DETROIT (Reuters) - Electric vehicle startup Rivian Automotive LLC got a big boost from one of its investors on Thursday when Amazon.com announced it was ordering 100,000 electric delivery vans.
Before Rivian has even begun commercial production at its factory in Normal, Illinois, the Amazon order rocketed it to the forefront of electric vehicle makers.
Amazon (AMZN.O) Chief Executive Jeff Bezos said in Washington that as part of the online retailer’s plan to be carbon neutral by 2040 it would order the electric vans from Rivian, with deliveries starting in 2021. The goal is to deploy all the vehicles by 2024.
Rivian, a potential rival to Silicon Valley’s Tesla Inc(TSLA.O), unveiled its electric R1T pickup and R1S SUV last November, but had piqued Amazon’s interest earlier. Bezos personally reached out to Rivian CEO R.J. Scaringe last summer to express interest in an investment, sources previously said.
Plymouth, Michigan-based Rivian, founded in 2009, has raised close to $1.9 billion from investors, including a $700 million February round led by Amazon.
The deal solidifies Rivian’s place among EV builders, said Sam Fiorani, a vice president with Auto Forecast Solutions. “It helps boost the image of the (Rivian) brand,” he said.
Rivian aspires to be the first to produce a mass market electric pickup. It intends to begin selling its R1T by the end of 2020, a target that has not changed with the Amazon deal in place, said Rivian spokeswoman Amy Mast said.
The Amazon vans, under the exclusive deal, will be built at Rivian’s plant, a former Mitsubishi factory in Normal, Illinois, Mast said. The first vehicles will be delivered in 2021 and 10,000 should be on the road by late 2022, she said. The vehicles will be serviced by Rivian.
Scaringe has described the Rivian vehicle’s platform as a skateboard that packages the drive units, battery pack, suspension system, brakes and cooling system all below wheel height to allow for more storage space and greater stability due to a lower center of gravity.
Amazon is looking to speed packages to shoppers’ doorsteps regardless of spikes in consumer demand or shortages of delivery personnel. Last year, Daimler AG’s(DAIGn.DE) Mercedes-Benz said Amazon had become the biggest customer of its Sprinter vans, securing 20,000 vehicles for delivery contractors.
Ford invested $500 million in Rivian in April with plans to use the Rivian EV platform to build a new vehicle in North America. Details of that vehicle were not disclosed. Ford is not involved in the Rivian deal, Mast said.
Cox Automotive Inc, the owner of the Autotrader online automobile market and the Kelley Blue Book car valuation service, invested $350 million in Rivian this month. The companies will explore partnerships in digital retailing, service operations and logistics.
Other backers include Saudi auto distributor Abdul Latif Jameel Co, Sumitomo Corp of Americas and Standard Chartered Bank.
Amazon’s reputation and the contract size would raise Rivian’s status with potential customers and investors, Fiorani said. It also offers the advantage of not having to chase buyers or ship vehicles all over the country.
Reporting by Ben Klayman in Detroit; Editing by David Gregorio