction and the contractual terms of the agreement.

Management evaluates and approves credit standards and oversees the credit risk management function related to investments.

As of December 31, 2020 and 2021, all of the Company’s cash and cash equivalents were placed at financial institutions that management believes are of high credit quality.

These amounts are typically in excess of insured limits.

The Company is subject to risks related to its dependence on its suppliers, the majority of which are single-source providers of parts or components for the Company’s products.

Any inability of the Company’s suppliers to deliver necessary product components, including semiconductors, at timing, prices, quality, and volumes that are acceptable to the Company could have a material and adverse impact on Rivian’s business, growth prospects, and financial and operating results.

The Company’s manufacturing facility in Normal, Illinois (the “Normal Factory”) is operational, and Rivian is continuing to invest in the Normal Factory.

The Company’s ability to sustain production depends, among other things, on the readiness and solvency of suppliers and vendors through all macroeconomic factors, including factors resulting from the COVID-19 pandemic.

RIVIAN AUTOMOTIVE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NEW ACCOUNTING STANDARDS

Recently Adopted Accounting Standards

The Financial Accounting Standards Board’s Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842) requires the recognition of assets and liabilities for leases that are not short-term.

The Company adopted the provisions of the ASU, along with the provisions of all other issued ASUs containing related amendments, on January 1, 2020.

The Company elected to use hindsight to determine whether lease terms included periods covered by options to extend or terminate a lease, did not reassess existing or expired land easements that were not previously accounted for as leases, and did not elect to apply the “package of three” practical expedients available upon adoption.

Amounts in the consolidated financial statements and accompanying notes prior to January 1, 2020 have not been restated and continue to be reported in accordance with the legacy accounting requirements in Accounting Standards Codification (“ASC”) Topic 840, Leases.

The adoption of the ASU did not have a material impact on the Company’s consolidated financial statements.

ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40):

Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity simplifies (i) the accounting for convertible financing instruments issued, including preferred stock, (ii) the derivatives scope exception for contracts in an entity’s own equity, and (iii) the calculation of earnings per share.

Early adoption is permissible, and the Company elected to early adopt the provisions of the ASU on January 1, 2021.

The adoption of the ASU did not have a material impact on the Company’s consolidated financial statements.

ASU 2016-13, Financial Instruments—Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments amends the measurement of (i) assets measured at amortized cost by including an entity’s current estimate of all expected credit losses and broadening the information that an entity must consider in developing its expected credit loss estimate and (ii) available-for-sale debt securities by requiring estimated credit losses to be presented as an allowance rather than a write-down.

The Company adopted the provisions of the ASU, along with the provisions of all other issued ASUs containing related amendments, on January 1, 2021.

The adoption of these ASUs did not have a material impact on the Company’s consolidated financial statements.

Upcoming Accounting Standards Not Yet Adopted

ASU 2020-04, Reference Rate Reform (Topic 848):

Accounting Standards Update (“ASU“) 2020-04, Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting provides optional expedients and exceptions to the accounting for contracts, hedging relationships, and other transactions that reference the London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued because of reference rate reform.

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The Company is currently evaluating the potential impact of the ASU on the consolidated financial statements.

INVENTORY AND INVENTORY VALUATION

Inventory is stated at the lower of cost or net realizable value (“LCNRV”) and consists of raw materials, work in progress, finished goods, and service parts.

The Company primarily calculates inventory value using standard cost, which approximates actual cost on the first-in, first-out (“FIFO”) basis.

NRV is the estimated selling price of inventory in the ordinary course of business, less estimated costs of completion, disposal, and transportation.

The following table summarizes the components of “Inventory” on the Consolidated Balance Sheets (in millions):

December 31, 2021 December 31, 2022

Raw materials and work in progress $ 245 $ 949

Finished goods 29 $ 399

Total inventory $ 274 $ 1,348

The Company recorded a $ 95 million and $ 582 million charge to reflect the LCNRV of inventory as of December 31, 2021 and 2022, respectively, in “Cost of revenues” in the Company’s Consolidated Statements of Operations .

The Company is obligated to make inventory firm purchases commitments during the next year.

Losses to reflect the LCNRV on these firm purchase commitments as of December 31, 2022 were $ 338 million in “Cost of revenues” in the Company’s Consolidated Statements of Operations and are reflected in the inventory component of “Accrued liabilities” on the Consolidated Balance Sheets .

Refer to Note 8 "Accrued Liabilities" for more information about Accrued liabilities.

The increase in these charges is primarily due to an increase in overall inventory and firm purchase commitment values as production ramps, which were adjusted to reflect the amount we anticipate receiving upon vehicle sale (after considering future costs necessary to ready the inventory for sale).

PROPERTY, PLANT, AND EQUIPMENT, NET

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Costs of routine maintenance and repair are expensed when incurred.

RIVIAN AUTOMOTIVE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company capitalizes certain qualified costs incurred in connection with the development of software used internally.

Costs incurred during the application development stage are evaluated to determine whether the costs meet the criteria for capitalization.

Costs related to preliminary project activities and post implementation activities, including maintenance, are expensed as incurred.

Costs related to preliminary project activities and post implementation activities that are not incremental upgrades, including maintenance, are expensed as incurred.

Property, plant, and equipment are primarily depreciated using the straight-line method over the estimated useful life of the asset.

Leasehold improvements are amortized over the period of lease or the life of the asset, whichever is shorter, using the straight-line method.

Capitalized costs related to software used internally are amortized using the straight-line method over the estimated useful life of the asset.

Land is not depreciated.

RIVIAN AUTOMOTIVE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table summarizes the components of “Property, plant, and equipment, net” (in millions):

The following table summarizes the components of “Property, plant, and equipment, net” on the Consolidated Balance Sheets (in millions):

Estimated Useful Lives December 31, 2021 December 31, 2022

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Depreciation and amortization expense was $ 29 million, $ 197 million, and $ 647 million for the years ended December 31, 2020, 2021 and 2022, respectively.

The Company leases real estate, machinery, equipment and vehicles under agreements with contractual periods ranging from one month to 12 years.

The Company leases real estate, machinery, equipment, and vehicles under agreements with contractual periods ranging from 1 month to 15 years.

Leases generally contain extension or renewal options, and some leases contain termination options.

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At lease commencement, the Company measures the lease liability at the present value of lease payments not yet paid.

All variable payments that are not based on a market rate or an index (e.g., the Consumer Price Index) are excluded from the measurement of the lease liability and instead are recognized as expense when paid.

Because the discount rate implicit in the lease is not determinable for most leases, the Company determines the appropriate discount rate using the estimated incremental borrowing rate for the lease based on the information available at lease commencement.

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Instead, expense representing the rent payments is recognized on a straight-line basis over the lease term within “Selling, general, and administrative” in the Consolidated Statement of Operations .

RIVIAN AUTOMOTIVE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Operating lease assets are recorded net of accumulated amortization.

The following table presents the carrying value of operating lease right-of-use assets and lease liabilities recorded within the corresponding line items on the Company’s Consolidated Balance Sheets at December 31, 2020 and 2021 (in millions):

December 31, 2021 December 31, 2022

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Total lease liabilities $ 264 $ 379

RIVIAN AUTOMOTIVE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table summarizes the contractual maturities of operating lease liabilities as of December 31, 2022 (in millions):

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Total lease liabilities $ 379

The future minimum lease payments for leases that have not yet commenced are not material at December 31, 2021.

The leases will commence in 2022 and 2023, with lease terms ranging from 1 year to 10 years.

Total lease cost for the year ended December 31, 2020 was not material.

Total least cost of $ 43 million for the year ended December 31, 2021 was comprised primarily of operating lease cost and recorded in “Selling, general, and administrative” in the Consolidated Statement s of Operations .

The weighted average remaining lease term and weighted average discount rate for operating leases at December 31, 2020 and 2021 were as follows:

December 31, 2020 December 31, 2021

The future minimum lease payments for operating leases that have not yet commenced are not material at December 31, 2022.

The leases will commence in 2023 and 2024, with lease terms ranging from 3 to 10 years.

Total lease cost for the years ended December 31, 2020 and 2021 was not material.

Total lease cost of $ 86 million for the year ended December 31, 2022 was comprised primarily of operating lease cost and recorded in “Selling, general, and administrative”, “Research and development”, and “Cost of revenues” in the Consolidated Statements of Operations .

The weighted average remaining lease term and weighted average discount rate for operating leases were as follows:

December 31, 2020 December 31, 2021 December 31, 2022

Weighted average remaining operating lease term (in years) 5.8 6.1 5.9

Weighted average operating lease discount rate 3.8 % 4.0 % 7.0 %

Supplemental cash flow information related to operating leases for the year ended December 31, 2020 and 2021 is as follows (in millions):

December 31, 2020 December 31, 2021

Supplemental cash flow information related to operating leases is as follows (in millions):

Years Ended December 31,

2020 2021 2022

Cash paid for amounts included in the measurement of operating lease liabilities $ 11 $ 31 $ 65

Right-of-use assets obtained in exchange for operating lease liabilities (non-cash) $ 87 $ 178 $ 158

Operating lease expense for the year ended December 31, 2019 was not material.

RIVIAN AUTOMOTIVE, INC.

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The following table summarizes the Company’s outstanding debt:

Maturities December 31, 2020 December 31, 2021

December 31, 2021 December 31, 2022

Maturity Amount

(in millions) Effective Interest Rate Amount

(in millions) Effective Interest Rate

Term Facility 2022 $ 79 4.9 % $ — — %

2026 Notes 2026 $ 1,250 7.0 % $ 1,250 11.3 %

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Less unamortized discount and debt issuance costs ( 24 ) ( 19 )

Notes payable, less unamortized discount and debt issuance costs 75 1,226

Long-term debt, less unamortized discount and debt issuance costs 1,226 1,231

Current portion — —

Total note payable, less current portion $ 47 $ 1,226

Total long-term debt, less current portion $ 1,226 $ 1,231

Term Facility

In April 2018, the Company entered into a variable rate Term Facility Agreement for a committed facility to be used towards the Company’s and its subsidiaries’ operating expenses and capital expenditures (“Term Facility”).

As of December 31, 2020, the amount drawn on the Term Facility was $ 79 million.

In April 2018, the Company entered into a variable rate Term Facility Agreement for a committed facility to be used towards the Company’s operating expenses and capital expenditures (“Term Facility”).

In February 2021, the Company paid all outstanding amounts related to the Term Facility.

The Term Facility was scheduled to mature in May 2022, the four th anniversary of the first borrowing under the loan.

Maturity payments were scheduled to begin in 2021.

Rivian’s obligations under the Term Facility Agreement were backed by guarantees from two of its subsidiaries, as well as an affiliate of a stockholder of the Company.

Interest on the Term Facility was paid based on the LIBOR plus 4.3 %.

As of December 31, 2020, the stated interest rate for borrowings under the Term Facility Agreement was 4.5 %.

As the Term Facility was variable rate debt, the carrying value of the Term Facility approximated fair value.

In connection with the Term Facility Agreement, the Company issued common stock warrants to the affiliate of the stockholder on the date thereof (“Initial Common Stock Warrant”) and on each anniversary thereafter (“Anniversary Common Stock Warrants”) until the Term Facility Agreement was terminated.

The Initial Common Stock Warrant was classified as a debt issuance cost and recorded as an increase to Additional paid-in capital on the Consolidated Balance Sheets .

The debt issuance cost was subsequently amortized over the periods the Term Facility was outstanding.

The Anniversary Common Stock Warrants were classified as prepaid expenses and recorded as an increase to Additional paid-in capital on the Consolidated Balance Sheets .

The prepaid expenses were subsequently amortized over the respective annual period following the grant of each Anniversary Common Stock Warrant.

Refer to Note 11 "Contingently Redeemable Convertible Preferred Stock and Stockholders’ (Deficit) Equity" for further details regarding stock warrants.

Interest on the Term Facility was paid based on LIBOR plus 4.3 %.

The Company’s obligations under the Term Facility were backed by guarantees, including from an affiliate of a stockholder of the Company.

In connection with the Term Facility Agreement, the Company issued common stock warrants to the affiliate of the stockholder on the date thereof.

The common stock warrants were classified as a debt issuance cost, recorded as an increase to Additional paid-in capital, and subsequently amortized over the periods the Term Facility was outstanding.

2021 Convertible Notes

In July 2021, the Company issued $ 2,500 million aggregate principal amount of unsecured senior convertible promissory notes due July 2026 in a private offering (“2021 Convertible Notes”) and made an irrevocable election to account for the 2021 Convertible Notes under the Fair Value Option in accordance with ASC Topic 825, Financial Instruments.

As a result, the 2021 Convertible Notes were initially recognized as a liability measured at issue-date estimated fair value and subsequently re-measured to estimated fair value as of September 30, 2021.

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The Company made no cash interest payments on the 2021 Convertible Notes during the year ended December 31, 2021.

RIVIAN AUTOMOTIVE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Upon the Company’s IPO, the 2021 Convertible Notes converted into 38 million shares of Class A common stock at a conversion price equal to $ 66.30 per share.

During the year ended December 31, 2021, the loss on the 2021 Convertible Notes is recognized in “Loss on convertible notes, net” in the Consolidated Statement of Operations and is calculated as follows (in millions):

During the year ended December 31, 2021, the loss on the 2021 Convertible Notes was recognized in “Loss on convertible notes, net” in the Consolidated Statement of Operations and was calculated as follows (in millions):

Year Ended December 31, 2021

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2021 Convertible Notes $ 2,941 $ 2,500 $ ( 441 )

In May 2021, the Company, through various of its subsidiaries, entered into a senior secured asset-based revolving credit facility (“ABL Facility”) with a syndicate of banks that may be used for general corporate purposes.

In May 2021, the Company entered into an ABL Facility with a syndicate of banks that may be used for general corporate purposes.

The ABL Facility is secured by certain current assets of the Company.

The ABL Facility provides for a $ 750 million committed secured revolving credit facility with an annual interest rate between 1.25 % and 1.75 % plus LIBOR that matures on May 20, 2025.

The ABL Facility provides for a $ 750 million committed secured revolving credit facility with an annual interest rate between 1.25 % and 1.75 % plus LIBOR that matures

RIVIAN AUTOMOTIVE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

on May 20, 2025.

Availability under the ABL Facility is based on the lesser of the borrowing base and the committed $ 750 million cap and is reduced by borrowings and the issuance of letters of credit which bear a fronting fee of 0.125 % plus interest per annum.

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As of December 31, 2022, the Company had no borrowings under the ABL Facility and $ 400 million of letters of credit outstanding, resulting in availability under the ABL Facility of $ 343 million after giving effect to the borrowing base and the outstanding letters of credit.

In October 2021, the Company issued $ 1,250 million aggregate principal amount of senior secured floating rate notes due October 2026 (the “2026 Notes”) to new and existing investors of the Company.

In October 2021, the Company issued $ 1,250 million aggregate principal amount of senior secured floating rate notes due October 2026 (“2026 Notes”) to new and existing investors of the Company.

Proceeds received, net of a $ 25 million original issue discount (“OID”), may be used for general corporate purposes.

The 2026 Notes bear interest at (x) six-month LIBOR, subject to a 1.00 % floor, plus (y) 6.0 % per annum, subject to downward adjustment upon certain events, including an IPO.

Upon the Company’s IPO, the interest rate on the 2026 Notes was adjusted downward and as of December 31, 2021, the interest rate on the notes was 6.63 %.

Upon the Company’s IPO, the interest rate on the 2026 Notes was adjusted downward and as of December 31, 2022, the contractual interest rate on the notes was 10.1 %.

Interest on the 2026 Notes is paid in cash semi-annually in arrears on April 15 and October 15 of each year.

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The 2026 Notes are secured by a second priority security interest in the same assets in which the ABL Facility has a first priority security interest and are guaranteed by certain subsidiaries of the Company.

The 2026 Notes contain a number of customary covenants similar to the covenants under the ABL Facility, including a minimum liquidity covenant.

The 2026 Notes contain a number of customary covenants similar to the covenants under the ABL Facility, including the same minimum liquidity covenant.

As of December 31, 2022, the Company was in compliance with all covenants required by the 2026 Notes.

RIVIAN AUTOMOTIVE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company’s 2026 Notes are classified within Level 2 of the fair value hierarchy because they are valued using quoted prices in markets that are not active.

As of December 31, 2021 and 2022, the fair value of the 2026 Notes was $ 1,250 million and $ 1,216 million, respectively.

Interest Expense

The components of “Interest expense” recorded in the Consolidated Statements of Operations are as follows (in millions):

Years Ended December 31,

2019 2020 2021

Amortization of discount and debt issuance costs $ 22 $ 3 $ 7

Contractual interest expense 12 5 22

Total interest expense $ 34 $ 8 $ 29

“Interest expense” recorded in the Consolidated Statements of Operations was primarily contractual interest expense.

ACCRUED LIABILITIES

The carrying value of “Accrued liabilities” on the Consolidated Balance Sheets includes the following components that were not yet paid by the Company as of December 31, 2020 and 2021 (in millions):

December 31, 2020 December 31, 2021

Capital and other expenditures $ 384 $ 490

Payroll 44 94

Services 5 27

The carrying value of “Accrued liabilities” on the Consolidated Balance Sheets included the following components (in millions):

December 31, 2021 (a) December 31, 2022

Inventory $ 28 $ 367

Capital expenditures 311 265

Payroll and related costs 95 259

Other products and services 182 169

Total accrued liabilities $ 667 $ 1,154

(a) The prior period has been recast to conform to current period presentation.

RIVIAN AUTOMOTIVE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Components of Income Taxes

The Company’s tax rate is generally a function of the tax rates in the jurisdictions in which the Company operates, the relative amount of income earned by jurisdiction, and the relative amount of losses or income for which no tax benefit or expense is recognized due to a valuation allowance.

The components of ”Loss before income taxes” in the Consolidated Statement s of Operations for the years ended December 31, 2019, 2020 and 2021 are as follows (in millions):

The components of ”Loss before income taxes” in the Consolidated Statements of Operations are as follows (in millions):

Years Ended December 31,

2020 2021 2022

Loss before income taxes

United States $ ( 1,021 ) $ ( 4,590 ) $ ( 6,729 )

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Total loss before income taxes $ ( 1,018 ) $ ( 4,688 ) $ ( 6,748 )

Based on United States tax regulations applicable to Rivian, the Company does not anticipate foreign earnings would be subject to a 21% corporate income tax rate upon repatriation.

Accordingly, no provision for United States tax on undistributed earnings of foreign subsidiaries has been made.

Distributions of unremitted foreign earnings would be subject to foreign withholding taxes.

The Company maintains that foreign earnings will be indefinitely reinvested unless expressly stated to the contrary.

Provisions are made for estimated United States and foreign income taxes which may be incurred on the reversal of the basis differences in investments in foreign subsidiaries and corporate joint ventures not deemed to be indefinitely reinvested.

Provisions have not been made on basis differences in investments that primarily result from earnings in foreign subsidiaries which are deemed indefinitely reinvested.

Based on United States tax regulations, the Company does not anticipate foreign earnings would be subject to United States taxation upon repatriation.

However, distributions of unremitted foreign earnings would be subject to foreign withholding taxes.

The Company maintains that all foreign earnings are indefinitely reinvested.

Accordingly, provisions have not been made on the Company’s basis differences in investments that primarily result from earnings in foreign subsidiaries which are deemed indefinitely reinvested.

If recorded, the deferred tax liability associated with indefinitely reinvested basis differences would be immaterial to the financial statements.

RIVIAN AUTOMOTIVE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Deferred tax assets and liabilities are recognized based on the future tax consequences attributable to (i) temporary differences that exist between the carrying value of assets and liabilities and their respective tax bases and (ii) operating loss and tax credit carryforwards on a taxing jurisdiction basis.

The Company measures deferred tax assets and liabilities using enacted tax rates that will apply in the years in which the temporary differences are expected to be recovered or paid.

The Company’s accounting for deferred tax consequences adheres to the requirements of U.S.

GAAP to reduce the measurement of deferred tax assets not expected to be realized.

The Company considers all available evidence, both positive and negative, to determine whether a valuation allowance is needed.

In determining whether a valuation allowance is needed, the Company considers all available evidence, both positive and negative.

If, based on the weight of available evidence, it is more likely than not that the deferred tax assets will not be realized, a valuation allowance is recorded.

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The valuation allowance on net deferred tax assets increased by $ 293 million, $ 988 million, and $ 1,867 million during the years ended December 31, 2020, 2021 and 2022, respectively.

The changes in the valuation allowance are primarily due to additional United States deferred tax assets and liabilities recognized in the respective years.

The changes in the valuation allowance are primarily due to additional net United States deferred tax assets recognized in the respective years.

The Company had no releases of valuation allowances for the years ended December 31, 2021 and 2022.

The Company continues to monitor the realizability of the United States deferred tax assets taking into account multiple factors, including results of operations.

The Company continues to monitor the realizability of the United States deferred tax assets considering multiple factors, including results of operations.

The Company shall continue maintaining a full valuation allowance on United States deferred tax assets until there is sufficient evidence to support the reversal of all or some portion of these allowances.

Release of all, or a portion, of the valuation allowances would result in the recognition of certain deferred tax assets and a decrease to income tax expense for the period the release is recorded.

A reconciliation of the provision for income taxes to its components at the United States statutory rate for the years ended December 31, 2019, 2020 and 2021 is shown below (in millions):

RIVIAN AUTOMOTIVE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

A reconciliation of the provision for income taxes to its components at the United States statutory rate is shown below (in millions):

Years Ended December 31,

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Nondeductible loss on convertible debt — 118 —

Nondeductible interest 8 — —

Tax credits ( 31 ) ( 63 ) ( 264 )

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Valuation allowance 293 988 1,867

Tax credit limitation 7 — —

Provision for income taxes $ — $ — $ 4

The Company’s effective tax rate was 0 % for the years ended December 31, 2020, 2021 and 2022.

Foreign income taxes were not material during the years ended December 31, 2019, 2020 and 2021.

RIVIAN AUTOMOTIVE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Provision for income taxes relates to current taxes on foreign operations for the years ended December 31, 2020, 2021 and 2022.

Components of Deferred Tax Assets and Liabilities

The components of deferred tax assets and liabilities as of December 31, 2020 and 2021 are as follows (in millions):

The components of deferred tax assets and liabilities are as follows (in millions):

December 31, 2021 December 31, 2022

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Inventory 142 203

Lease liabilities 26 71

Operating lease liabilities 71 94

Stock-based compensation 118 110

R&D capitalization — 369

Total deferred tax assets 1,599 3,537

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Operating lease assets ( 62 ) ( 81 )

Other — ( 6 )

Total deferred tax liabilities ( 140 ) ( 211 )

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Additionally, the Company has $ 6,653 million of carryforwards for state NOLs.

Under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended (the “Code”), if a corporation undergoes an “ownership change,” the corporation’s ability to use its pre-change net operating loss carryforwards and other pre-change tax attributes (such as R&D tax credits) to offset its post-change income may be limited.

If the Company experiences a greater than 50 percentage point aggregate change in ownership of certain significant stockholders over a three-year period, a Section 382 ownership change could be deemed to have occurred.

Under Sections 382 and 383 of the Internal Revenue Code of 1986 (“Code”), if a corporation undergoes an “ownership change,” the corporation’s ability to use its pre-change net operating loss carryforwards and other pre-change tax attributes (such as R&D tax credits) to offset its post-change income may be limited.

If the Company experiences a greater than 50

RIVIAN AUTOMOTIVE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

percentage point aggregate change in ownership of certain significant stockholders over a three-year period, a Section 382 ownership change could be deemed to have occurred.

If a Section 382 change occurs, the Company’s future utilization of the NOLs and credits as of the ownership change will be subject to an annual limitation under Section 382 of the Code and similar state provisions.

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NOLs are not expected to be limited.

Unrecognized Tax Benefits

The Company records uncertain tax positions using a two-step process.

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for those tax positions that meet the more-likely-than-not recognition threshold, by recognizing the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority.

The Company includes interest and penalties related to income tax matters within the provision for income taxes.

As of December 31, 2020 and 2021, the Company has no t recorded any amounts related to uncertain tax positions.

When applicable, the Company includes interest and penalties related to income tax matters within the provision for income taxes.

The Company had no accrued interest or penalties for the years ended December 31, 2021 and 2022.

The Company’s unrecognized tax benefits related to the Company ’ s United States R&D tax credit for the year ended December 31, 2022 was not material.

Because a full valuation allowance is maintained in the United States, there is no impact to the consolidated balance sheet and, if recognized, no ne of the unrecognized tax benefit would impact the Company’s effective tax rate.

Although it is possible that unrecognized tax benefits may increase or decrease within the next twelve months due to tax examination changes or the impact on recognition and measurement considerations related to the results of published tax cases or similar activities, we do not anticipate any significant changes to unrecognized tax benefits over the next twelve months.

The Company is subject to taxation and files income tax returns in the United States federal jurisdiction, plus state and foreign jurisdictions.

Tax years after 2017 remain open in our major jurisdictions and are subject to examination by the taxing authorities.

RIVIAN AUTOMOTIVE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Tax years after 2018 remain open in the Company ’ s major jurisdictions and are subject to examination by the taxing authorities.

The Company is not currently under an income tax audit by any taxing authority.

STOCK-BASED COMPENSATION

The Company's 2015 Long-Term Incentive Plan ("2015 Stock Plan") and 2021 Incentive Award Plan (“2021 Stock Plan” and, together, “Stock Plans”) permit the grant of stock options, RSUs, and other stock-based awards to employees, non-employee directors, and consultants.

The Company's 2015 Long-Term Incentive Plan ("2015 Stock Plan") and 2021 Incentive Award Plan (“2021 Stock Plan” and, together, “Stock Plans”) permit the grant of stock options, restricted stock units (“RSUs”), and other stock-based awards to employees, non-employee directors, and consultants.

The 2021 Stock Plan became effective when the registration statement filed in connection with the Company’s IPO became effective.

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Stock options granted under the 2015 Stock Plan may be exercised only upon the occurrence of a Change in Control (as defined under the 2015 Stock Plan, which includes an IPO), which is a performance condition.

RSUs generally vest in quarterly installments based on a requisite service period of four years of continuous service, upon the later of the quarterly vest date and six months after the occurrence of an IPO (as defined under the Stock Plans), which is a performance condition.

Achievement of the Change in Control- and IPO-based performance conditions of stock options and RSUs granted under the 2015 Stock Plan is not deemed to be probable until such events occur.

RSUs generally vest in quarterly installments based on a requisite service period of 1 to 4 years of continuous service, upon the later of the quarterly vest date and six months after the occurrence of an IPO (as defined under the Stock Plans), which is a performance condition.

Achievement of the Change in Control- and IPO-based performance conditions of stock options and RSUs granted under the 2015 Stock Plan was not deemed to be probable until such events occurred.

Therefore, no awards granted under the 2015 Stock Plan vested, were expected to vest, or were exercisable prior to the Company’s November 2021 IPO.

Accordingly, the Company recognized no stock-based compensation expense prior to the IPO.

After the IPO, expense is recognized on an accelerated basis for these awards granted prior to the IPO due to the performance condition.

For awards granted after the IPO, the Company has elected to use the straight-line expense recognition on awards with only service conditions.

RIVIAN AUTOMOTIVE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In January 2021, the Company granted a stock option covering 27 million shares valued at $ 241 million to its CEO.

A portion of the stock option contains only a service condition, which vests over a requisite service period of six years following a Qualified IPO (as defined within the award).

The other portion of the stock option contains both a service and a market condition, which vests in installments based on the achievement of share price goals following a Qualified IPO , measured over a specified period ending on the tenth anniversary of the award.

The other portion of the stock option contains both a service and a market condition, which vests in installments based on the achievement of share price goals following a Qualified IPO, measured over a specified period ending on the 10th anniversary of the award.

During June 2021, the Company modified the service-based vesting terms of approximately 17 million RSUs.

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As achievement of the performance condition of the stock options was not considered probable both before and after the modification, the fair value of the stock options was remeasured on the date of modification, which resulted in an increase in unrecognized stock-based compensation cost of approximately $ 275 million.

RIVIAN AUTOMOTIVE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In September 2022, the Company approved the payment of 2022 bonus incentives to be made under the 2021 Stock Plan in the form of stock-based awards, which will vest immediately upon grant in the first quarter of 2023.

The 2022 bonus incentives were subject to certain performance conditions related to production and other targets.

As of December 31, 2022, the total amount of accrued stock-based bonus incentives is $ 139 million within “Accrued liabilities” on the Consolidated Balance Sheets .

The following table summarizes the Company’s stock option and restricted stock unit activity during the year ended December 31, 2022:

Stock Options RSUs

Average Weighted

Number of Weighted Remaining Aggregate Number of Average

Shares Average Contractual Intrinsic Value Shares Grant Date

(in millions) Exercise Price Life (years) (in millions) (in millions) Fair Value

Number of Shares

(in millions) Weighted-Average Exercise Price Weighted-Average Remaining Contractual Life

(in years) Aggregate Intrinsic Value (in millions) Number of Shares

(in millions) Weighted-Average Grant-Date Fair Value

Outstanding at December 31, 2021 65 $ 12.06 37 $ 31.24

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Exercisable at December 31, 2022 28 $ 5.02 5.8 $ 386 — $ —

The weighted-average fair value of stock options granted during the years ended December 31, 2019, 2020 and 2021 was $ 1.26 , $ 2.28 , and $ 10.03 , respectively.

There were no stock options exercised during the years ended December 31, 2019 and 2020.

The aggregate intrinsic value of stock options exercised during the year ended December 31, 2021 was $ 127 million.

There were no RSUs granted during the year ended December 31, 2019, and the weighted-average fair value of RSUs granted during the year ended December 31, 2020 was $ 7.23 .

During the years ended December 31, 2019 and 2020, the Company recognized no stock-based compensation expense for the Stock Plans and ESPP.

The following table summarizes Company’s stock-based compensation expense for the Stock Plans and ESPP recognized for the year ended December 31, 2021 by line item in the Consolidated Statements of Operations (in millions):

December 31, 2021

The weighted-average grant-date fair value of stock options granted during the years ended December 31, 2020, 2021 and 2022 was $ 2.28 , $ 10.03 , and $ 21.64 , respectively.

There were no stock options exercised during the year ended December 31, 2020.

The aggregate intrinsic value of stock options exercised during the years ended December 31, 2021 and 2022 was $ 127 million and $ 105 million, respectively.

The weighted-average grant-date fair value of RSUs granted during the years ended December 31, 2020 and 2021 was $ 7.23 and $ 43.94 , respectively.

There were no RSUs vested during the years ended December 31, 2020 and 2021.

The total fair value of RSUs vested during the year ended December 31, 2022 was $ 566 million.

RIVIAN AUTOMOTIVE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

During the year ended December 31, 2020 there was no stock-based compensation expense for the Stock Plans and 2021 Employee Stock Purchase Plan (“ESPP”).

The following table summarizes Company’s stock-based compensation expense for the Stock Plans and ESPP by line item in the Consolidated Statements of Operations (in millions):

Years Ended December 31,

Cost of revenues $ 16 $ 60

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Selling, general, and administrative 277 490

Total stock-based compensation expense for the Stock Plans and ESPP

The stock-based compensation expense for the Stock Plans recognized for the year ended December 31, 2021 reflects the fair value of stock options and RSUs that are vested as of December 31, 2021.

As of December 31, 2021, the Company’s unrecognized stock-based compensation expense for awards outstanding under the Stock Plans was approximately $ 1,491 million, which is expected to be recognized over a weighted-average period of 3.8 years.

Total stock-based compensation expense $ 570 $ 987

As of December 31, 2022, the Company’s unrecognized stock-based compensation expense for unvested awards was approximately $ 1,309 million, which is expected to be recognized over a weighted-average period of 5.7 years for stock options and 2.3 years for RSUs.

Fair Value Assumptions

The fair value of the stock options granted to the CEO in January 2021 was estimated using a Monte Carlo simulation capturing scenarios of the Company's projected stock price over the ten-year time horizon, with the resulting intrinsic value at maturity of the stock options in each scenario discounted to present value.

RIVIAN AUTOMOTIVE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The assumptions used in the Monte Carlo simulation are as follows:

The assumptions used in the Monte Carlo simulation were as follows:

Year Ended December 31, 2021

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The Company generally estimates the fair value of stock options using a Black-Scholes option pricing model.

Expected volatility is based on historical volatility rates of peer companies.

Expected volatility is based on a weighted-average of historical volatility rates of peer companies and the Company’s implied volatility.

The dividend yield is estimated based on the rate at which the Company expects to provide dividends.

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As a result, for stock options, the expected term is estimated based on the weighted-average midpoint of expected vest date and expiration date.

The weighted-average assumptions used in the Black-Scholes option pricing model for stock options granted during the years ended December 31, 2019, 2020 and 2021 are as follows:

The weighted-average assumptions used in the Black-Scholes option pricing model for stock options granted were as follows:

Years Ended December 31,

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Expected term (in years) 5.3 5.6 6.8

Prior to the Company’s IPO, the stock price input to the estimated fair value of stock options and the fair value of RSUs was measured on the grant date (or modification date, if appropriate) based on an independent appraisal of the fair market value of the Company’s common stock.

RIVIAN AUTOMOTIVE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

of the Company’s common stock.

The independent appraisal used a market approach with an adjustment for lack of marketability given that the shares underlying the awards were not publicly traded.

This assessment required complex and subjective judgments regarding the Company’s projected financial results.

The appraisal incorporated a backsolve method to the Company’s most recent equity issuance and a PWERM that estimated equity value in an IPO scenario.

The appraisal incorporated a backsolve method to the Company’s most recent equity issuance and a probability-weighted expected return method “(PWERM)” that estimated equity value in an IPO scenario.

The fair value of a share of the Company’s common stock was estimated by weighting the backsolve and PWERM valuation methods based on the anticipated probability of an IPO as of each valuation date.

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Employee Stock Purchase Plan

In November 2021, the Company adopted the 2021 Employee Stock Purchase Plan (“ESPP”).

In November 2021, the Company adopted the ESPP.

The ESPP is designed to allow eligible employees to purchase shares of Class A common stock at a 15 % discount, generally at intervals of approximately six months , with their accumulated payroll deductions.

The number of shares of Class A common stock authorized for sale under

RIVIAN AUTOMOTIVE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

the ESPP is equal to the sum of (i) 22 million shares of Class A common stock and (ii) an annual increase on the first day of each year beginning on January 1, 2022 and ending on January 1, 2031, equal to the lesser of (A) 1 % of the aggregate number of shares of all classes of common stock outstanding on the last day of the immediately preceding year and (B) such smaller number of shares of Class A common stock as determined by the board of directors;

The number of shares of Class A common stock authorized for sale under the ESPP is equal to the sum of (i) 22 million shares of Class A common stock and (ii) an annual increase on the first day of each year beginning on January 1, 2022 and ending on January 1, 2031, equal to the lesser of (A) 1 % of the aggregate number of shares of all classes of common stock outstanding on the last day of the immediately preceding year and (B) such smaller number of shares of Class A common stock as determined by the board of directors;

provided, however, that no more than 185 million shares of Class A common stock may be issued under the ESPP.

As of December 31, 2022, 28 million shares were reserved for issuance under the ESPP.

As of December 31, 2021, the Company’s unrecognized stock-based compensation expense for the first offering period of the ESPP was approximately $ 46 million.

RELATED PARTY TRANSACTIONS

Stock Warrants

During the year ended December 31, 2019, the Company entered into an agreement with Amazon (Amazon.com, Inc.

and its affiliates referred to as “Amazon”) to develop, manufacture, and supply customized EVs.

In connection with this agreement, the Company provided a share-based sales incentive to Amazon in the form of warrants to purchase preferred stock.

In November 2021, upon the close of the IPO, the outstanding warrants for the purchase of preferred stock converted to warrants to purchase an equivalent number of shares of Class A common stock.

The grant-date fair value of the warrants is not material and will be amortized as an offset against revenues in future periods;

the offset against revenues for the year ended December 31, 2021 was not material.

In February 2019, the Company entered into a commercial letter agreement with Amazon.com, Inc.

and its affiliates (“Amazon”), and in September 2019, the entered into a related framework agreement with Amazon Logistics, Inc.

(“Logistics”).

The Company refers to these agreements, together with any work orders, purchase orders, related agreements, and amendments thereunder or thereto, collectively, as the “EDV Agreement.” Under the EDV Agreement, the Company and Logistics have agreed to collaborate to design, develop, manufacture, and supply EDVs and/or certain component parts and related services for use in Amazon’s last mile delivery operations.

In connection with the EDV Agreement, the Company provided a share-based sales incentive to Amazon, a principal stockholder, in the form of warrants to purchase preferred stock.

These were converted to warrants to purchase an equivalent number of shares of Class A common stock upon the close of the Company’s IPO.

The carrying value of the warrants was not material as of December 31, 2021 and 2022 and is amortized as an offset against revenues as Electric Delivery Vans (“EDVs”) are sold.

The offset against revenues for the years ended December 31, 2021 and 2022 was not material.

2021 Convertible Notes

In July 2021, the Company issued the 2021 Convertible Notes to existing investors of the Company, including the following principal owners:

In July 2021, the Company issued the 2021 Convertible Notes to principal stockholders of the Company at that time, including:

Amazon with $ 490 million principal amount, Ford Motor Company (“Ford”) with $ 415 million principal amount, and certain funds and accounts advised by T.

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Upon the Company’s IPO, the 2021 Convertible Notes converted into 38 million shares of Class A common stock at a conversion price equal to $ 66.30 per share (refer to Note 7 "Debt" for more information about the 2021 Convertible Notes).

In October 2021, the Company issued the 2026 Notes to new and existing investors of the Company, including T.

RIVIAN AUTOMOTIVE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The 2026 Notes were issued to certain new and existing principal stockholders, including T.

Rowe Price with an aggregate $ 285 million principal amount (refer to Note 7 "Debt" for more information about the 2026 Notes).

The Company recorded $ 343 million in revenues from Amazon for the year ended December 31, 2022, within “Revenues” in the Consolidated Statements of Operations , primarily related to the sale of EDVs in accordance with the EDV Agreement.

As of December 31, 2022, the uncollected amounts related to these revenues in “Accounts receivable, net” on the Consolidated Balance Sheets were $ 60 million.

Operating Expenses

The Company obtains prototyping, engineering, and other R&D services from Troy Design and Manufacturing Co., a wholly-owned subsidiary of Ford.

The Company recognized $ 8 million, $ 66 million and $ 71 million of expense for these services during the years ended December 31, 2019, 2020 and 2021, within “Research and development” in the Consolidated Statements of Operations .

As of December 31, 2020 and 2021, respectively, unpaid amounts of $ 27 million and $ 16 million related to these services are reported within “Accrued liabilities” on the Consolidated Balance Sheets .

The Company obtains hosting services from Amazon.

The Company obtained prototyping, engineering, and other R&D services from a wholly-owned subsidiary of Ford.

Until May 2022, Ford was a principal stockholder and related party of the Company as a beneficial owner of more than 10 percent of the Company’s voting interests.

The expense for services from Ford that the Company recognized in “Research and development” in the Consolidated Statement of Operations was not material through this time.

Ford is no longer a related party.

The Company obtains data services, including hosting, storage, and compute from Amazon.

During the year ended December 31, 2020, expenses related to these services were not material.

During the years ended December 31, 2021 and 2022, expenses related to these services of $ 30 million and $ 60 million, respectively, were recorded in “Research and development” and “Selling, general, and administrative” in the Consolidated Statements of Operations .

As of December 31, 2020 and 2021, the unpaid amounts related to these services are not material .

CONTINGENTLY REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ (DEFICIT) EQUITY

During the year ended December 31, 2019, the Company authorized a fifty -for-one stock split by issuing fifty shares for each one share held.

All share information within the consolidated financial statements has been retroactively adjusted to reflect the stock split.

RIVIAN AUTOMOTIVE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2021 and 2022, the unpaid amounts related to these services were not material.

STOCKHOLDERS’ EQUITY

Initial Public Offering

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The Company also amended and restated its certificate of incorporation to (i) authorize the issuance of 3,500 million shares of Class A common stock and 8 million shares of Class B common stock and (ii) authorize the issuance of 10 million shares of preferred stock.

Contingently Redeemable Convertible Preferred Stock

Since the preferred stock outstanding prior to the IPO was contingently redeemable upon a Deemed Liquidation Event as defined in the Company ’s Certificate of Incorporation, it was classified as mezzanine equity prior to the IPO .

During the year ended December 31, 2020, approximately 161 million shares of Series E contingently redeemable convertible preferred stock were issued for $ 2,500 million .

During the year ended December 31, 2021 , approximately 72 million shares of Series F contingently redeemable convertible preferred stock were issued for $ 2,650 million .

RIVIAN AUTOMOTIVE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company has two classes of common stock:

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Shares of Class A common stock and Class B common stock are identical, except with respect to voting and conversion rights.

As of December 31, 2021, 892 million shares of Class A common stock and 8 million shares of Class B common stock were issued and outstanding.

As of December 31, 2021, 3,500 million shares of Class A common stock and 8 million shares of Class B common stock were authorized.

As of December 31, 2021 and 2022, 892 million and 918 million shares of Class A common stock were issued and outstanding, respectively.

As of December 31, 2021 and 2022, 8 million shares of Class B common stock were issued and outstanding.

As of December 31, 2021 and 2022, 3,500 million shares of Class A common stock and 8 million shares of Class B common stock were authorized.

Each share of Class A common stock entitles the holder to one vote, and each share of Class B common stock entitles the holder to ten votes.

Holders of Class A common stock and Class B common stock have the right to receive any dividend declared by the Company , subject to the payment of dividends on shares of preferred stock (as described below).

Holders of Class A common stock and Class B common stock have the right to receive any dividend declared by the Company , subject to the payment of dividends on shares of preferred stock.

After the payment in full of all liquidation amounts required to be paid to the holders preferred stock, holders of common stock also have the right to receive the remaining property of the Company upon the liquidation, dissolution, or winding up of the Company on a pari passu basis among all holders of common stock.

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Any shares of Class B common stock that are no longer owned by the Company ’s CEO or their affiliates will automatically convert into an equal of shares of Class A common stock upon transfer of ownership.

Contingently Redeemable Convertible Preferred Stock

Each share of preferred stock outstanding prior to the IPO entitled the holder to the number of votes equal to the number of whole shares of common stock into which the share of preferred stock was convertible.

Except as provided by law or by the other provisions of the Company ’s Certificate of Incorporation, the holders of preferred stock voted together with the holders of common stock as a single class and on an “as-converted to common stock” basis.

The holders of preferred stock also had voting rights separate and apart from the holders of common stock, on a single-class and single-series basis, as set forth in the Company ’s Certificate of Incorporation.

Each holder of preferred stock had the right to receive dividends on a single-series basis, in addition to the right to receive dividends on a pari passu basis with holders of common stock, according to the number of shares of common stock held on an “as-converted to common stock” basis.

Dividends were non-cumulative and were payable at a per-annum rate of eight percent of the Original Issue Price (as defined in the Company ’s Certificate of Incorporatio n).

As of December 31, 2021, no dividends had been declared or distributed.

RIVIAN AUTOMOTIVE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In the event of any voluntary or involuntary liquidation, dissolution, or winding up of the Company , the holders of preferred stock were entitled, on a pari passu basis, to be paid out of the assets of the Company available for distribution to its stockholders.

In the case of a Deemed Liquidation Event (as defined in the Company ’s Certificate of Incorporation), the holders of preferred stock were entitled, on a pari passu basis, to be paid out of the consideration payable to stockholders in a Deemed Liquidation Event or out of available proceeds, as applicable, based upon the greater of (i) the Original Issue Price plus declared but unpaid dividends and (ii) the amount which would be payable on an “if converted to common stock” basis, before any payment would have been made to the holders of common stock.

Each share of preferred stock was convertible into one share of common stock anytime at the option of the holder, or automatically upon a Qualified IPO (as defined in the Company ’s Certificate of Incorporation).

The conversion rate was subject to adjustment upon issuance or sale (or deemed issuance or sale) of common stock for a consideration per share less than the conversion price in effect immediately prior to the issuance or sale.

Since the preferred stock was contingently redeemable upon a Deemed Liquidation Event, it was classified as mezzanine equity of $ 5,244 million as of December 31, 2020.

During the year ended December 31, 2021 , approximately 72 million shares of Series F contingently redeemable convertible preferred stock were issued.

Contingently redeemable convertible preferred stock consisted of the following shares as of December 31, 2020 (in millions) ):

Contingently Redeemable Convertible Preferred Stock Shares Authorized Shares Outstanding Carrying and Liquidation Value

Series A 118 118 $ 600

Series B 66 66 500

Series C 42 39 350

Series D 121 121 1,297

Series E 161 161 2,497

Total 508 504 $ 5,244

Preferred Stock

No shares of preferred stock are outstanding as of December 31, 2021.

As of December 31, 2021, 10 million shares of preferred stock were authorized.

Stock Warrants

The following table summarizes the changes in the Company’s outstanding warrants to purchase common stock:

Weighted Average

Average Remaining

Shares Exercise Contractual

Common Stock Warrants (in millions) Price Term

Outstanding at December 31, 2020 8 $ 6.00 7.6

Transferred from preferred stock warrant 4 9.09

Exercised — —

Cancelled, forfeited or expired — 5.66

Outstanding at December 31, 2021 12 $ 6.84 7.0

Exercisable at December 31, 2021 12 $ 6.84 7.0

The weighted average grant date fair value of common stock warrants granted during the years ended December 31, 2019 and 2020 was $ 2.30 and $ 4.30 , respectively.

RIVIAN AUTOMOTIVE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table summarizes the changes in the Company’s outstanding warrants to purchase preferred stock:

Shares Exercise

Preferred Stock Warrants (in millions) Price

Outstanding at December 31, 2020 4 $ 9.09

Exercised — —

Cancelled, forfeited, expired, or converted ( 4 ) ( 9.09 )

Outstanding at December 31, 2021 — $ —

Exercisable at December 31, 2021 — $ —

As of December 31, 2021 and 2022, the Company had 12 million shares of common stock warrants outstanding and exercisable with a weighted-average exercise price of $ 6.84 .

The weighted-average remaining contractual life of common stock warrants outstanding and exercisable as of December 31, 2021 and 2022 is 7 years and 6 years, respectively.

There was no activity for the year ended December 31, 2022.

The weighted average grant date fair value of common stock warrants granted during the year ended December 31, 2020 was $ 4.30 .

There were no common stock warrants granted during the year ended December 31, 2021.

Fair Value Assumptions

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The dividend yield is estimated based on the rate at which the Company expects to provide dividends.

The risk-free rate is based on the United States Treasury yield curve for Treasury Separate Trading of Registered Interest and Principal of Securities (“STRIPS") with maturities approximating each grant’s contractual life.

The weighted-average assumptions used in the Black-Scholes model for warrants granted during the years ended December 31, 2019 and 2020 are as follows:

Years Ended December 31,

The risk-free rate is based on the United States Treasury yield curve for Treasury Separate Trading of Registered Interest and Principal of Securities with maturities approximating each grant’s contractual life.

The weighted-average assumptions used in the Black-Scholes model for warrants granted were as follows:

December 31, 2020

Volatility 54.7 %

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Contractual term (in years) 10.0

RIVIAN AUTOMOTIVE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

COMMITMENTS AND CONTINGENCIES

Legal Proceedings

Liabilities for loss contingencies arising from claims, assessments, litigation, fines and penalties, and other sources are recorded when it is probable that a liability has been incurred and the related amount can be reasonably estimated.

Liabilities for loss contingencies arising from claims, assessments, litigation, fines and penalties, and other sources are recorded within “Accrued liabilities” on the Consolidated Balance Sheets when it is probable that a liability has been incurred and the related amount can be reasonably estimated.

If an amount within the range of loss appears at the time to be a better estimate than any other amount within the range, the liability is recorded at that amount.

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Legal costs related to contingencies are recognized as expenses as they are incurred.

The Company is involved in legal proceedings and while it is not possible to predict the outcome of these matters with certainty, the Company has developed an initial estimate of the range of outcomes related to unsettled obligations, primarily related to some supplier contract terminations, ranging from $ 16 million to $ 20 million.

As of December 31, 2020 and 2021, the Company recorded an estimated liability for unsettled obligations of $ 21 million and $ 17 million, respectively, within “Accrued liabilities” on the Consolidated Balance Sheets .

The majority of the matters for which an estimated obligation has been recorded are expected to be settled during the year ended December 31, 2022.

RIVIAN AUTOMOTIVE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company is involved in legal proceedings, primarily related to supplier contracts and employment matters.

While it is not possible to predict the outcome of these matters with certainty, the Company has developed an initial estimate of the range of reasonably possible outcomes related to unsettled obligations which, together with the estimated liability, is not material as of December 31, 2021 and 2022.

The estimated liability is not reduced by expected recoveries from third parties, and the majority of the matters for which an estimated obligation has been recorded are expected to be settled during the year ended December 31, 2023.

Unconditional Purchase Obligations

During the year ended December 31, 2022, the Company entered into unrecognized commitments that require the future purchase of goods or services (“unconditional purchase obligations”).

The Company’s unconditional purchase obligations primarily relate to near-term inventory purchase requirements and vary by vendor and payments for hosting services from Amazon (refer to Note 10 "Related Party Transactions" for further information).

As of December 31, 2021, the Company was obligated to make inventory purchases of approximately $ 63 million during the next year.

The Company’s unconditional purchase obligations primarily relate to inventory purchase requirements and vary by vendor.

Future payments under unconditional purchase obligations having a remaining term in excess of one year as of December 31, 2022 are as follows (in millions):

Future Payments

2024 and thereafter 8

NET LOSS PER SHARE

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Upon completion of the IPO during November 2021, all outstanding shares of common stock and contingently redeemable convertible preferred stock automatically converted into an equal number of shares of Class A common stock, and approximately 8 million shares of Class A common stock were exchanged for an equivalent number of shares of Class B common stock.

Except with respect to voting, the rights, including liquidation and dividend rights, of the holders of Class A and Class B common stock are identical (see Note 11 "Contingently Redeemable Convertible Preferred Stock and Stockholders' (Deficit) Equity" ).

Except with respect to voting and conversion, the rights, including liquidation and dividend rights, of the holders of Class A and Class B common stock are identical (see Note 12 "Stockholders' Equity" ).

Accordingly, the undistributed earnings are allocated on a proportionate basis and as a result, net loss per share attributable to common stockholders is the same for Class A and Class B common stock, whether on an individual or combined basis.

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Holders of contingently redeemable convertible preferred stock did not participate in the net loss per share with common stockholders, as they did not have a contractual obligation to share in the Company's losses.

Diluted net loss per share is computed by giving effect to all potential shares of common stock, to the extent dilutive, including stock options, unvested RSUs, and stock warrants.

Potential shares of common stock are excluded from the computation of diluted net loss per share if their effect would have been anti-dilutive for the periods presented or if the issuance of shares is contingent upon events that did not occur by the end of the period, in the case of stock options with a market condition.

The number of potential shares of common stock outstanding at period-end that were excluded from the computation of diluted net loss per share is as follows (in millions):

Diluted net loss per share is computed by giving effect to all potential shares of common stock, to the extent dilutive, including stock options, unvested RSUs, shares underlying the Company’s ESPP, stock warrants, and other stock-based awards.

Potential shares of common stock are excluded from the computation of diluted net loss per share if their effect

RIVIAN AUTOMOTIVE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

would have been anti-dilutive for the periods presented or if the issuance of shares is contingent upon events that did not occur by the end of the period, in the case of stock options with a market condition and other stock-based awards.

The number of potential shares of common stock outstanding during each period that were excluded from the computation of diluted net loss per share is as follows (in millions):

Years Ended December 31,

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Stock options 39 65 61

Restricted stock units — 12 37

RSUs, ESPP, and other stock-based awards 12 37 48

Total 567 114 121

RIVIAN AUTOMOTIVE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

A reconciliation of the numerator and denominator in the calculation of basic and diluted net loss per share is as follows (in millions, except per share data):

A reconciliation of the numerator and denominator used in the calculation of basic and diluted net loss per share is as follows (in millions, except per share data):

Years Ended December 31,

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Net loss attributable to common stockholders, basic and diluted $ ( 1,019 ) $ ( 4,688 ) $ ( 6,752 )

Weighted-average common shares outstanding - basic 98 101 204

Weighted-average Class A and Class B common shares outstanding - basic 101 204 913

Effect of dilutive securities — — —

Weighted-average common shares outstanding - diluted 98 101 204

Net loss per share attributable to common stockholders, basic and diluted $ ( 4.35 ) $ ( 10.09 ) $ ( 22.98 )

Weighted-average Class A and Class B common shares outstanding - diluted 101 204 913

Net loss per share attributable to Class A and Class B common stockholders, basic and diluted $ ( 10.09 ) $ ( 22.98 ) $ ( 7.40 )

RIVIAN AUTOMOTIVE, INC.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data