SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

3 Months Ended

Mar. 31, 2022

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates

Accounting estimates are an integral part of the condensed consolidated financial statements. These estimates require the use of judgments and assumptions that may affect the reported amounts of assets, liabilities, and expenses in the periods presented. The Company believes that the accounting estimates and related assumptions employed by the Company are appropriate and the resulting balances are reasonable under the circumstances. However, due to the inherent uncertainties involved in making estimates, the actual results could differ from original estimates, requiring adjustments to these balances in future periods.

Cash and Cash Equivalents

Cash and cash equivalents include cash on hand, cash in banks, payments due from financial institutions for the settlement of credit card and debit card transactions, and short-term, highly liquid investments with maturities of three months or less. The Company’s cash equivalents are classified within Level 1 of the fair value hierarchy because they are valued using quoted

prices in active markets. The cost of the Company’s cash equivalents approximated their fair values as of December 31, 2021 and March 31, 2022. The following table presents the fair value of the Company’s cash and cash equivalents (in millions):


	December 31, 2021		March 31, 2022
Cash	$	5,438	$	4,261
Money market funds	11,827		10,324
Certificates of deposit	450		400
Commercial papers	268		497
United States Treasury securities	150		950
Total cash and cash equivalents	$	18,133	$	16,432

The Company has corrected an error in the disclosure of cash equivalents as of December 31, 2021 that was not material. The disclosed fair value of money market funds was overstated by $1,221 million, and the other types of cash equivalents in the table above were not disclosed in the Form 10-K. These amounts have been corrected herein. The carrying value of cash and cash equivalents on the Consolidated Balance Sheets as of December 31, 2021 was not impacted.

Restricted Cash

Cash and cash equivalents that are restricted as to withdrawal or use under the terms of certain contractual agreements are

classified as restricted cash and are primarily recorded in “Other non-current assets” on the Company’s Condensed Consolidated Statement of Operations. Restricted cash primarily consists of the balance of an account under the dominion and control of the administrative agent under the Company’s senior secured asset-based revolving credit facility (“ABL Facility”), which will be used to repay outstanding borrowings under the ABL Facility if certain specified events of default occur. See Note 4 “Debt” for more information on the ABL Facility. Total restricted cash was $290 million and $539 million as of December 31, 2021 and March 31, 2022, respectively.

Accounts Receivable, Net

Receivables are reported at the invoiced amount, less an allowance for any potential uncollectible amounts. The Company had no allowance for uncollectible amounts as of December 31, 2021 and March 31, 2022.

Inventory and Inventory Valuation

Inventory is stated at the lower of cost or net realizable value (“LCNRV”). Net realizable value (“NRV”) is the estimated selling price of inventory in the ordinary course of business, less estimated costs of completion, disposal, and transportation. During the three months ended March 31, 2022, the Company recorded a $188 million charge to reflect the NRV of inventory and losses on firm purchase commitments, in “Cost of revenues” in the Company’s Condensed Consolidated Statement of Operations. As of December 31, 2021 , the carrying value of inventory consisted primarily of $236 million of raw materials. As of March 31, 2022, the carrying value of inventory consisted primarily of $344 million of raw materials, with the remainder consisting of work-in-process and finished goods.

Revenues

The Company primarily recognizes revenue from the sale of EVs. Revenue from the sale of EVs is recognized upon delivery, when control of the EV transfers to the customer. Payment for EV sales is due prior to or upon delivery, and an insignificant amount of revenue is recognized after delivery for performance obligations satisfied over time. Sales are subject to a right of return and involve variable consideration for certain sales to employees.

The expected value of variable consideration is used to estimate the transaction price. Variable consideration is included in the transaction price only to the extent it is probable that a significant reversal of revenue recognized will not occur. The transaction price is allocated based on the estimated relative standalone selling price of each performance obligation. The Company utilizes directly observable standalone selling prices when possible. If not available, the standalone selling prices are estimated using appropriate methods, such as the “adjusted market assessment” approach, “expected cost plus a margin” approach, and others.

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 exclude fully-refundable customer deposits. The Company’s contract liabilities were not material as of December 31, 2021 and March 31, 2022, and were recorded primarily in “Current portion of lease liabilities and other current liabilities” on the Condensed Consolidated Balance Sheet s.

Concentration of Risk

Counterparty Credit Risk

Financial instruments that potentially subject the Company to concentration of counterparty credit risk consist of cash and cash equivalents, restricted cash, deposits, and loans. The Company is exposed to credit risk to the extent that its cash balance with a financial institution is in excess of Federal Deposit Insurance Company insurance limits. The degree of counterparty credit risk will vary based on many factors including the duration of the transaction and the contractual terms of the agreement. Management evaluates and approves credit standards and oversees the credit risk management function related to investments. As of December 31, 2021 and March 31, 2022, all of the Company’s cash and cash equivalents were placed at financial institutions that management believes are of high credit quality. These amounts are typically in excess of insured limits.

Supply Risk

The Company is subject to risks related to its dependence on suppliers, the majority of which are single source providers of parts or components for the Company’s products. Any inability of the Company’s suppliers to deliver necessary product components, including semiconductors, at timing, prices, quality, and volumes that are acceptable to the Company could have a material and adverse impact on Rivian’s business, growth prospects, and financial and operating results.

The Company’s manufacturing facility in Normal, Illinois (the “Normal Factory”) is operational, and Rivian is continuing to invest in the Normal Factory. The Company’s ability to sustain production depends, among other things, on the readiness and solvency of suppliers and vendors through various macroeconomic factors, including factors resulting from the COVID-19 pandemic, and economic uncertainties, such as geopolitical instability and its effects on commodity prices.