Rivian Automotive, Inc. annual report, FY2021

Rivian Automotive, Inc. — FY2021 Form 10-K

Reporting period: Fiscal year ended December 31, 2021. This is an annual report; the figures below are full-year amounts, not standalone fourth-quarter results. Rivian designs and manufactures electric consumer vehicles, commercial vans, and related services. First deliveries of the R1T, R1S, and Amazon delivery van began in 2021.

Financial and operating performance

Metric	FY2021	FY2020
Revenue	$55 million	$0
Cost of revenue	$520 million	$0
Gross profit (loss)	$(465) million	$0
Operating expenses	$3.755 billion	$1.021 billion
Operating loss	$(4.220) billion	$(1.021) billion
Net loss	$(4.688) billion	$(1.018) billion
Net cash used in operating activities	$(2.622) billion	$(848) million
Capital expenditures / investing cash flow	$(1.794) billion	$(914) million

• Gross margin was approximately negative 845%, reflecting early, low-volume production and elevated labor and factory overhead. Rivian recorded a $95 million inventory write-down and cited higher expedited freight costs.
• Cash and cash equivalents were $18.133 billion at year-end, versus $2.979 billion a year earlier. The company also reported $306 million of availability under its ABL facility. Cash and restricted cash together were $18.423 billion in the cash flow statement.
• Outstanding debt had $1.3 billion of principal at year-end; the balance sheet reported $1.226 billion of long-term debt, net of discount and issuance costs. The $1.25 billion senior secured floating-rate notes mature in 2026. There were no ABL borrowings outstanding.
• Rivian produced 1,015 vehicles and delivered 920 for 2021, according to the business overview. The MD&A separately reports 1,009 R1Ts and two R1Ss produced and 917 R1Ts and two R1Ss delivered by year-end.

Material changes versus prior year

• Revenue began in 2021 with initial vehicle deliveries; FY2020 had no revenue. The filing attributes approximately $55 million of 2021 revenue primarily to the first 917 R1T customer deliveries.
• Net loss widened to $4.688 billion from $1.018 billion. R&D rose to $1.850 billion from $766 million, and selling, general and administrative expense rose to $1.242 billion from $255 million, reflecting business growth, higher headcount, and stock-based compensation.
• FY2021 included $570 million of stock-based compensation, a $441 million loss on conversion of the 2021 convertible notes, and $663 million of other expense for a charitable contribution to Forever by Rivian. These materially affected reported results.
• Cash from financing activities was $19.828 billion, principally including $13.5 billion of net IPO proceeds, alongside preferred-stock and debt financing. Operating and investing cash outflows also increased as Rivian ramped production and built out its Normal, Illinois factory.

Outlook, commentary, and risks

• Management said year-end cash, IPO proceeds, and ABL availability were expected to fund operating expenses, working capital, and capital expenditures for at least the next 12 months. Rivian expects continued losses and significant investment; the filing provides no quantified revenue or earnings guidance.
• The Normal factory had installed capacity of up to 150,000 vehicles annually (approximately 65,000 R1-platform and 85,000 commercial-platform vehicles). Rivian did not expect to reach an annualized production rate equal to that capacity until late 2023. A second Georgia facility was planned, with anticipated capacity of up to 400,000 vehicles annually.
• Management said near-term production growth would be constrained by supply-chain conditions. Risks include semiconductor and battery-material shortages, inflation and input-cost increases, supplier concentration, manufacturing ramp execution, and the ability to scale service and charging infrastructure.
• Amazon’s initial order was for 100,000 delivery vans, but the agreement has no minimum purchase requirement; Amazon can adjust quantities or timing and may terminate under specified provisions. Amazon was also a significant stockholder. As of March 8, 2022, Rivian reported approximately 83,000 R1 preorders in the U.S. and Canada, each backed by a cancellable, refundable $1,000 deposit.
• Rivian recorded a $95 million inventory valuation charge and expects near-term pressure from low production volumes and expedited freight. It also disclosed a small, contained battery-line fire in October 2021, with no injuries, equipment damage, or production delay.
• Management concluded disclosure controls were ineffective at December 31, 2021 because material weaknesses in segregation-of-duties controls and IT general controls remained. The company said these weaknesses did not cause a material misstatement of the financial statements and described remediation steps.
• Legal matters include Tesla’s trade-secret lawsuit and two securities class actions filed in March 2022 relating to the IPO and subsequent period. Management said it intended to defend the claims and did not expect the pending matters, based on current knowledge, to have a material adverse effect; outcomes remain uncertain.

Investor verification priorities

1. Reconcile the filing’s total production and delivery figures with the model-specific R1T and R1S counts, including commercial-van activity.
2. Track production volumes, delivery timing, unit costs, gross margin, inventory write-downs, and the extent of supply-chain and inflation pressures.
3. Assess cash burn and planned capital spending against factory expansion, service and charging investments, and management’s liquidity outlook.
4. Review Amazon order terms and actual purchases, and monitor preorder cancellations and conversion to completed sales.
5. Monitor debt terms, floating-rate exposure, liquidity covenant compliance, and the use of any additional financing.
6. Follow remediation of internal-control weaknesses and developments in the disclosed litigation.