Is Rivian Unappreciative of the Amazon Lifeline?
Have you seen the electric delivery vans with the Rivian name on the front and the giant Amazon smile on the side? Some have, and these Rivian Amazon electric delivery vans are pretty cool. They take commercial deliveries forward for Amazon, which has been a huge supporter of Rivian since 2019. Unfortunately, something seems amiss about this copesetic partnership.
What is the deal between Amazon and Rivian for the electric delivery vans (EDVs)?
In 2019, Amazon and Rivian entered a partnership in which Amazon would become the largest shareholder of Rivian stock. This initial investment was $700 million, which was a massive lifeline for Rivian. In exchange for this investment, Rivian signed an exclusive contract to build Amazon 100,000 electric vehicles for package deliveries.
These Rivian Amazon vans started delivering packages last year. Amazon has nearly 1,000 of these EDVs on the road but cut their initial order to 10,000 vehicles for 2023. Anyone can see these numbers are a far cry from 100,000.
When is Amazon supposed to have 100,000 Rivian vans?
The agreement struck in 2019 states the number of Amazon electric vehicles from Rivian would total 100,000 by 2030. If only 10,000 are purchased this year, that leaves 89,000 models that must be added over the next seven years.
Both companies are facing tough times
Since the 2019 agreement, the economic climate has shifted, and Amazon is laying off over 18,000 workers and halting construction on its second headquarters in Washington, D.C., according to Autoblog.com. Rivian is also facing financial troubles and laid off six percent of its workforce in February.
What can Rivian do to turn things around?
The deal between Rivian and Amazon for the delivery vans is an exclusive deal. It might seem that Rivian is being a bit unappreciative of the lifeline given in 2019, but the best course of action is to remove the exclusivity of the deal. This would allow Rivian to seek other commercial customers to sell its electric delivery vans.
How did the economic climate change for the worse?
Although growth and demand for electric vehicles, especially in the commercial sector, have been explosive for a few years, it has recently slowed. Couple this slowdown with the higher interest rates, and you’ve got a recipe for disaster.
Although Rivian continues to enjoy a positive relationship with Amazon, with a spokesperson telling Electrek:
“We continue to work closely together and are navigating a changing economic climate, similar to many companies.”
Still, if Rivian is to survive a slowdown in the commercial sector, the company must find creative solutions and remove the exclusivity clause in the agreement with Amazon. Recently, both Ford and Amazon trimmed ownership stakes in Rivian, which could be detrimental to the EV startup.
What about Rivian’s other vehicles?
The Rivian R1T electric truck and R1S electric SUV are impressive EVs, but the company hasn’t found a way to make them profitably. Thus far, Rivian hasn’t struck the same chord with investors as Tesla, which could put the fledgling EV automaker on the path to bankruptcy.
Next, check out the Rivian R1T, or learn more about the Rivian Amazon electric delivery vans in this video below: