This does not mean the relationship between the two companies is ending.
All-electric vehicle maker Rivian and retail giant Amazon, Rivian's largest shareholder, are reportedly holding talks that could see the termination of their exclusive delivery van (EDV) deal, according to the Wall Street Journal. Neither company has confirmed the report, each only stating they're committed to a continued relationship.
"While nothing has changed with our agreement with Rivian, we have always said we want others to benefit from their technology in the long run," said an Amazon spokesperson.
Rivian had this to say: "Our relationship with Amazon has always been a positive one. We continue to work closely together and are navigating a changing economic climate, similar to many companies."
Signed back in September 2019, the deal called for Amazon to purchase over 100,000 all-electric delivery vans over the course of a decade. The vans first began making deliveries in Los Angeles in February 2021 and expanded to over 100 cities last year. The EDVs have since delivered over 10 million packages.
The reason for the exclusivity portion of the deal possibly being removed is reportedly that Amazon wants to purchase 10,000 vans this year, a figure that's lower than expected. Therefore, Rivian wants to seek new retail customers in addition to retaining Amazon. The carmaker's stock dropped just over 3% at the end of trading Monday.
Amazon initially invested a whopping $700 million into Rivian in 2019 as part of The Climate Pledge, the commitment it made to reach net zero carbon by 2040. Both Rivian and Amazon previously announced they're each implementing cost-saving measures due to current economic conditions.
Rivian is laying off 6% of its workforce while Amazon let go over 18,000 workers. EDVs are not being sold for private use, unlike the R1T and R1S EVs. They were designed to be delivery vans from the get-go, which is why they appealed to Amazon.
But if Amazon doesn't fully hold up its end of the bargain, Rivian needs to find new fleet customers to help make up the financial difference. It simply cannot take any chances otherwise. Ford, Rivian's second-largest backer with an initial investment of $500 million, cut its stake last month to just 1.15% last month. Amazon, meanwhile, has reduced itself to 17% ownership.
In other words, Rivian's two largest shareholders are fleeing. Finding new retail customers for the EDVs Rivian has been planning to build for years has suddenly become a critical issue.
Join The Discussion