Rivian’s electric delivery vans will no longer just be an Amazon exclusive.
The company announced Tuesday that it would sell its electric delivery vans to other companies by next year, ending an exclusivity deal with Amazon. This announcement was released along with Rivian’s third quarter earnings release.
This amendment opens up a whole new market of customers for Rivian, the electric vehicle startup whose sales of its R1 line of passenger electric vehicles, the R1T pickup truck and R1S SUV, continue to be eclipsed by Tesla. The titan of the EV field, Tesla’s powerhouse manufacturing allows it to produce and deliver hundreds of thousands of passenger EVs each quarter.
“We’re confident the value of our vans, software and service offerings can provide fleet customers and are in active discussions with a number of large potential fleet customers to launch pilot programs,” RJ Scaringe, Rivian’s chief executive and president, said in the earnings call.
Daniel Ives, an analyst with Wedbush Securities, said Rivian’s commercial opportunities are significant as it can help the company branch out into new financial territory.
“Every (company) is looking at a new angle that differentiates them with competition increasing across the board” in the EV field, Ives said. “Rivian has an advantage, especially on the commercial side.”
Rivian and Amazon brokered a deal in 2019 to have the EV startup exclusively sell its vans for Amazon’s delivery operations, aiming to provide the retail giant 100,000 units by 2030. To date, Amazon has over 10,000 electric vans on the road.
Amazon is one of Rivian’s largest investors, holding a 17% stake.
The new development that Rivian ended this deal doesn’t come as a surprise, as The Wall Street Journal reported in March that the two parties were in talks to modify the deal after Amazon sought to purchase a lower amount of electric vans this year compared to what it had originally indicated. As a result, Rivian wanted to end the exclusivity agreement.
An Amazon executive said this was the plan from the beginning as “having more electric delivery vehicles on the road is good for our communities and our planet,” according to the AP.
Scaringe said that Rivian will still fulfill its pledge to ultimately provide Amazon with 100,000 electric vans.
Rivian also announced in its earnings release that it raised its total 2023 production guidance – which entails both its electric vans and R1 line – to 54,000 units, the second time it’s been increased this year.
The 16,304 vehicles produced and 15,564 delivered were the primary drivers of the $1.34 billion Rivian generated this quarter, according to Clare McDonogh, the company’s chief financial officer. That’s 150% higher than what the company posted in revenue this period last year.
Ultimately, Rivian had a gross loss of $477 million compared to the $917 million it suffered in the third quarter last year.
Still, the company has been able to improve its cost structure as it continues to work towards profitability, executives said.
The company’s gross margin loss this quarter improved to 36% compared to 171% this period last year, while the gross loss per unit improved to $30,648, a 77% change from the $139,277 loss per unit during last year’s third quarter.
Improving the company’s cost efficiency is one of its four key value drivers and Rivian has done this through reduced commodity costs and renegotiating with suppliers for price reductions, according to executives.
Rivian’s shares closed 7.7% Wednesday this year to date to $17. Tesla closed at 80% to $222.