Amazon Will Help Rivian Drive to the Top of the EV Mountain
In recent months, Rivian has captured a considerable amount of positive buzz. The start-up EV automotive company is heralded by some people as the next Tesla. The highly-touted Rivian R1T electric truck will soon be delivered to customers, and the R1S electric SUV will follow early next year. Most of the attention of Rivian centers on the R1T and R1S. However, the automaker’s drive to the top of the EV mountain hinges on a surprising partnership with the online retail giant Amazon.
Rivian builds Amazon Prime Van to deliver packages
With the high price of the Rivian R1T and R1S, buying a Rivian is something most people can only dream about. However, you may see a Rivian Prime Van heading up your driveway to deliver your packages from Amazon.
Amazon has an exclusive partnership with Rivian for the automaker to build delivery vans, or the Rivian Prime Van as it’s called internally, according to Bloomberg. The current contract is for Rivian to build 100,000 of the vans by the end of the decade. The first 10,000 units of the van are due by the end of 2022. Relative to the range of over 300 miles of the Rivian R1T and R1S, the Rivian Prime Van has a modest 150 miles of range. Amazon plans to use the Rivian Prime Van as a last-mile delivery vehicle.
PitchBook analysts estimate that the Amazon van order is worth $4.5 billion. Also, it could be a catalyst to attract more commercial customers for Rivian.
Rivan places such a high importance on the Amazon van order that it prioritizes it over the retail orders of the R1T and R1S. While production of the R1T and R1S is at a slow pace, Rivian plans to deliver the first 300 vans to Amazon by the end of 2021. R.J. Scaringe, the CEO of Rivian, stated that it might take two years to fulfill the backlog of orders for the R1T.
Amazon has a 5% ownership stake in Rivian
The success of Rivian is also important to Amazon, for the company has a 5% ownership stake in the automaker. The van order and ownership stake are part of the reasons why Rivian has a targeted $80 billion value for its upcoming IPO.
Jeff Bezos pledged that Amazon would be carbon neutral by 2040 — and the Rivian electric delivery vans are a big first step in making this happen. For the world’s most valuable company to partner with a small automotive start-up is a stunning stroke of fortune for Rivian. Tesla, despite its recent run of success, never had this kind of backing in its early days.
The Amazon partnership and ownership stake also paved the way for additional investment in Rivian. This includes a 5% ownership stake from Ford, as well as investment from Fidelity, D1 Capital Partners, and T. Rowe Price.
Rivian: Secret weapon for Amazon and Jeff Bezos to fight climate change
Jeff Bezos first announced the Rivian Prime Van order during a speech in 2019 about climate change at a conference in Washington, D.C. He stunned the crowd by revealing that his “secret weapon” against climate change is Rivian, which at the time was a mostly unknown company.
Bezos never publicly stated how he first heard about Rivian and considered the partnership with the EV automaker. One possible connection is through director Peter Berg. He knows Bezos and owns the production company that filmed footage of the Rivan R1T that was used at its Los Angeles Auto Show debut. Also, Rivian may be attractive to Amazon for its ability to produce electric vans at a low price at scale.
The future looks very promising for the Rivian, with the highly touted R1T electric truck and R1S electric SUV. However, its success, especially at this early stage, rides on Amazon.