What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2024-02-26 compared with 2023-02-28 · 331 added, 217 removed, 608 unchanged (47% of the section changed)

6 unchanged sentences

Consolidated Statements of Comprehensive Loss

Consolidated Statements of Changes in Contingently Redeemable Convertible Preferred Stock and Stockholders’ (Deficit) Equity

Consolidated Statements of Changes in Contingently Redeemable Convertible Preferred Stock and Stockholders’ Equity

Consolidated Statements of Cash Flows

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

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).

and subsidiaries (the Company) as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive loss, changes in contingently redeemable convertible preferred stock and stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2023, 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, 2023 and 2022, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2023, in conformity with U.S.

generally accepted accounting principles.

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.

We also have 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, 2023, 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 26, 2024 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

Basis for Opinion

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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;

Controls and Procedures, material weaknesses were identified as of December 31, 2022 that were remediated during the year ended December 31, 2023.

The description of the material weaknesses stated 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 (IT) systems.

As a result, the Company had ineffective information technology general controls (ITGC) 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.

These material weaknesses remained unremediated for a portion of the year ended December 31, 2023.

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.

Evaluating the sufficiency of audit evidence obtained required especially subjective auditor judgment because of the pervasiveness of the material weaknesses noted above that existed throughout a portion of the year ended December 31, 2023.

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

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• 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

• involved information technology professionals with specialized skills and knowledge who assisted in evaluating the remediated design and testing the operating effectiveness of the ITGCs, user access and segregation of duties controls

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

• 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

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and subsidiaries' (the Company) internal control over financial reporting as of December 31, 2023, 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.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have 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, 2023 and 2022, the related consolidated statements of operations, comprehensive loss, changes in contingently redeemable convertible preferred stock and stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2023, and the related notes (collectively, the consolidated financial statements), and our report dated February 26, 2024 expressed an unqualified opinion on those consolidated financial statements.

Basis for Opinion

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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;

(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.

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$ 11,568 $ 7,857

Short-term investments ( Note 4 )

Accounts receivable, net (Note 2)

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Total current liabilities 2,424 2,487

Non-current portion of long-term debt ( Note 7 )

Long-term debt ( Note 8 )

Non-current lease liabilities ( Note 7 )

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Accumulated deficit ( 13,126 ) ( 18,558 )

Accumulated other comprehensive loss — ( 2 )

Accumulated other comprehensive (loss) income ( 2 ) 3

Total stockholders' equity 13,799 9,141

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Cost of revenues (Note 2)

520 4,781 6,464

Gross profit ( 465 ) ( 3,123 ) ( 2,030 )

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Loss on convertible notes, net (Note 8)

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

Other (expense) income, net ( 1 ) 18 6

Loss before income taxes ( 4,688 ) ( 6,748 ) ( 5,431 )

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Net loss $ ( 4,688 ) $ ( 6,752 ) $ ( 5,432 )

Other comprehensive loss — — ( 2 )

Other comprehensive (loss) income — ( 2 ) 5

Comprehensive loss $ ( 4,688 ) $ ( 6,754 ) $ ( 5,427 )

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RIVIAN AUTOMOTIVE, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN CONTINGENTLY REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ (DEFICIT) EQUITY

CONSOLIDATED STATEMENTS OF CHANGES IN CONTINGENTLY REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY

(in millions)

Stockholders' (Deficit) Equity

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

Stockholders' Equity

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

Shares Amount Shares Amount Total

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Capital stock issuance 72 2,650 185 — 14,181 — — 14,181

Warrants issuance — — — — 3 — — 3

Share repurchase and retirement — ( 6 ) — — — — — —

Net loss — — — — — ( 1,018 ) — ( 1,018 )

BALANCE—December 31, 2020 504 5,244 101 — 302 ( 1,686 ) — ( 1,384 )

Capital stock issuance 72 2,650 185 — 14,181 — — 14,181

Conversion of contingently redeemable preferred stock ( 576 ) ( 7,894 ) 576 1 7,893 — — 7,894

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

Capital stock issuance including employee stock purchase plan — — 42 — 63 — — 63

Purchase of capped call options — — — — ( 108 ) — — ( 108 )

Stock-based compensation — — — — 814 — — 814

Other comprehensive income — — — — — — 5 5

Net loss — — — — — ( 5,432 ) — ( 5,432 )

BALANCE—December 31, 2023 — $ — 968 $ 1 $ 27,695 $ ( 18,558 ) $ 3 $ 9,141

See accompanying notes to these consolidated financial statements.

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Depreciation and amortization 197 652 937

Stock-based compensation — 570 987

Other expenses (Note 2)

Stock-based compensation expense 570 987 821

Other expenses 643 — —

Loss on convertible notes, net 441 — —

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

Inventory LCNRV write-downs and losses on firm purchase commitments 95 920 107

Other non-cash activities 36 82 115

Changes in operating assets and liabilities:

Accounts receivable 11 ( 20 ) ( 76 )

Accounts receivable, net ( 20 ) ( 76 ) ( 59 )

Inventory ( 369 ) ( 1,657 ) ( 1,604 )

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Cash flows from investing activities:

Purchases of short-term investments — — ( 2,410 )

Maturities of short-term investments — — 925

Capital expenditures ( 1,794 ) ( 1,369 ) ( 1,026 )

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Proceeds from issuance of convertible notes 2,500 — 3,195

Proceeds from issuance of long-term debt, net of discount and debt issuance costs — 1,226 —

Principal payments and other financing activities ( 6 ) ( 86 ) ( 3 )

Proceeds from issuance of long-term debt 1,226 — —

Purchase of capped call options — — ( 108 )

Other financing activities ( 86 ) ( 3 ) ( 18 )

Net cash provided by financing activities 19,828 99 3,130

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Capital expenditures included in liabilities $ 479 $ 364 $ 374

Capital stock issued to settle bonuses $ — $ — $ 137

Conversion of convertible notes $ 2,941 $ — $ —

Conversion of convertible preferred stock $ 7,894 $ — $ —

Warrants issuance $ 3 $ — $ —

See accompanying notes to these consolidated financial statements.

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Rivian was formed for the purpose of designing, developing, manufacturing, and selling category-defining electric vehicles (“EVs”), accessories, and related services directly to customers in the consumer and commercial markets.

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.

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”).

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

The nature of the Company’s operations during the years ended December 31, 2022 and 2023 was primarily the production and sale of EVs in the United States.

Segment Information

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As the CODM reviews financial information presented on a consolidated basis for purposes of making operating decisions, allocating resources, and evaluating financial performance, the Company has determined that it operates in one operating segment and one reportable segment.

The Company’s assets and revenues are primarily in the United States.

Basis of Presentation

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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, 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 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.

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.

The Company’s allowance for uncollectible amounts was not material as of December 31, 2022 and 2023.

Derivative Instruments

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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.

They are classified within Level 2 of the fair value hierarchy because they are valued using observable inputs other than quoted prices for identical assets or liabilities 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 .

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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.

The Company has entered into commodity contracts and the resulting asset, liability, and aggregate notional amount is not material as of December 31, 2022 and 2023.

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

During the years ended December 31, 2022 and 2023, losses and gains resulting from changes in fair value were not material.

Vehicle Sales

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.

Revenue from the sale of EDVs is recognized in accordance with a bill and hold arrangement, under which risk of ownership has been transferred to the customer but delivery is delayed at the request of the customer.

In such cases, the EDVs are separately identified as belonging to the customer, ready for physical delivery to the customer, and the Company does not have the ability to sell the EDVs to another customer.

As of December 31, 2023, all EDVs under this bill and hold arrangement have been delivered.

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

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

Other Revenues

The Company generates tradable credits from various regulatory standards primarily related to zero-emission vehicles and greenhouse gas.

The Company sells these credits to other manufacturers.

Revenue is recognized at the time control of the regulatory credits is transferred to the purchasing party, and payment is typically received in accordance with customary

RIVIAN AUTOMOTIVE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

payment terms.

Other revenues consist primarily of sales of vehicle trade-ins (“remarketing”), repair and maintenance services, vehicle accessories, and other complementary services.

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 are primarily related to payments for vehicles collected prior to delivery of the EV, generally satisfied within one quarter or less, OTA vehicle software updates, generally satisfied over the estimated useful life of the EV , and extended service contracts, satisfied over the coverage period.

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

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 .

The following table summarizes the Company’s contract liabilities recorded by line item on the Consolidated Balance Sheets (in millions):

December 31, 2022 December 31, 2023

Current portion of lease liabilities and other current liabilities $ 37 $ 88

Other non-current liabilities 32 133

Total contract liabilities $ 69 $ 221

Cost of Revenues

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

Cost of revenues primarily relates to the cost of EVs and includes direct parts, material and labor costs including stock-based compensation, 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.

Warranty and Field Service Actions

The Company provides a manufacturer’s warranty on new consumer vehicles.

A warranty reserve is accrued at the time of sale or once a specific field service action has been identified.

The amount accrued is comprised of management’s estimate of the projected costs to repair, replace, or adjust defective component parts under the applicable warranty period and identified field service actions.

These estimates are based on an analysis of actual claims incurred to date and expectations of the nature, frequency, and costs of future claims by vehicle model, including relevant benchmark data.

The Company reevaluates the adequacy of the warranty reserve on a regular basis and makes revisions when necessary.

Warranty estimates are inherently uncertain, especially given the Company’s limited history of sales, and more historical experience or updates to benchmarks and projections may cause material changes to the warranty reserve in the future.

The following table summarizes the Company’s warranty and field service action reserve recorded by line item on the Consolidated Balance Sheets (in millions):

December 31, 2022 December 31, 2023

Current portion of lease liabilities and other current liabilities $ 30 $ 91

Other non-current liabilities 70 184

Total warranty reserve $ 100 $ 275

Warranty expense is recorded as a component of “Cost of revenues” in the Company’s Consolidated Statements of Operations .

The Company’s warranty and field service action activity for the years ended December 31, 2021 and 2022 was

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.

primarily for warranties issued during the period.

The following table presents the warranty and field service action activity for the year ended December 31, 2023 (in millions):

Year Ended December 31, 2023

Beginning balance $ 100

Warranties issued in period 233

Adjustments to pre-existing warranties ( 22 )

Warranty costs incurred ( 36 )

Ending balance $ 275

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, short-term investments, restricted cash, customer deposits, derivative instruments, and debt.

The Company is exposed to credit risk on cash to the extent that a balance with a financial institution exceeds Federal Deposit Insurance Company insurance limits.

The Company is exposed to credit risk on cash equivalents and short-term investments to the extent that counterparties are unable to settle maturities or sales of investments and on customer deposits to the extent that counterparties are unable to complete the corresponding purchase transaction.

The Company is exposed to credit risk on derivative instruments to the extent that counterparties are unable to settle derivative asset positions and on debt to the extent that the senior secured asset-based revolving credit facility (“ABL Facility”) lenders are not able to extend credit.

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

As of December 31, 2022 and 2023, all of the Company’s cash, typically in amounts exceeding insured limits, was distributed across several large financial institutions that the Company believes are of high credit quality.

Management evaluates and approves credit standards and oversees the credit risk management function related to cash equivalents, short-term investments, and customer deposits.

As of December 31, 2022 and 2023, the counterparties to the Company’s derivative instruments and the ABL Facility lenders are financial institutions that the Company 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 input materials or product 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 the Company’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.

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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

A three-level valuation hierarchy, based upon observable and unobservable inputs, is used for fair value measurements.

Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect market assumptions based on the best evidence available.

These two types of inputs create the following fair value hierarchy:

• Level 1 – Quoted prices for identical instruments in active markets

• Level 2 – Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-derived valuations whose significant inputs are observable

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

Depending on the

RIVIAN AUTOMOTIVE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

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, consulting and contractor expenses, amortized equipment costs, and allocation of indirect costs.

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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The expedients and exceptions provided do not apply to contract modifications made and most hedging relationships entered into or evaluated after December 31, 2024.

The Company expects to adopt the provisions of the ASU as of the beginning of any interim period in which LIBOR is discontinued from the Company’s transactions that reference LIBOR.

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

The Company adopted the provisions of the ASU during the year ended December 31, 2023 with no impact to the consolidated financial statements.

As of December 31, 2023, the Company does not have any LIBOR-based debt outstanding.

ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures updates required disclosures of significant reportable segment expenses that are regularly provided to the CODM and included within each reported measure of a segment's profit or loss.

This ASU also requires disclosure of the title and position of the individual identified as the CODM and an explanation of how the CODM uses the reported measures of a segment’s profit or loss in assessing segment performance and deciding how to allocate resources.

The ASU is effective for annual periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, though early adoption is permitted.

Adoption of the ASU should be applied retrospectively to all prior periods presented in the financial statements.

The Company is currently evaluating the presentational impact of this ASU and expects to adopt in the year ended December 31, 2024.

ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures enhances the transparency and usefulness of income tax disclosures.

The updates are effective for annual periods beginning after December 15, 2024 on a prospective basis, though early adoption is permitted.

The Company is currently evaluating the presentational impact of this ASU and expects to adopt in the year ended December 31, 2025.

RIVIAN AUTOMOTIVE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FAIR VALUE MEASUREMENTS

Cash and cash equivalents include cash in banks and highly liquid investments with maturities of three months or less recorded in “Cash and cash equivalents” on the Consolidated Balance Sheets .

Short-term investments are available-for-sale debt securities and term deposits with maturities over three and up to twelve months recorded in “Short-term investments” on the Consolidated Balance Sheets .

The Company’s available-for-sale debt securities are measured at fair value with unrealized gains and losses recorded in “Other comprehensive (loss) income” on the Consolidated Statements of Comprehensive Loss with reclassification to net loss upon maturity or sale of the security.

Term deposits are recorded at cost, which approximates fair value due to their short time to maturity.

Interest receivable on cash equivalents and short-term investments is recorded in “Other current assets” on the Consolidated Balance Sheets and was not material of December 31, 2022 and 2023.

Total restricted cash was $ 531 million and $ 0 as of December 31, 2022 and 2023, respectively.

Restricted cash consisted of the balance of an account under the dominion and control of the administrative agent under the ABL Facility.

In April 2023, all of the Company’s restricted cash associated with the ABL Facility was released due to expanded assets in the borrowing base in conjunction with the ABL Facility amendment.

See Note 8 “Debt” for more information on the ABL Facility.

A three-level valuation hierarchy, based upon observable and unobservable inputs, is used for fair value measurements.

Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect market assumptions based on the best evidence available.

These two types of inputs create the following fair value hierarchy:

• Level 1 – Quoted prices for identical instruments in active markets

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

The following table presents the fair value of the Company’s cash and cash equivalents and short-term investments and their corresponding level within the fair value hierarchy:

December 31, 2022 December 31, 2023

(in millions) Level Amount

(in millions)

Cash and cash equivalents:

Cash $ 2,604 $ 1,245

Money market funds 1 7,147 1 6,070

Commercial paper 1 845 2 517

United States Treasury securities 1 822 1 25

Certificates of deposit 1 150 —

Total cash and cash equivalents $ 11,568 $ 7,857

Short-term investments:

United States Treasury securities $ — 1 $ 1,061

Term deposits — 2 450

Total short-term investments $ — $ 1,511

Total cash and cash equivalents and short-term investments $ 11,568 $ 9,368

As of December 31, 2022 and 2023, the fair value of cash equivalents and short-term investments approximated their cost.

Fair value measurements classified within Level 2 of the fair value hierarchy are determined using observable inputs other than quoted prices for identical assets in active markets.

RIVIAN AUTOMOTIVE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Refer to Note 2 “Summary of Significant Accounting Policies” and Note 8 "Debt" for more information about the fair value of the Company’s derivative instruments and debt, respectively.

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.

Inventory is stated at the 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.

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

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.

4 unchanged sentences

Total inventory $ 1,348 $ 2,620

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 .

The balance of the Company’s inventory was written down by $ 582 million and $ 319 million from its cost to its NRV as of December 31, 2022 and 2023, respectively.

Additionally, the Company has a liability for LCNRV losses related to firm purchase commitments which were $ 338 million and $ 126 million as of December 31, 2022 and 2023, respectively, and are reflected in the “Inventory” component of “Accrued liabilities” on the Consolidated Balance Sheets .

Refer to Note 9 "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).

The impact of inventory LCNRV write-downs and the change in liability for LCNRV losses on firm purchase commitments was $ 95 million, $ 920 million, and $ 107 million during the years ended December 31, 2021, 2022, and 2023, respectively, and is recorded in “Cost of revenues” in the Company’s Consolidated Statements of Operations .

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.

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Total property, plant, and equipment, net $ 3,758 $ 3,874

RIVIAN AUTOMOTIVE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Depreciation and amortization expense was $ 197 million, $ 647 million, and $ 917 million for the years ended December 31, 2021, 2022 and 2023, respectively.

10 unchanged sentences

Leases that are economically similar to the purchase of an asset are classified as finance leases.

The Company’s carrying value of finance leases is not material for all periods reported.

Lease expense for operating leases is recognized on a straight-line basis over the lease term.

The Company’s carrying value of finance leases is not material for the years ended December 31, 2021 and 2022.

The Company and the State of Georgia and the Joint Development Authority of Jasper County, Morgan County, Newton County and Walton County (“JDA”) entered into a development agreement in May 2022 to build the manufacturing facility near Atlanta, Georgia (“ Stanton Springs North Facility”).

In November 2023, the Company and the JDA entered into a rental agreement, a bond purchase agreement, and an option agreement (the “Project Agreements”) pursuant to which the JDA is leasing land to the Company in exchange for the Company making rent payments totaling $ 309 million over the lease term.

The noncancelable lease term is four years with automatic extensions reasonably certain to be utilized.

The lease expires in December 2047 unless earlier terminated per the terms of the agreement.

The lease is classified as a finance lease as the Company is reasonably certain to exercise the purchase option at expiration.

Under the Project Agreements, the Company is required to make capital expenditures in the project of at least $ 5 billion by December 31, 2030 in exchange for various development incentives, tax credits and exemptions, and government grants.

Lease expense for operating leases is comprised of rent expense recognized on a straight-line basis over the lease term and amortization of right-of-use assets recognized as the difference between rent expense and imputed interest on the liability using the effective interest method.

Lease expense for finance leases is comprised of interest expense on the liability recognized using the effective interest method and amortization of the right-of-use assets recognized on a straight-line basis over the shorter of the useful life of the asset or the lease term.

The Company does not recognize right-of-use assets and lease liabilities for short-term leases with an original lease term of 12 months or less.

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 .

Instead, expense representing the rent payments is recognized on a straight-line basis over the lease term.

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 (in millions):

December 31, 2021 December 31, 2022

Lease assets are recorded net of accumulated amortization.

The following tables present the carrying value of operating and finance lease right-of-use assets and lease liabilities recorded within the corresponding line items on the Company’s Consolidated Balance Sheets (in millions):

Operating Leases December 31, 2022 December 31, 2023

Operating lease assets, net $ 330 $ 356

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Long-term lease liabilities 311 324

Total lease liabilities $ 264 $ 379

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

Operating Leases

Total operating lease liabilities $ 379 $ 409

Finance Leases December 31, 2023

Property, plant, and equipment, net $ 76

Current portion of lease liabilities and other current liabilities $ 3

Other non-current liabilities 76

Total finance lease liabilities $ 79

The following table summarizes the contractual maturities of lease liabilities as of December 31, 2023 (in millions):

Operating Leases Finance Leases

2024 $ 120 $ 5

Thereafter 91 301

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Total lease liabilities $ 409 $ 79

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

The future minimum lease payments for operating and finance leases that have not yet commenced are not material.

The leases will commence in 2024 and 2025 with lease terms ranging from 3 to 12 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:

Total lease cost for the year ended December 31, 2021 was no t material.

Total lease cost for the years ended December 31, 2022 and 2023 was $ 86 million and $ 134 million, respectively, 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 leases were as follows:

December 31, 2021 December 31, 2022 December 31, 2023

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Weighted average operating lease discount rate 4.0 % 7.0 % 8.9 %

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

Weighted average remaining finance lease term (in years) Not material 22.1

Weighted average finance lease discount rate Not material 10.7 %

RIVIAN AUTOMOTIVE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Years Ended December 31,

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Right-of-use assets obtained in exchange for operating lease liabilities (non-cash) $ 87 $ 158 $ 111

RIVIAN AUTOMOTIVE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Right-of-use assets obtained in exchange for finance lease liabilities (non-cash) Not material $ 80

The following table summarizes the Company’s outstanding debt:

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2026 Notes 2026 $ 1,250 11.3 % $ 1,250 12.0 %

2029 Green Convertible Notes 2029 — — % 1,500 4.9 %

2030 Green Convertible Notes 2030 — — % 1,725 3.8 %

Total long-term debt 1,250 4,475

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The 2021 Convertible Notes accrued interest quarterly at a rate of (i) zero percent ( 0 %) from the date of issuance to, and including, June 30, 2022 and (ii) five percent ( 5 %) after June 30, 2022.

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

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

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 was recognized in “Loss on convertible notes, net” in the Consolidated Statement of Operations and was calculated as follows (in millions):

During the year ended December 31, 2021, the loss on the 2021 Convertible

RIVIAN AUTOMOTIVE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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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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

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.

Interest on LIBOR borrowings under the ABL Facility is due at maturity of each LIBOR period, and interest on non-LIBOR borrowings under the ABL Facility is due on a quarterly basis.

The Company is required to pay a quarterly commitment fee of 0.25 % per annum based on the unused portion of the ABL Facility.

The ABL Facility contains certain affirmative and negative covenants and conditions to borrowing or taking other actions that restrict certain of the Company’s subsidiaries’ ability to, among other things, incur debt, grant liens, make investments, enter into certain transactions with affiliates, pay dividends, and prepay junior or unsecured indebtedness, subject to certain exceptions.

In April 2023, the Company amended and restated the credit agreement governing the ABL Facility which extended the maturity date to April 2028 (unless due earlier pending the maturity of certain debt exceeding $ 200 million).

The revolving commitment of the facility doubled to $ 1,500 million and has an annual interest rate between 1.25 % and 1.75 %, plus daily Secured Overnight Financing Rate (“SOFR”), plus 0.10 % credit spread adjustment, subject to a 0.00 % floor.

In addition, the Company is required to pay a quarterly commitment fee between 0.20 % and 0.25 % per annum based on the unused portion of the ABL Facility.

Availability under the ABL Facility is based on the lesser of the borrowing base and the committed $ 1,500 million cap and is reduced by borrowings and the issuance of letters of credit.

The letter of credit sub-limit increased from $ 500 million to $ 1,000 million and the eligibility of assets in the borrowing base expanded allowing for the release of all restricted cash associated with the ABL Facility.

The ABL Facility is secured by certain assets of the Company and contains certain affirmative and negative covenants and conditions to borrowing or taking other actions that restrict certain of the Company’s subsidiaries’ ability to, among other things, incur debt, grant liens, make investments, enter into certain transactions with affiliates, pay dividends, and prepay junior or unsecured indebtedness, subject to certain exceptions.

The covenants include a minimum liquidity requirement and fixed charge coverage ratio calculated quarterly.

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

As of December 31, 2023, 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 $ 1,100 million after giving effect to the borrowing base and the outstanding letters of credit.

As of December 31, 2023, the Company was in compliance with all covenants required by the ABL Facility.

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, 2022, the contractual interest rate on the notes was 10.1 %.

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

The 2026 Notes bear interest at (x) six-month SOFR, subject to a 1.00 % floor, plus (y) the credit spread adjustment of 0.43 %, plus (z) 5.6 % per annum.

As of December 31, 2023, the contractual interest rate on the notes was 11.5 %.

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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As of December 31, 2023, the Company was in compliance with all covenants required by the 2026 Notes.

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.

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

As of December 31, 2022 and 2023, the fair value of the 2026 Notes was $ 1,216 million and $ 1,250 million, respectively.

Green Convertible Notes

2029 Green Convertible Notes

In March 2023, the Company issued $ 1,500 million principal amount of the 2029 Green Convertible Notes at a discount of $ 15 million in a private offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act.

The 2029 Green Convertible Notes were issued pursuant to, and are governed by, an indenture dated March 10, 2023, between the

RIVIAN AUTOMOTIVE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Company and U.S.

Bank Trust Company, National Association.

The 2029 Green Convertible Notes accrue interest at a rate of 4.625 % per annum, payable semi-annually in arrears on March 15 and September 15 .

Before December 15, 2028, the 2029 Green Convertible Notes are convertible at the option of the noteholders only upon the occurrence of certain events, as described in the indenture.

From and after December 15, 2028, the 2029 Green Convertible Notes are convertible at any time at the noteholders’ election until the close of business on the second scheduled trading day immediately before the maturity date.

The Company will settle conversions by paying or delivering, as applicable, cash, shares of the Company’s Class A common stock, or a combination of cash and shares of the Company’s Class A common stock, at the Company’s election.

The initial conversion rate is 49.6771 shares of common stock per $1,000 principal amount of 2029 Green Convertible Notes, which represents an initial conversion price of approximately $ 20.13 per share of the Company’s Class A common stock.

The conversion rate and conversion price will be subject to customary adjustments upon the occurrence of certain events.

The 2029 Green Convertible Notes are redeemable in whole or in part (subject to certain limitations) at the Company’s option at any time on or after March 20, 2026 and on or before the 20th scheduled trading day immediately before the maturity date, but only if the last reported sale price per share of the Company’s Class A common stock exceeds 130 % of the conversion price for a specified period of time.

If certain events that constitute a Fundamental Change (as defined by the indenture) for the 2029 Green Convertible Notes occur, then, subject to limited exceptions, noteholders may require the Company to repurchase their notes for cash.

The cash repurchase price is equal to the principal amount of the notes to be repurchased, plus any accrued and unpaid interest, if any, to, but excluding, the applicable repurchase date.

The 2029 Green Convertible Notes contain a number of customary covenants.

The 2029 Green Convertible Notes are classified within Level 2 of the fair value hierarchy because they are valued using quoted prices for identical assets in markets that are not active.

As of December 31, 2023, the fair value of the 2029 Green Convertible Notes was $ 2,110 million.

2030 Green Convertible Notes

In October 2023, the Company issued $ 1,725 million principal amount of the 2030 Green Convertible Notes at a discount of $ 15 million in a private offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act.

The 2030 Green Convertible Notes were issued pursuant to, and are governed by, an indenture dated October 11, 2023, between the Company and U.S.

Bank Trust Company, National Association.

The 2030 Green Convertible Notes accrue interest at a rate of 3.625 % per annum, payable semi-annually in arrears on April 15 and October 15.

Before July 15, 2030, the 2030 Green Convertible Notes are convertible at the option of the noteholders only upon the occurrence of certain events, as described in the indenture.

From and after July 15, 2030, the 2030 Green Convertible Notes are convertible at any time at the noteholders’ election until the close of business on the second scheduled trading day immediately before the maturity date.

The initial conversion rate is 42.929 shares of common stock per $1,000 principal amount of 2030 Green Convertible Notes, which represents an initial conversion price of approximately $ 23.29 per share of the Company’s Class A common stock.

The conversion rate and conversion price will be subject to customary adjustments upon the occurrence of certain events.

The 2030 Green Convertible Notes are redeemable in whole or in part (subject to certain limitations) at the Company’s option at any time on or after October 20, 2027 and on or before the 20th scheduled trading day immediately before the maturity date, but only if the last reported sale price per share of the Company’s Class A common stock exceeds 130 % of the conversion price for a specified period of time.

If certain events that constitute a Fundamental Change (as defined by the indenture) for the 2030 Green Convertible Notes occur, then, subject to limited exceptions, noteholders may require the Company to repurchase their notes for cash.

The cash repurchase price is equal to the principal amount of the notes to be repurchased, plus any accrued and unpaid interest, if any, to, but excluding, the applicable repurchase date.

The 2030 Green Convertible Notes contain a number of customary covenants.

RIVIAN AUTOMOTIVE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The 2030 Green Convertible Notes are classified within Level 2 of the fair value hierarchy because they are valued using quoted prices for identical assets in markets that are not active.

As of December 31, 2023, the fair value of the 2030 Green Convertible Notes was $ 2,121 million.

The Company intends to use the net proceeds from the 2029 Green Convertible Notes and 2030 Green Convertible Notes (together the “Green Convertible Notes”) to finance, refinance, or make direct investments in, in whole or in part, one or more new or existing eligible green projects, as described in the Company’s green financing framework.

In October 2023, in connection with the issuance of the 2030 Green Convertible Notes, the Company paid $ 108 million to purchase privately negotiated capped call transactions (the “Capped Calls”) with certain financial institutions.

The initial strike price of the Capped Calls is approximately $ 23.29 per share of the Company’s Class A common stock, which is the initial conversion price of the 2030 Green Convertible Notes.

The initial cap price of the Capped Calls is approximately $ 31.06 per share of the Company’s Class A common stock, which represents a premium of 70 % over the last reported sale price of the Company’s Class A common stock on October 5, 2023, and is subject to certain anti-dilution adjustments under the terms of the Capped Calls.

The Capped Calls cover, subject to customary anti-dilution adjustments, the aggregate number of shares of the Company’s Class A common stock that initially underlie the 2030 Green Convertible Notes, and are expected generally to reduce potential dilution to the Company’s Class A common stock upon any conversion of the 2030 Green Convertible Notes and/or offset any cash payments the Company is required to make in excess of the principal amount of converted 2030 Green Convertible Notes, as the case may be, with such reduction and/or offset subject to a cap, based on the cap price of the Capped Calls.

The Capped Calls are separate transactions entered into by the Company and the applicable counterparties, and are not part of the terms of the 2030 Green Convertible Notes, and do not affect any holder’s rights under the 2030 Green Convertible Notes or the indenture.

Holders of the 2030 Green Convertible Notes do not have any rights with respect to the Capped Calls.

As the Capped Calls are indexed to the Company’s own stock and qualified for equity classification, they were not accounted for as derivatives and were recorded as a reduction of the Company’s “Additional paid-in capital” on the C onsolidated B alance S heets and will not be remeasured.

Interest Expense

2 unchanged sentences

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

December 31, 2022 December 31, 2023

Payroll and related costs $ 259 $ 328

Capital expenditures 265 263

Inventory 367 241

Other products and services 169 169

Total accrued liabilities $ 1,154 $ 1,145

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

RIVIAN AUTOMOTIVE, INC.

19 unchanged sentences

As of December 31, 2023, the Company recorded valuation allowances of $ 4,866 million for the portion of deferred tax assets that is not expected to be realized.

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 net United States deferred tax assets recognized in the respective years.

The valuation allowance on net deferred tax assets increased by $ 1,541 million during the year ended December 31, 2023.

The change in the valuation allowance is primarily due to additional net United States deferred tax assets recognized during the year.

The Company had no releases of valuation allowances for the years ended December 31, 2022 and 2023.

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Inventory 203 179

Deferred revenue 8 33

Operating lease liabilities 94 101

Stock-based compensation 110 88

Accrued liabilities 29 81

R&D capitalization 369 804

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Additionally, the Company has $ 9,154 million of carryforwards for state NOLs.

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 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.

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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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.

The Company had no accrued interest or penalties as of December 31, 2022 and 2023.

The Company’s unrecognized tax benefits related to the Company’s United States R&D tax credit.

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.

The Company had the following activity related to unrecognized tax benefits (in millions):

Years Ended December 31,

Beginning balance $ — $ 38

Additions for current year tax positions 16 15

Additions for tax positions of prior years 22 8

Ending balance $ 38 $ 61

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.

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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.

The Company’s stock options have seven - or ten-year contractual terms and unvested stock options and RSUs generally are forfeited upon the termination of a grantee’s service.

1 unchanged sentence

As of December 31, 2023, 64 million and 167 million shares were reserved for issuance under the 2015 Stock Plan and 2021 Stock Plan, respectively.

Generally, the Company’s stock options vest in annual installments based on a requisite service period of four years of continuous service and may contain performance conditions related to production and other targets.

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 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

RSUs generally vest in quarterly installments based on a requisite service period of 2 to 4 years of continuous service.

Expense is recognized on an accelerated basis for awards granted prior to the IPO due to the IPO as a 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.

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 10th anniversary of the award.

A portion of the stock option contains only a service condition, which vests over a requisite service period of six years following the IPO.

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 the 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.

2 unchanged sentences

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.

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 .

Starting in the year ended December 31, 2022, the Company approved the payment of bonus incentives to be made under the 2021 Stock Plan in the form of stock-based awards, which vest immediately upon grant in the first quarter of each year.

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

As of December 31, 2022 and 2023, the total amount of accrued stock-based bonus incentives was $ 139 million and $ 188 million within the “Payroll and related costs” component of “Accrued liabilities” on the Consolidated Balance Sheets .

Refer to Note 9 "Accrued Liabilities" for more information about Accrued liabilities.

The following table summarizes the Company’s stock option and restricted stock unit activity during the year ended December 31, 2023:

12 unchanged sentences

The weighted-average grant-date fair value of stock options granted during the years ended December 31, 2021, 2022 and 2023 was $ 10.03 , $ 21.64 , and $ 10.49 , 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 aggregate intrinsic value of stock options exercised during the years ended December 31, 2021, 2022 and 2023 was $ 127 million, $ 105 million, and $ 29 million, respectively.

The weighted-average grant-date fair value of RSUs granted during the years ended December 31, 2021 and 2022 was $ 43.94 and $ 35.87 , 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.

There were no RSUs vested during the year ended December 31, 2021.

The total fair value of RSUs vested during the years ended December 31, 2022 and 2023 was $ 566 million and $ 630 million, respectively.

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):

The following table summarizes Company’s stock-based compensation expense for the Stock Plans and 2021 Employee Stock Purchase Plan (“ESPP”) by line item in the Consolidated Statements of Operations (in millions):

Years Ended December 31,

2021 2022 2023

Cost of revenues $ 16 $ 60 $ 85

13 unchanged sentences

The exercise price of all stock options granted during the years ended December 31, 2021, 2022 and 2023 was equal to or greater than the fair market value of Rivian's stock at the date of grant.

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

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

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

11 unchanged sentences

Expected term (in years) 5.6 6.8 6.3

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

The independent appraisal used a market approach with an adjustment for lack of

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.

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.

2 unchanged sentences

In light of initial information received in estimation of the Company’s IPO price range and the proximity of stock-based awards granted from July 20, 2021 to the IPO, the Company established the fair value of a share of the Company’s common stock applicable to stock options and RSUs granted from July 20, 2021 onward using a straight-line interpolation from the July 20, 2021 fair value estimated using an independent appraisal to the midpoint of the initial price range in order to calculate unrecognized stock-based compensation expense.

The grant-date fair value of stock options granted after the IPO is measured using the Black-Scholes option pricing model described above.

The grant-date fair value of RSUs granted after the IPO is equal to the closing trading price of the Company‘s common stock on the grant date .

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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.

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

(“Logistics”).

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Rowe Price with an aggregate $ 285 million principal amount (refer to Note 8 "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.

The Company recorded $ 343 million and $ 823 million in revenues from Amazon for the years ended December 31, 2022 and 2023, 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 and 2023, the uncollected amounts related to these revenues in “Accounts receivable, net” on the Consolidated Balance Sheets were $ 60 million and $ 6 million, respectively.

As of December 31, 2022 and 2023, contract liabilities related to these revenues, primarily related to extended service contracts, were $ 14 million and $ 72 million, respectively.

Refer to Note 2 "Summary of Significant Accounting Policies" for more information about revenue.

Operating Expenses

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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 year ended December 31, 2021, expenses related to these services were no t material.

During the years ended December 31, 2022 and 2023, expenses related to these services of $ 60 million and $ 63 million, respectively, were recorded in “Research and development” and “Selling, general, and administrative” in the Consolidated Statements of Operations .

As of December 31, 2022 and 2023, the unpaid amounts related to these services were not material.

Unconditional Purchase Obligations and Commitments

Refer to Note 14 "Commitments and Contingencies" for more information about unconditional purchase obligations with Amazon.

STOCKHOLDERS’ EQUITY

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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.

RIVIAN AUTOMOTIVE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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:

12 unchanged sentences

As of December 31, 2021, 2022, and 2023, 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.

The weighted-average remaining contractual life of common stock warrants outstanding and exercisable as of December 31, 2021, 2022, and 2023 is 7 years, 6 years, and 5 years, respectively.

There were no common stock warrants granted during the years ended December 31, 2021 and 2022.

There was no activity for the year ended December 31, 2023.

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

The Company estimates the fair value of each stock warrant using a Black-Scholes warrant pricing model.

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

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 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 %

Dividend yield — %

Risk-free rate 0.7 %

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 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.

When no amount within the range is a better estimate than any other amount, however;

the liability is recorded at the minimum amount in the range.

If a loss is reasonably possible and the amount of the loss or range of loss cannot be reasonably estimated, the Company discloses the nature of the possible loss and states that such an estimate cannot be made .

Legal Proceedings and Loss Contingencies

The Company accrues contingencies when management believes that a loss is probable and the amounts can be reasonably estimated, while contingent gains are recognized only when realized.

In the event any losses are sustained in excess of accruals, they are charged against income in the period they occur.

In evaluating loss contingencies, management takes into consideration factors such as historical experience with matters of similar nature, specific facts and circumstances, and the likelihood of prevailing.

Management evaluates and updates accruals as matters progress over time.

It is reasonably possible that some of the matters for which accruals have not been established could be decided unfavorably to the Company and could require recognizing future expenditures.

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

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.

The Company is involved in legal proceedings and evaluates other loss contingencies, primarily related to supplier contract claims and employment matters which may result in obligations of the Company.

The Company believes it has valid defenses

RIVIAN AUTOMOTIVE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

with respect to these matters.

However, as of December 31, 2023, the Company has accrued approximately $ 80 million for probable losses related to these matters.

It is reasonably possible that losses could occur in excess of amounts accrued.

As of December 31, 2023, the Company estimates its reasonably possible risk of loss to be up to approximately $ 160 million, which includes the amounts accrued.

We expect the majority of the matters to be resolved within the next 12 months.

Unconditional Purchase Obligations

During the year ended December 31, 2023, 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 inventory purchase requirements and vary by vendor.

The Company’s unconditional purchase obligations primarily relate to inventory purchase requirements varying by vendor and data services, including hosting, storage, and compute from Amazon.

Future payments under unconditional purchase obligations having a remaining term in excess of one year as of December 31, 2023 are as follows (in millions):

Future Payments

Total Future Payments

NET LOSS PER SHARE

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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, 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

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

The following table presents the number of potential shares of

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):

common stock outstanding as of the end of each period that were excluded from the computation of diluted net loss per share for each period (in millions):

Years Ended December 31,

2021 2022 2023

Green Convertible Notes — — 149

Stock warrants 12 12 12

Contingently redeemable convertible preferred stock 504 — —

Stock options 65 61 62

1 unchanged sentence

Total 114 121 287

Capped Calls are excluded from the calculation of diluted earnings per share as they would be antidilutive.

However, upon conversion, there will be no economic dilution from the 2030 Green Convertible Notes unless the market price of the Company’s Class A common stock exceeds the cap price as exercise of the Capped Calls offsets any dilution from the 2030 Green Convertible Notes from the conversion price up to the cap price.

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):

2 unchanged sentences

Net loss attributable to Rivian $ ( 4,688 ) $ ( 6,752 ) $ ( 5,432 )

Premium on repurchase of convertible preferred stock ( 1 ) — —

Net loss attributable to common stockholders, basic and diluted $ ( 4,688 ) $ ( 6,752 ) $ ( 5,432 )

6 unchanged sentences

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