Rivian had a rough week in the stock market; Is Amazon’s electric vehicle future in jeopardy?

Rivian had a rough week in the stock market;  Is Amazon’s electric vehicle future in jeopardy?

Despite production delays and market disruption, Amazon continues to rely on electric vehicle startup Rivian to meet ambitious climate targets 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 is almost exactly the number of semiconductors it had, CEO RJ Scaringe said.

Those tight margins have spooked investors, a panic that came to a head Tuesday when Ford announced it was selling 8 million shares of Rivian and began cutting ties with the California-based company that promised to make the transition Initiate CO2-neutral transport . Ford still holds around 94 million shares.

The announcement sent Rivian’s shares down 20%, but the drop was short-lived. It rose over the next two days after a call with investors on Wednesday that saw Scaringe claim the worst of the supply chain restrictions was behind it. Rivian will ramp up production for the rest of the year, he said, and the company has recorded more than 90,000 pre-orders.

Amazon — one of Rivian’s largest shareholders — isn’t wavering.

Amazon saw its investment in the company pay off in late 2021 when it reported a nearly $12 billion gain from Rivian’s IPO. But it felt the drop this year, reporting a $7.6 billion loss from investment in the first three months of 2022.

With 150 million shares and an order for 100,000 electric delivery trucks, Amazon is using Rivian’s vehicles to help it achieve its goal of net-zero carbon emissions by 2040. is no reason to question the achievement of that goal, say researchers, analysts and company executives.

“Rivian is an important partner for Amazon and we look forward to the future,” said Amazon spokeswoman Kate Scarpa on Friday. “Having 100,000 electric delivery vehicles on the road by 2030 is no small feat and we remain committed to working with Rivian to make this a reality.”

Rivian is “prepared to become an EV giant,” analysts at Baird Equity Research wrote in a Wednesday report, adding that the company “is blessed with talent, a clean sheet of paper, a robust balance sheet and a strong partner at Amazon.” ” may be.

Beril Toktay, director of Georgia Tech’s Ray C. Anderson Center for Sustainable Business, said Rivian’s flip-flop week in the stock market was “no long-term cause for concern.”

“These goals of companies are bold. They need to be met through a portfolio of strategies,” she said. “So a tiny outlier, like this one company, really isn’t a story in my opinion.”

It’s too early to speculate on a timeframe stretching nearly 10 years to go, 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 overall.

“From what I know about Amazon’s EV goals, they are planning and have initiated purchases from a number of different vendors,” he said. “They didn’t put all their eggs in the Rivian basket.”

According to an April company blog post, Amazon has put 15 different models of electric vehicles on the road, including delivery vans, e-cargo bikes and e-rickshaws. In addition to its partnership with Rivian, it is working with automakers Stellantis and Mahindra to build a global delivery fleet, Scarpa said.

“There is no one-size-fits-all approach,” she added.

Amazon ordered 100,000 electric delivery vans from Rivian in September 2019. They began testing these vans in Los Angeles in February 2021.

Since the beginning of the test program with Rivian, “pre-production” vehicles have delivered 90,000 packages and clocked 50,000 miles.

Of the 25,000 vehicles expected to come from Rivian this year, Scaringe estimates that about a third — or about 8,300 — would be electric vans. Rivian has launched a 700 cu ft van and is testing a 500 cu ft model.

After months of collecting feedback from Amazon drivers, which resulted in a “whole lot of improvements,” Scaringe said deliveries “will start to pick up and hopefully you’ll see a lot more of them coming in. All of ours.” Neighborhoods deliver packages.”

According to Chief Financial Officer Claire McDonough, Rivian produced 2,553 vehicles and delivered 1,227 in the first quarter of this year. The company is preparing to transition to two-shift operation at its Illinois warehouse and is on track to launch a new vehicle model — the R2 — at its Georgia plant in 2025.

Scaringe assured investors that Rivian is ready to ramp up production and said on Wednesday that Rivian has already weathered the worst of the shortages.

“We’ve been working very closely with suppliers … to ensure we move beyond the restrictions and line-down situations we’ve been dealing with in recent weeks,” he said. “We couldn’t be more confident about the path that lies ahead. …

“In terms of our future growth, we’re in the driver’s seat.”

Rivian reported revenue of $95 million for the first three months of 2022. It reported a net loss of $1.6 billion compared to a loss of $414 million in the same period last year.

The company spent $547 million on research and development, up from $289 million a year earlier, and attributed most of the loss to freight costs, supply chain challenges and significant labor and overhead costs.

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