Inside Rivian’s Strategy to Survive a Hostile EV Market

23:15Kara Swisher:So let's talk a little bit about some of the obstacles you're facing, though, because let's talk about consumers, because that's really where the—I hate to make metaphors, but rubber meets the road. The big one right now is that EV sales in the U.S. took a no-sive at the end of last year. Rivian's fourth quarter sales were down more than 30 percent compared to the same period. Now, that's not unique to Rivian, by the way. Ford stopped making F-150 Lightning, which I tried out. Terrific car. GM paused production of its electric Hummers, which I also tried a cool car. And Cadillac Escalade, same thing.

23:45Kara Swisher:Beautiful car, actually. The Escalade was stunning. Stellantis canceled plans for an all-electric Ram pickup truck. Now, I get that because when I wrote a column six years ago and said, someday you're not going to own a car, most of the letters I got were from truck people who were like in the Midwest. We want our cars. I'm like, fine. I think it was like having a horse, something like that. And I said, fine, have your fucking horse. I don't care. but this is where it's going like it's like the people who like a phone in their house um i don't think these are going there i'm quite bullish on them too but what do you do to deal with the obviously the drop in the man you've had to cut 600 employees many car makers are doing this uh tesla's fallen off a cliff really even though the stock keeps growing that's a whole different meme situation but one of the reasons for the drop in sales is because trump administration and congressional republicans ended federal tax credits for people buying evs which has been around for a long time.

24:37Kara Swisher:Trump has three more years in his term. So how do you navigate those years, given if the federal government is working against efforts to push more people and companies towards EVs? Yeah. Well, the way we think about it is ultimately our job, and that is, I think this is true for any company that's making products, is to develop products that are highly compelling. And in order to truly drive electrification adoption, the products need to be not like slightly better or as good as. They need to be a wildly more compelling choice than an ICE alternative. And so that was the philosophy that drove me to start Rivian.

25:21It was before any of these policies existed. This philosophy still drives us today as we think about R2. And so when we look at it, it's the performance, it's like zero to 60, the driving dynamics need to be exceptional, best in class, the storage and functionality and features that allow you to fit your gear, your pets, your stuff need to be really thoughtful. The design needs to be something that's compelling. And then range and the time to charge the vehicle need to be really nice. And this is perhaps the one that's maybe most difficult to explain until you experience it. which is once you try an EV and eliminate the need to go to a gas station, and if you have charging at your home, which most folks do in the United States, of course there's challenges in highly urban environments, but in most of the United States.

26:12It's not that hard anymore. Yeah, it's not that hard. It isn't. It just isn't. And it's really nice. Your cars, you don't have to think about, did I put fuel in it? You charge it at night. And there's like all the benefits, the intrinsic, sort of hard to measure benefits. If it's quiet, it's smooth. And so we do think that with the existence of more choice, that demand will naturally come up. And there's something here that, speaking to the consumer, I think is really maybe unexpected if you were to just listen to all the rhetoric and all the noise, which is we look at our customers today, our R1 customers.

26:46And if you were to just extract out some of the tone you hear on these topics, you would expect 95 % of our customers to be Democrat and a small fraction of your Republican. And the truth is actually it's about 50-50. And I think that's great news. And what it tells me is customers are going to choose something that appeals to them. And regardless of maybe political tone.

27:11Kara Swisher:There's only one political car that exists. It's a Cybertruck. But go ahead. And so there's zero others, really. So when we see that, it's encouraging. And we try really hard as a company to not politicize the idea of electrification. It's strangely become political in ways that I wouldn't have expected and somewhat. Well, Elon is the problem for you, for all of you, honestly, in that regard. Yeah. Well, nonetheless, so we just have said, let's focus on making the best cars. And so in doing that, there are externalities that have happened in the last six months. What is the greatest consumer sentiment against them?

27:50Kara Swisher:Obviously, I think most people are intrigued. There's no question. Everybody now knows about them. And when I started pushing electric cars many, many years ago, most people didn't or wouldn't consider it. Obviously, range anxiety is one of the issues. But from your perspective, what has shifted? Yeah, I sort of bucket it maybe into three categories. I think there are people who are open to it and looking for the right car. So they want an EV. maybe they own one or maybe they don't. In many cases, they don't because they just haven't had the form factor, what they need for function, coupled with price, coupled with something that they emotionally connect to.

28:24And so we believe there's a lot of folks there and we see this firsthand with customers. Most of our R1 customers are first-time EV buyers and they were in that category. The product they were looking for hadn't arrived yet. The second category are people that are curious, but have those concerns, range anxiety. My folks live 600 miles away. I want to be able to drive to their house at Christmas and not have to worry about charging along the way, those kinds of things. And then the third category, which is by far the smallest, but I do think the most vocal are folks that for some reason have identified electric vehicles as being bad or wanting to be against them.

29:05And I do think this is a very small percentage, but it can generate noise. And I've reflected a lot as to what's the psychology driving that. And I don't know. I'm certainly not a psychologist, but if I had to project a guess, I would say it's some version of, I think, folks that feel like a solution's being pushed onto them or forced onto them are inclined to naturally reject that.

29:31Kara Swisher:Well, the haters include the President of the United States. Clearly, he talks about them quite negatively. How do you navigate that next period, especially if they continue to be hostile? And on top of axing the federal tax credit, Trump's also slapped tariffs. That may change, but it'll take a while. So talk a little bit about the Trump impact here on your business. Well, and to that last category, so folks that are, let's say, against electric vehicles, I think the first thing we do from a consumer point of view is we make it very clear that But we're not like we want there to be choice. And I think the existence of choice helps eliminate some of those tensions and to say, look, if you don't want to buy an electric car, you don't need to buy an electric car.

30:14But we're making these vehicles to be really compelling. And hopefully you drive it and you experience it and it sways you or draws you in. I think as it pertains to policy and working with the administration, what we've really focused on, which is an important point, is the indisputable view that over time, and we can debate how long that is, but in the fullness of time, high technology vehicles where there's lots of software, lots of electronics, they're deeply integrated together. the vehicles increasingly drive themselves, the skill sets necessary around power electronics and battery systems, those are things that the U.S.

30:59should continue to maintain a leadership position in. And so in order for that to happen, it's necessary that companies like Rivian, not just Rivian, but Rivian and many other companies like Rivian need to exist to be active participants in the future technology development that we're going to see play out over the next few decades. And we found that it's a really, I think it resonates extremely well on all sides of the aisle. It's also really helpful to look at it through that lens of skills.

31:32Kara Swisher:Is Trump undermining that idea? I don't think he's. You're being careful. I think there's a lot of. Yes, the answer is yes, but go ahead. You answer anyway. I think there's a lot of, what we try really hard to do is there's a lot of noise. There's like the signal to noise ratio right now is it's, you know, if you're looking at this as like a signal processing problem, it's the noisiest the signal has ever been. And so we're trying really hard to ignore or avoid riding up and down some of the peaks of the noise and look for the signal. But credits did matter. So do tariffs. Oh, yeah. You know. Yeah, credits, like created it, like, to be clear, I mean, you talked about the Q4 drop off relative to Q3.

32:19There's no doubt. Yeah, the credits going away impacted everyone. But I don't think that's going to change the end state. It's like a speed bump. It's a bump along the way. but something that we all have to navigate.

32:31Kara Swisher:Right, which could take your entire chassis off compared to other car makers with more money. But, and this is a very, for people who don't understand, car making is so expensive compared to other, I mean, I joke about AI, but it's really as a high level of, it's a very difficult jump for everybody. So it's actually quite astonishing how we make cars in a lot of ways. Now Canada has agreed to slash its 100 % tariffs on Chinese EVs, which is not a good news for you all. You argue the customers need more choice in the EV market, and that's not a zero-sum game. But, wow, it's a real problem for you from a global market point of view because you can't compete with these Chinese companies because of the price and innovation, really.

33:15Yeah, I mean, I think first just to frame the overall Chinese market, it's very, very, very different than what we have in the United States. There's a couple of ways it's very different. The first is there are many choices there, like an overwhelming number of choices. So there's an excess of a hundred different companies making electric vehicles in China. And actually a vast majority of them are not particularly compelling in terms of technology or innovation, but a subset of those are both affordable and impressive technology. Companies like Xiaomi or BYD, very much technically demonstrating a lot of leadership and then from a price point of view, quite competitive.

33:56And there are two things to take away from that. The first, which I think is often overlooked, is for a lot of the same reasons, Rivian or Tesla have vertically integrated technology stacks that are distinctly different than legacy car companies, is we had the benefit of starting with a clean sheet in a world where software and electronics existed. And so Rivian was built as a software and electronics company first, and we make cars. And so we have more software engineers than we do mechanical engineers. And that same dynamic exists for a number of the newer Chinese car companies where they approached it as a technology-first business.

34:35They made architectural decisions that are advantaged relative to legacy manufacturers. And if you were to take those cars apart and compare them to a Rivian, you'd see there's technically, there's actually a lot of similarity. Zonal architectural architectures, really heavy focus on in-vehicle inference and compute for enabling AI features at scale over time, removal of a lot of the tier one supply base and bringing a lot of that in-house, a lot of consistency. And then you say, well, why are the cost structures so different? And here, I do think too often we look at this as if it's like some black art, it's like magic happening.

35:14But it's not magic. You can build it in a spreadsheet and it's a combination of things. The first is the cost of capital in China, so the cost to build the plant and invest in the products, is very low, near zero, because in many cases, the plant and the equipment is paid for by the government. So whereas we have to raise capital with equity or some debt, in China, you get sort of given the capital to go build capacity.

35:43Kara Swisher:Yes, they have decided this is an area they want to dominate. And so it's like, it's very much a decision by the Chinese government to say, we're going to be leaders in this space. And so they've heavily subsidized the capital industry to build these businesses. That's number one. The second is that's not just happening at the OEMs, that's happening across the tiered supply. And so when you take the cost of capital to close to zero, the whole supply base suddenly becomes cheaper because your amortization of your fixed cost becomes a lot less. then you have a labor cost that's much much lower and labor policies that are uh very different so you have people that go and work and live at a plant working 50 to 60 hours a week and making you know somewhere between one-fifth and one-seventh of what someone in the united states would make and there's no way with that difference in labor cost uh to really have and the cost of capital to have a like-for-like one-to-one.

36:41Kara Swisher:I get all that. They're also very innovative. I think one of the canards— Well, that's my point first. That's why I wanted to call out. I think sometimes we just say, oh, it's low cost. There's a handful of companies that are very, very strong in terms of technology, and they have these advantaged cost structures. So here you have Trump slashing the credits, putting on the tariffs, which makes it very difficult for all kinds of companies. And Canada agreed to slash this. It might have been favorable to you had we had a pleasant relationship. Now it's toxic and largely due to the Trump administration.

37:16Kara Swisher:In fact, completely due to the Trump. Why am I being nice about it? So how do you compete if this is the case, especially this Canadian thing is a big deal? Well, yeah. We have 100 % tariff for people don't know on Chinese EVs. Yeah. Yeah. That's an important point to note. I think at first, as I call it out, there's two vectors here to consider. So first is we have to compete on technology. And you made that point a couple of times. I couldn't more fully agree with you. And it's for that reason, Rivian has many of the cars we just described. We own them, we study them, we take them apart, just like the Chinese have our cars and take them apart and study them.

37:53And so we need to continue to be on the tip of the spear in terms of technology and leading there. Number one, on cost, there's not a way to be competitive where labor cost is so much lower and where cost of capital is so much lower. And so I think what will happen in the United States, and I can't speak for other countries, I think it's very, very, very likely that the tariffs the United States have put in place will remain. And for the Chinese to really participate in this market, they'll need to locally produce. And if they decide to locally produce, those advantages as I just talked about, both in terms of cost of capital, but also in terms of labor costs, just go away.

38:34And they're not building the cars differently. You were to take a Chinese car apart and compare it to a Riggian. They're stamping and castings. It's all very similar processes. Again, there's no magic happening. It's just there's two big factors. And so I think in the United States, which is by far the second largest car market in the world, the first being China. This is maybe the one topic that the right and the left are very aligned on, which is a pro-US policy. Now, I think Europe's a big open question, as you've already called out. The interesting thing there is they have a large domestic auto industry to protect as well.

39:14But a lot of the countries that don't have domestic auto industry are likely to be more open or fully open to Chinese vehicles, I do think it's going to see a lot of market share shift to those brands. Now, what's also happening, which is we haven't touched on yet, but is an important point, is just the nature of how cars are produced is going to change over the next 10 years. And this is an area where we're going to start to see industrial automation and high dexterity robotics come in that this is truly the only way the United States can compete with low labor cost countries for manufacturing is by developing robotics to essentially operate manufacturing plants with far fewer people.

39:59And so I do think that's something that is going to happen.

40:03Kara Swisher:Which, of course, takes time. And to that point, I started a robotics company recently called Mind Robotics that's specifically focused on industrial automation, industrial robotics. Separately from your company. Rivian's a shareholder in it, but it's a separate entity. Yeah, I've been talking a lot about everyone's focus on AI. I'm like, you need to focus on robotics is what you actually need to focus on. I couldn't agree more. I keep saying it. And everyone's like, I was like, stop with AI. AI will be a critical part of robotics, but it's robotics in terms of lots of things will matter a great deal.

40:39Kara Swisher:We'll be back in a minute.

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44:12Kara Swisher:Every episode we get a question from an outside expert, by the way, and yours comes from Chris Ermsson, the co-founder, chairman, and CEO of Aurora. I rode in one of my first cars of his, and I tried to run him over, as he knows, with the electric car in Google parking lot. This was almost 20 years ago. So let's listen to him. I'm a big fan of Chris. Yeah, me too. Hey, this is Chris Hermsen. My question for RJ is this. I've been a Rivian truck owner for many years now. I love it. It looks great. It has awesome performance. The one area that could really be improved is the media experience. Can you talk a little bit about the strategy behind why you haven't leaned into the CarPlay ecosystem and why you think that leads to a better experience for customers?

44:56Kara Swisher:Particularly given for new car buyers, somewhere between a third and a half of them aren't interested in buying a car if it doesn't have CarPlay. Anyway, cheering for me from the sideline. Huge fan. Thanks for all you're doing. He gave you an easy one, but I would agree. I have to say it matters. I'm just as superficial. No, it's a great question. Chris and I have talked about that a lot in the past. We have the view that the integration of vehicle capabilities, so vehicle status, vehicle health, vehicle, you know, so like window position, vehicle speed, anything that has to do with how the vehicle's operating into as context, into the media or user interface experience is going to be really important.

45:43And we want to control that whole, essentially the whole platter. And we think that becomes more important as AI enters more and more into the existence of how you run the vehicle. And so the challenge with CarPlay is, of course, it's an app that runs on the screen, but it sort of takes you out of the vehicle experience into a separate app that's very media-centric, but it's very difficult to create consistency across all the different platforms and to create consistency with every part of the user interface. And so what's missing, what draws that question is, I want to have the exact same ease of using my text or ease of using functions around my phone.

46:27And so what we've done is we've worked really hard with Apple and similarly with Google to create the same menu of options, but where Rivian is the, we're setting the table. And so, for example, we have an Apple Music integration. We just did an Apple Watch integration as a key. We have Google Maps integration. Two years ago, three years ago, this was a bigger issue because we didn't have all those integrations. And some of those discussions we have with our partners at Apple and with Google took some time, but we're now in a place where we have a great working relationship with Apple, great working relationship with Google, where we can serve up all those items.

47:07And now we're doing the backend work, which we just demonstrated to really enable, on more of an agent-to-agent basis, all the integration of the back ends of these apps to create a more seamless experience. So you could say to the car, I want to go to dinner tomorrow. I want it to be after my meeting, you know, that meeting with Bill, and I need to be home in time for this. And it can collect all that information between your Google Calendar, the state of charge of the vehicle, where the vehicle is. But that integration and aggregation of all the information is really hard to do if you leave the vehicle and go into a separate app that doesn't have access to those same types of information.

47:47So that's the reason. It certainly has blocked, as Chris said, some customers have said, I don't want to buy a Rivian because I want CarPlay, which is like we're not blind to that, we recognize it. Right.

47:59Kara Swisher:So that gets into the final thing I want to talk about, about AI, because AI is part of that, and autonomous vehicles, which is another area I'm very, I'm very bullish on. Rivian recently announced some new AI features coming to its cause. You've develop a new custom chip. Their plans to roll out self-driving capabilities, obviously you've announced ambitions to enter the robo-taxi space. Talk a little bit about your ambitions. Tesla has been promising customers they'll be able to turn their cars into robo-taxis for years, but it's turned out to be Google and Waymo. And Chris Ermsson was the original person there.

48:31Kara Swisher:Yeah, yeah. Talk a little bit about what you'll be able to deliver when Tesla has just not been able to do so and certainly should have been able to do so, although he has some obsession with the lack of cameras. So I think there's an important thing to note here, which is the nature of how we develop self-driving has changed really dramatically in the last couple of years. And if you go back to, you talked about Chris, if you go back to the beginning when Chris first started working in this area, the way self-driving systems were designed is you had a perception platform, which depending on the design of the overall system, it could be cameras, but more likely it was cameras plus radar plus LIDAR that would perceive the world, identify objects in the world, classify those objects, associate vectors with those objects, and then hand all that classified object information to a planner.

49:20And the planner was a rules-based environment that was written by humans. Humans were trying to codify or describe how a vehicle operates, what are the rules of the road? And those were the systems that were designed and built up through the late, call it 2020, 2021. And even Rivian's launch vehicle, we first launched within late 2021 was one of those systems. So I would call that like an AV1.0 solution. These were not neural net-based solutions. These were not systems that used things like transformer-based encoding. But around 2021, 2022, the state of the art, in part informed by some of the things that had been happening in the LLM space, the large language model space, started to shift to say, can we take more of a neural net-based approach and build a foundation model that describes how the world works through a much more complex, large parameter model?

50:20And to do that, you need to control the perception platform. So you can't go through third parties that process this and you need raw signals from your cameras, your radars, and if you You have them, your LIDARs. You need to be able to trigger interesting events that you can then train off of and move those interesting events offline to build this very, very large parameter model that describes how the world works. And so we made the decision at the end of 2021, beginning of 2022, to start working on that system, on this neural net-based approach. And to do that, you need to first have the hardware, and then you need to launch it, and then you need to put enough vehicles in the car park to have a data flywheel.

50:59Kara Swisher:You need data. You need lots of data. So here's where it gets interesting. So we launched that hardware platform in the middle of 2024. That was what we call our Gen 2 vehicle. And the biggest change was our autonomy stack. So in-house compute platform, in-house perception. And then over the course of last year, started to build enough vehicles in the car park to build this really robust data flywheel. But we approached it in a way that is probably not fully understood. so I'm so glad I get to talk about it here, which is the sensors that are on the vehicles are not just there to drive the vehicle.

51:32They're very importantly there as part of a large-scale data acquisition platform for building a model. And if I were to characterize how I think about autonomy over the next, call it three years, relative to the last three or four years, the rate of progress that we will see as an industry is going to be substantially higher. And that's because of this inflection point towards neural net-based approaches. And so I'm, like, beyond bullish on this.

52:01Kara Swisher:So why do you think you'll be able to deliver on this vision? Tesla hasn't been able to. He's been trying to do that. And, I mean, I know he's busy making non-consensual sexual material. But why has that not been able? Because they do have all those elements, right? They certainly do. Yeah. So if we, like, look at this spread of how you build this, you need large data set. lots of vehicles deployed. You have two ends of the spectrum, which are interesting to know. One is Waymo. It's a relatively small fleet. Right. But with a very robust sensor set. Right, absolutely. Lots of megapixels, lots of data.

52:36And then the other end of the spectrum, you have Tesla with a very constrained sensor set. So, you know, the cameras are, call them, they're okay, but their dynamic range, you know, low light performance, bright light performance isn't great. So it's like very limited sensor set. We took the approach of saying, we're going to have a much bigger fleet, than Waymo, a smaller fleet than Tesla, but we need our vehicles to learn faster. And so every one of our two vehicles, when we launch the LiDAR variant, will have a LiDAR. And so the LiDAR is an important thing because it protects a lot of corner cases, particularly very long range corner cases, but it also is a great platform for turning the entire fleet into ground truth.

53:19And so that's our goals, radar, LiDAR plus camera.

53:22Kara Swisher:I always note to people when one car learns, they all do as opposed to a human being. So a couple of questions. You were just on the podcast Access and you said you think within the next three to five years, autonomy is going to be as critical as having tires on a vehicle. And that not buying a V-capable car would be like buying a cell phone without Wi-Fi. Now, as I noted back in 2019, I wrote a column about how owning a car would be like owning a horse down the line. And why even own a car when you have an insurer maintained, pay tens of thousands of dollars for, not to mention, deal with legal fallout if it gets in an accident?

53:54Kara Swisher:And also, humans suck at driving at the very base level. Talk about that. You have visions of robo-taxis. Now, again, the only people who have delivered consistently has been Waymo and Zoox to a lesser extent. There's stuff happening, obviously, in China that's quite robust, actually. Talk about why you think that's a critical part. You don't have to comment on not owning a car. I just don't think people are going to own cars, but that's just me. Yeah. Well, to your last point, I think that the business model, the customer model on how you, let's call it purchase mobility, purchase transportation, I think could change a lot.

54:32But putting that aside, because recognizing regardless of whether you own the car, you're purchasing a ride, you're purchasing a subscription, all the different ways you could conceivably consume transportation, the level four, the ability for the vehicle to operate itself and importantly operate itself empty is the enabler. And so our view is that that's going to go from a very, very small subset of vehicles today, as you said, the only deployed at scale variant of that is Waymo, to becoming something that if you're buying a vehicle, having what we call personal level four is going to become very important.

55:13And, of course, if you want a different mobility model, it's a necessity to enable that mobility model. And so I think this is going to represent the biggest shaking of the nature of the auto industry. Mobility. Of just the whole thing. Like market shares can shift dramatically with this. And so we've decided, and this has been a long effort for us, that it's the most important investment area for the business. So it's by far where we invest our most capital. As we think of like our R &D budget, it's shifted from a lot of the traditional vehicle level innovations, which are now fairly stable, electronics platform, so on, and moving those dollars.

55:50To autonomy. To autonomy.

55:52Kara Swisher:And what will be the critical thing for your company to do so? We need a robust data flywheel. We need a lot of GPUs to train the model. And we took the decision, this is a decision we took, geez, almost four years ago, to bring inference, to bring silicon in-house. and the reason for that there's so much focus on the sensors uh but the compute is actually the really expensive part is correct so we we said look we need to bring compute in-house versus a dependency on nvidia to allow us to put very high levels of compute into every car and so we want every car to have a really capable brain but lidars are no longer a thousand dollar things No, they're not.

56:34It's low hundreds of dollars. Radars are low tens of dollars. Cameras are low tens of dollars. So the perception platform, as much as that gets visual, you see it, as much as it gets a lot of attention, it's the little silicon wafer that's the most expensive part of the car or most expensive part of the stack. And so we brought that in-house so that we could deploy everywhere as part of this overall philosophy on building a data flywheel.

56:58Kara Swisher:In that environment, which you're talking about, which is, I agree with you, this is where cars are going, how do you, that you still have to run a car company, you still have to sell cars, you still need money. Does that require you get purchased by a larger, like an Apple or something else? Or can you do this on your own? Because you also have to make money, as I said, you can't just have this. And to get, you know, this valley you need to go through is quite long and difficult. And then the second one is, what then happens to a competitor like Tesla? I have not ask you one Elon question because I'm so tired, sick and tired of him, but he's still critical.

57:35Kara Swisher:And you can see him talking about it, even though it's in this sort of strange way. When he's talking about robotics, I understand what he's saying. Why wouldn't a Tesla be able to do this better eventually if he ever focused on it versus you? What will it take to do that? You don't have the benefit of a meme stock that doesn't represent your business. Yeah, so, and we said it before, R2 is really important for us. It demonstrates that like a path to the automotive side of our business being profitable and the revenue associated with that vehicle covering our fixed costs. That's really important.

58:11But I think maybe in a more philosophical way, the deeper part of the question is how many companies ultimately can be successful? So if you look historically, automotive is a very big, it's a huge market. The TAM is enormous, but it's not one in which there's a single dominant player. Very different than tech. So if you look at tech in each segment, there's one, two, maybe three companies that occupy the vast majority of market share. In automotive, on a global basis, the largest manufacturer represents around 10%. And so the question is, does that continue or does it consolidate down to like one or two companies?

58:56And my view has continues to evolve on this, maybe without saying exactly how many companies I think there will be in the end. I think it's helpful to think about what are the ingredients necessary to be a car company at scale. And I do think there'll be more than one, but I think there's probably going to be less than there are today. but um the ingredients that are i think like a must have is the vehicle to be a successful at scale vehicle manufacturer putting aside like very niche call it like you know almost like a horse like vehicles vehicles that are just like anachronisms of the past but to be at scale the vehicle must be software defined which allows for robust new features to be deployed which to do that well, it means breaking from the network architecture and ECU topology of 100 to 150 different companies writing little islands of software that then gets integrated on a canvas architecture.

59:52I think there's absolutely no way a company can be at scale in five to 10 years and still have that architecture. Now, that statement sounds subtle, but that's a big statement because Because there's only two companies in the Western world that have a software-defined architecture, Tesla and Rivian. Of course, the deal we did with Volkswagen unlocks this for them. But that means every car company, if you believe what I just said, will have to find a path to moving to a very different software and electronics architecture than what they've had historically, number one. The second thing, which requires the first thing to really do the second thing well, is the vehicles will need very high levels of both AI integration and autonomy.

1:00:37autonomy and I think that if you miss autonomy as a car company when if you're a customer and you have a choice of I can buy a car for 35 40 000 and it can you know drop me at the airport it can go to the grocery store to pick up you know stuff for me it can drop a friend at a house it can do all those things or a car that doesn't do that it's it's going to be very binary right I think there'll be very few people that will self-select to say I don't want those features even folks who are not comfortable with the idea of self-driving once you experience it one or two times it does i try to say that to everybody it's so sticky because you get your time back suddenly you can be reading a book on your phone it's just so sticky my one way of convincing one person i'm

1:01:19Kara Swisher:not who likes to party i'm like you can you can text and drink i don't know what to say there's my that's my sale for you but go ahead sorry but but i do think this just represents like a big like it's like taking all the different companies in our market shares and shaking them up and saying this is going to be a different looking outcome. And here's the part that I don't know the answer to and is, you know, it's provocative just to think about it, which is if market shares of some of these larger incumbent companies drops by even a small percent, these are very, very high fixed cost businesses and they're big machines.

1:01:56So they're not easy to reduce costs. And we have an example of what happens when the revenue drops by 20 % to 30%, 35%, and that's 2008, 2009. And so that's the part that's hard to predict is if some of these changes I talked about, the combination of being a software-defined architecture and having very high levels of AI integration, if you're not front of the curve and you start to lose 20%, 30 % of your volume, you just have the risk of being clobbered like just completely clobbered by your fixed cost and that that could lead to like this slowly slowly slowly suddenly changes in the dynamics

1:02:39Kara Swisher:within the space you know interestingly and i'll let you have the westward it's like netflix circa when they they got off of discs yeah and i remember talking to media companies they said you're finished what they're doing you you don't understand what they're doing here and so it's like that. And of course, here they are poised to buy up one of the greatest brands, the former greatest brands, if they make it through. So if that comes to pass, can Rivian be one of those things or just a junk heap on the... Yeah, well, you're asking a highly biased perspective here. But of course, our view is, and that's what we're working towards, is to be one of the companies in the end that's both creating products for consumers that are just incredible and obviously software-defined, obviously very high levels of autonomy and AI.

1:03:26But the second part is we do believe, and part of the strategy with our Volkswagen deal, we do believe there's an opportunity to help some of the existing legacy companies that weren't born the way that Rivian was born and don't have this deep technology backbone to come up on the learning curve. But does that mean you might need an even bigger partner like an Apple or someone else? No, I more meant like the existence proof that Rivian technology can be deployed into an existing OEM. If you were to think of like, what's the ultimate existence proof, you probably say, let's pick one of the largest, most complex OEMs in terms of brand proliferation and market participation.

1:04:10And if you're looking for that, that would be Volkswagen Group. It's a very large group. It's got lots of different brands. And so our ability to demonstrate that we can deploy in a productized way our software and electronics, and this is not yet even talking about autonomy, just software and electronics, is the existence proof or it is the demonstration that should show other manufacturers, hey, one, Rivian can be a great partner. We've demonstrated this now with Volkswagen. We've, of course, demonstrated this with another very, very large company, Amazon. And so I do think the opportunity for us to not only have our own products, but to emerge as a very capable technology partner and provider that has both the ability to work with and the humility to work with very large existing companies is something we hope to demonstrate.

1:05:04Kara Swisher:So very last question, 20, 30 years, that puts you and Tesla at a complete competition, presumably, if he can get his attention back to this. What does Rivian in 20 years say it survives this? What does it look like? Last question. um i know you don't think in those time frames but well i mean you have to think about it somewhat i mean the way we make investments in technology the goal is to be one of the most impactful and uh you know important businesses in transportation technology and and like i do think we're at an inflection point aside from businesses like from a societal point of view around how our vehicles are powered what's going to happen as ai enters the physical world and a huge motivator for me is to help be part of writing that story and to do it in a way that's to the benefit of society.

1:05:57Kara Swisher:Great. All right, RJ, thank you so much for your time. Thank you.

1:06:04Kara Swisher:Today's show was produced by Christian Castor-Russell, Michelle Alloy, Megan Burney, and Kaylin Lynch. Nishat Kerwa is Vox Media's executive producer of podcasts. Special thanks to Catherine Barner. Our engineers are Fernando Arruda and Rick Kwan, and our theme music is by Trachademics. If you're already following the show, you get to drive autonomously with me in San Francisco. That's all I do when I'm in that city. If not, you get a horse. Go wherever you listen to podcasts, search for On with Kara Swisher and hit follow. Thanks for listening to On with Kara Swisher from Podium Media, New York Magazine, the Vox Media Podcast Network, and us.

1:06:38Kara Swisher:We'll be back on Monday with more.

1:06:44Kara Swisher:Support for this show comes from Harvey AI. As AI reshapes professional services, law firms and in-house teams are rethinking how complex work gets done. Harvey AI is an AI platform built specifically for the legal practice, helping teams analyze documents, draft with precision and collaborate securely across matters. Today, more than half of the AM Law 100 use Harvey. Learn more at Harvey.ai.

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