June 27 Reuters Material cost of Rivian39;s secondgeneration R1 electric SUVs and pickups will be 20 lower than the current version, CEO RJ Scaringe said on Thursday, after it overhauled its manufacturing plant and removed vehicle parts to slash cost.

Costs will go down further as Rivian continues to make improvements, Scaringe said at the company39;s first investor day.

Shareholders have been eagerly looking for details on the company39;s push to profitability as the EV industry tackles a sharp slowdown in demand.

The CEO39;s comments come days after Volkswagen said it would invest up to 5 billion in Rivian as part of a joint venture for its EV architecture and software.

The move is widely seen as a vote of confidence in the American automaker39;s prospects as it looks to build less expensive R2 and R3 crossovers to attract masses and is expected to help reduce operating expenses with scale.

The VW deal gives Rivian the potential to boost cashflows in the long run via the licensing of technologies and architecture to VW39;s various brands particularly the highend resilientvolume ones such as Audi and Porsche, said Sandeep Rao, analyst at Leverage Shares.

Rivian shut down its plant at Normal, Illinois for three weeks in April to make the changes, including simplifying processes and removing equipment at the facility, and removing over 500 parts from the vehicles in an effort to make them cheaper to build.

A similar exercise last year helped Rivian cut 35 in…