Electric delivery van maker Rivian wants to cancel Amazon exclusivity deal

Electric delivery van maker Rivian wants to cancel Amazon exclusivity deal

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Electric delivery van maker Rivian Automotive Inc. is reportedly holding talks with its chief backer Amazon.com Inc. in order to try and scrap the exclusivity deal it signed with the retail giant in 2019. Under that deal, Amazon was made Rivian’s sole customer.

News of the talks was first reported by the Wall Street Journal, which cites unnamed sources familiar with the matter as saying that Rivian isn’t happy that Amazon only bought 10,000 electric vans in fiscal 2023. While that number was in the bounds of its contract, it was just about the minimum Amazon could get away with, and it’s believed to be causing problems for Rivian.

Amazon has committed to buying 100,000 Rivian vehicles by 2030 and while this hasn’t changed, it does appear to be open to the idea of ending its exclusivity deal.

“While nothing has changed with our agreement with Rivian, we’ve always said that we want others to benefit from their technology in the long run because having more electric delivery vehicles on the road is good for our communities and our planet,” an Amazon spokesperson told Reuters. “We will have more of our custom vans from Rivian hitting the streets every day as we continue to partner together to bring 100,000 electric vans to the road by 2030.”

As to the current number of Rivian vans on the road, Amazon would only say that it’s operating “thousands” without being more specific.

Rivian could no doubt do with selling more vans, faster, as it is currently bleeding money. During its most recent, fourth quarter earnings report, it posted a loss of $1.7 billion. While that was down slightly from the previous year, Rivian’s full-year numbers were more telling – it lost $6.8 billion in fiscal 2023, up from the $4.6 billion loss it incurred 12 months earlier.

Not only is Rivian a money pit, but it has also had to contend with a couple of extensive recalls affecting its electric vans recently. The first of those concerned almost its entire fleet of vans, which were affected by a problem with their fasteners that could cause the steering wheel to detach. More recently, in February, Rivian’s R1T (pictured) and R1S vehicles were recalled after it was found that they may have faulty airbag sensors that might prevent it from deploying properly.

Rivian has actually been beset with bad news. In December, the company revealed that a proposed deal with Mercedes-Benz AG to collaborate on the production of electric vans in Europe had been put on hold. Then in February, it announced that it’s laying off 6% of its workforce as a cost-cutting measure.

Meanwhile, Rivian has promised to significantly increase deliveries of its vans over the next few months. It said it will shorten its lead times from 12-18 months to less than three months, and is planning to build 50,000 new vans in 2023, twice as many as it did last year. Rivian previously failed to hit its 2022 target of 25,000 vans, falling short by a few hundred.

Despite this, Rivian’s 50,000 benchmark fell short of the 67,000 van target that analysts had expected the company to announce, sending its stock down in the wake of February’s earnings call. Rivian’s shares have lost almost 90% of their value since the company’s initial public offering in November 2021.

Executives of Rivian reiterated last month that the company has enough cash on hand to keep itself up and running until 2025. However, with officials now seemingly desperate for Amazon to allow it to cater to other customers, Rivian seems to be worried about its ability to keep going beyond that date.

Photo: Rivian Automotive

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