Rivian had a rough week on the stock market; is Amazon’s electric vehicle future in danger?

Despite production delays and market turmoil, Amazon is still counting on electric vehicle startup Rivian to meet ambitious climate goals and put tens of thousands of electric vans on the road.

Rivian has a lean operation: The number of vehicles it produced this quarter is almost exactly equal to the number of semiconductors it had, CEO RJ Scaringe said.

Those tight margins are deterring investors, a panic that came to a head on Tuesday when Ford announced it would sell 8 million Rivian shares, and began severing ties with the California-based company that promised to usher in the shift to carbon neutral transportation. . † Ford still has about 94 million shares.

The announcement sent Rivian’s stock plunge 20%, but the decline was short-lived. It rose over the next two days, after a phone call with investors Wednesday, where Scaringe insisted the worst supply chain constraints were behind it. Rivian is set to ramp up production for the rest of the year, he said, and the company has registered more than 90,000 pre-orders.

Amazon — one of Rivian’s largest shareholders — is not faltering.

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

With 150 million shares and an order for 100,000 electric vans, Amazon is using Rivian’s vehicles to reach its goal of net zero carbon emissions by 2040. there is no reason to doubt the achievement of that goal, say researchers, analysts and business leaders.

“Rivian is an important partner for Amazon and we are excited about the future,” Amazon spokesperson Kate Scarpa said Friday. “Having 100,000 electric vans on the road by 2030 is no small feat, and we remain committed to working with Rivian to make it a reality.”

Rivian is “ready 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 in Amazon.” .”

Beril Toktay, director of the Ray C. Anderson Center for Sustainable Business at Georgia Tech, said Rivian’s long-term flip-flop week in the stock market is not cause for alarm.

“These corporate goals are bold. They need to be cushioned by a portfolio of strategies,” she said. “So a little speck, like this one company, really isn’t a story, in my opinion.”

It’s too early to speculate on a timeline that still spans nearly 10 years, said Don MacKenzie, who leads 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 in general.

“As far as I know about Amazon’s goals for electric vehicles, they are planning and have started purchasing from a number of different suppliers,” he said. “They didn’t put all their eggs in the Rivian basket.”

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

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

Amazon placed an order for 100,000 electric vans from Rivian in September 2019. They started testing those vans in Los Angeles in February 2021.

Since the start of the test program with Rivian, ‘pre-production’ vehicles have delivered 90,000 packages and covered 50,000 miles.

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

After months of collecting feedback from Amazon drivers that led to a “whole range of improvements,” Scaringe said deliveries “will start to increase, and hopefully you’ll see a lot more coming in all our neighborhoods delivering packages.”

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

Scaringe assured investors that Rivian is willing to ramp up production and said on Wednesday that Rivian had already weathered its worst shortages.

“We’ve been working very closely with the suppliers… to ensure that the restrictions and line-down situations we’ve been dealing with over the past few weeks, we’re going to put these behind us,” he said. “We cannot be more confident in the path that lies ahead. †

“We are at the helm of our future growth.”

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 the year before.

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

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