Rivian was never going to be Amazon's only electric van maker
BNN Bloomberg
This first week of 2022 brought a fresh reminder of just how irrational the land of EV stocks is, and how little attention investors are paying to details.
This first week of 2022 brought a fresh reminder of just how irrational the land of EV stocks is, and how little attention investors are paying to details.
The market drama started on Wednesday, when Amazon announced it was buying electric vans from Stellantis, formed last year from the merger of Fiat Chrysler and PSA Group. The news sank shares of Rivian Automotive, the buzzy EV startup Amazon has funded to build thousands of electric delivery vans. Rivian raised US$11.9 billion in last year’s biggest IPO.
The pixie dust from Seattle gave Stellantis its much sought-after stock bump: shares were up 11 per cent, headed for the biggest weekly gain in more than six months. The Amazon deal is good news for Stellantis, which is trying to tap into market mania for EVs by touting its electrification plans.
This is not bad news for Rivian. As several analysts have pointed out, Rivian was never going to be able to produce enough to satisfy Amazon’s voracious e-commerce delivery needs, and it wasn’t expected to. Amazon “always knew” it would “would require multiple electric delivery van providers” to meet its climate goals, the company said in an email after Rivian shares started dropping.
The retail giant started knocking on doors in Detroit years ago to get the electric vans it will need to achieve Jeff Bezos’ 2040 climate goal. It turned to Rivian in part because Detroit automakers couldn’t deliver zero-emissions trucks fast enough. Even so, Amazon is already a steady customer of Stellantis’ Ram ProMaster and Mercedes Sprinter vans.
The real tension investors should be focused on is whether Rivian can deliver the vans it’s promised. It’s on the hook to deliver 10,000 of them to Amazon by the end of this year, and 100,000 by the end of the decade. That is a huge lift for an upstart electric vehicle company that only just began to roll vehicles off the line late last year. (Remember Elon Musk’s “production hell?”) There’s something to be said for Stellantis’ century of manufacturing experience.
