Despite production delays and market upheaval, Amazon is still counting on electric vehicle startup Rivian to help it meet ambitious climate goals and put tens of thousands of electric delivery vans on the road.
Rivian runs a lean operation: The number of vehicles it produced this quarter almost exactly equals the number of semiconductors it had, CEO RJ Scaringe said.
Those tight margins spooked investors, a panic that came to a head on Tuesday when Ford announced it was selling 8 million Rivian shares, beginning to cut ties with the California-based company that had promised to help usher in the switch. to carbon-neutral transport. . Ford still owns nearly 94 million shares.
The announcement sent Rivian shares tumbling 20%, but the decline was short-lived. It soared over the next two days, following an investor call on Wednesday where Scaringe maintained the worst supply chain constraints were behind it. Rivian would start ramping up production for the rest of the year, he said, and the company has logged more than 90,000 pre-orders.
Amazon — one of Rivian’s largest shareholders — doesn’t hesitate.
Amazon saw its investment in the company pay off in late 2021, when it announced a gain of nearly $12 billion from Rivian’s IPO. But it felt the drop this year, reporting a $7.6 billion loss on investment in the first three months of 2022.
With 150 million shares and an order for 100,000 electric delivery vans, Amazon is using Rivian’s vehicles to help it reach its goal of net zero carbon emissions by 2040. There’s no reason to postpone questioning the achievement of this goal, say researchers, analysts and business leaders.
“Rivian is an important partner for Amazon, and we are excited about the future,” Amazon spokeswoman Kate Scarpa said Friday. “Getting 100,000 electric delivery vehicles on the road by 2030 is no small feat, and we remain committed to working with Rivian to make it a reality.”
Rivian is “ready to become an electric vehicle giant,” analysts at Baird Equity Research wrote in a Wednesday report, adding that the company is “packed with talent, a clean sheet of paper, a strong balance sheet and a strong partner at Amazon.”
Beril Toktay, director of Georgia Tech’s Ray C. Anderson Center for Sustainable Business, said Rivian’s week-long stock market flip-flop is not “cause for long-term alarm.”
“These corporate goals are bold. They have to be satisfied by a portfolio of strategies,” she said. “So a little blip, like this, is really not a story in my opinion.”
It’s too early to speculate on a timeline that still spans nearly 10 years, said Don MacKenzie, who directs the University of Washington’s Sustainable Transportation Lab. But if he did, he’d say Rivian’s trajectory wouldn’t change his predictions about Amazon in general.
“From what I know of Amazon’s EV goals, they are planning and have started buying from a number of different vendors,” he said. “They didn’t put all their eggs in the Rivian basket.”
Amazon has put 15 different models of electric vehicles on the road, according to an April blog post from the company, including delivery vehicles, e-cargo bikes and e-rickshaws. In addition to its partnership with Rivian, it is working with automakers Stellantis and Mahindra to create a global delivery fleet, Scarpa said.
“There is no one-size-fits-all approach,” she added.
Amazon placed an order for 100,000 electric delivery vans with Rivian in September 2019. They began testing these vans in Los Angeles in February 2021.
Since beginning its test program with Rivian, the “pre-production” vehicles have delivered 90,000 packages and driven 50,000 miles.
Of the 25,000 vehicles expected from Rivian this year, Scaringe estimated that around a third – or about 8,300 – would be electric delivery vans. Rivian has launched a 700 cubic foot pickup truck and is testing a 500 cubic foot model.
After months of collecting feedback from Amazon drivers that led to “a whole host of improvements,” Scaringe said deliveries “are going to start to pick up speed, and you’re going to start seeing a lot more, hopefully. -the, enter in all our neighborhoods deliver parcels.
In the first quarter of this year, Rivian produced 2,553 vehicles and delivered 1,227, according to chief financial officer Claire McDonough. It is preparing to transition to a two-shift operation at its Illinois warehouse and is on track to launch a new vehicle model – R2 – at its Georgia plant in 2025.
Assuring investors that Rivian is ready to ramp up production, Scaringe said Wednesday that Rivian has already been through the worst of shortages.
“We have been working closely with suppliers…ensuring that the stresses and line break situations that we have faced over the past few weeks, we will put behind us,” he said. . “We couldn’t be more confident in the path ahead of us. …
“We are in control of our future growth.”
Rivian reported revenue of $95 million for the first three months of 2022. It recorded a net loss of $1.6 billion, compared to a loss of $414 million for the same period of the year previous.
It spent $547 million on research and development, an increase from $289 million the previous year, and attributed most of the loss to transportation costs, supply chain challenges and high labor and overhead costs.
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