What happened to Amazon’s deal with Rivian?
When Amazon announced it would buy 100,000 electric delivery vans from Rivian in 2019, it gave the little-known electric vehicle (EV) startup immediate credibility. Now Amazon is giving Rivian investors reasons to be a lot more incredulous.
Amazon said in a statement yesterday (Jan. 5) it would be the first commercial customer for the Ram ProMaster electric van, which Stellantis NV—the automaker that manufacturers Chryslers—plans to launch in 2023. The retailer said it plans to put thousands of the Stellantis vans on the road as part of the long-term agreement.
Rivian’s stock was down by 11%, the most since mid-November, on news of the Stellantis deal.
Amazon’s deal with Rivian isn’t binding
Amazon’s deal to buy Rivian’s vehicles—part of the tech giant’s stated mission of eliminating its carbon footprint by 2040—represented the largest purchase of light-duty EVs in history.
But Amazon, which owns stake in Rivian, is not obligated to follow through on the purchase. When the EV maker filed for its IPO last August it specified in its regulatory filings the agreement with the retailer “does not contain a minimum order quantity or minimum purchase requirements,” and that purchase orders “are subject to modification or cancellation upon notice.”
Both companies insisted yesterday that the deal is still on. Rivian said in a statement the partnership with Amazon is still “intact, thriving and growing,” while the retailer said its work with Stellantis didn’t change anything about the “investment, collaboration, or order size and timing” of its deal with the EV firm.
Rivian recently cut production targets
Hailed as a promising rival to Tesla, Rivian had the world’s biggest IPO last year, and was valued at over $100 billion when it debuted on the stock market in November. But the startup has delivered just 42 of its electric pickup trucks to customers as of October, and said last month it would fall a few hundred vehicles short of its 2021 production targets due to supply chain issues and challenges with battery production.
Rivian is supposed to deliver 10,000 delivery vans to Amazon by the end of this year. If it doesn’t meet that production deadline, its bottom line could suffer. The firm has said it expects much of its near-term revenue to come from the retailer’s delivery order.
As for Stellantis, the partnership with Amazon could help the company catch up with rival automakers not only by expanding its EV offerings, but also in the sophistication of its vehicle technology. In addition to delivery vans, the automaker said yesterday it will work with the retailer on developing an in-vehicle software platform featuring voice assistance enabled by Amazon’s Alexa, as well as integrate the company’s AWS cloud services into its vehicles.