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Rivian wants out of Amazon electric van lock-in

10k delivery vehicles this year isn't going to cut it and upstart really needs the cash

Electric van maker Rivian and Amazon are reportedly in talks to scrap part of a 2019 deal that made the retail giant Rivian's sole customer for its electric delivery vans.

According to the Wall Street Journal, which spoke to unnamed sources familiar with the matter, Rivian wasn't happy with the fact that Amazon decided to only buy around 10,000 electric vans in 2023 - within the bounds of the contract, but only just. 

As we reported last year, Amazon had already taken delivery of around 1,000 electric vehicles as of November when Rivian reported Q3 losses of $1.7 billion in that quarter alone. Amazon has committed to buying 100,000 of the electric trucks by 2030, and a spokesperson told us that hasn't changed - except the exclusive part, maybe.

"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 The Register.

"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." 

We asked Amazon for an update on the number of Rivian vans on the road, but it only said there were "thousands" without providing a number.

From bad to worse

The Wall Street Journal's coverage of the news makes it appear that Rivian is solely responsible for the renegotiation, a question which neither Amazon nor Rivian answered when we put it to them. 

Rivian didn't respond to our questions at all, which means we only have the EV company's previous troubles to use as a metric by which to judge whether this latest news is good or bad, and it's probably not good. 

In its Q4 and 2022 year-end report, Rivian said it lost another $1.7 billion in the fourth quarter. Those quarterly losses were actually less than the company's losses in Q4 2021, but unfortunately Rivian's full-year numbers are less forgiving: It lost $6.8 billion in 2022, considerably more than the $4.6 billion it incurred in 2021.

Rivian has also dealt with a pair of extensive recalls recently, the first concerning nearly its entire fleet due to bad fasteners that could cause the steering wheel to detach. The second, issued in late February, affected both R1T and R1S vehicles, which may have faulty passenger airbags sensors that can cause it not to deploy properly. 

We asked Amazon if it had any problems with its Rivian fleet that may have pushed it to consider slashing its contract with the troubled carmaker, but Amazon didn't answer that question, either. The company did say it continually reevaluates its partnerships, but again made no allusion to whether the exclusivity reevaluation was mutual or not. 

Regardless, things aren't going great at Rivian. 

In late December, Rivian announced that a deal between it and Mercedes-Benz to jointly produce electric delivery vans in Europe had fallen through, and in February it laid off 6 percent of its staff as a cost-cutting measure. 

The automaker said it will significantly increase its deliveries in the next few months, reducing lead times from 12-18 months to less than a fiscal quarter, and plans to manufacture 50,000 vehicles in 2023 - double what it had planned to produce last year. We note that Rivian failed to meet its 25k goal in 2022, though only by a few hundred cars. 

Despite doubling its production expectation, that 50k benchmark, which it restated was its goal earlier this month, still fell short of the 67k target that analysts expected, causing more stock slumping. Rivian shares have lost nearly 90 percent of their value since the company went public in late 2021.

Reiterating what it had said in the past, Rivian told investors during its most recent earnings call that the company only had enough cash on hand to fund operations until 2025. With Amazon potentially reducing its orders and Rivian scrambling to open its electric delivery van up to other customers, 2025 is starting to look ambitious. ®

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