Amazon.com Inc. is engaged in talks with Rivian Automotive Inc. to scrap the exclusive agreement for the delivery vans. In today’s latest BNN News, an end to the exclusive pact will allow Rivian to sell its delivery vans to others.
Amazon recently informed Rivian of its intention to purchase 10,000 electric vans in 2023. It is at the lower end of the deal Amazon agreed with Rivian, according to people familiar with the matter. As a result, Rivian approached Amazon to end its exclusivity for EVs, and talks are in progress.
Amazon drivers started the daily delivery of 10 million packages worldwide with the arrival of Rivian electric vans equipped with routing software. It was an early investor in Rivian, an EV maker. The e-commerce giant has unveiled over 1,000 EVs, which were supplied by Rivian, since July in over 100 cities across the US. The relationship between Rivian and Amazon started in 2019 when Jeff Bezos, the former CEO and founder of the latter, procured 100,000 electric vans. It is against the backdrop of Bezos’ vision to go carbon neutral by the year 2040.
Amazon is committed to purchasing 100,000 EVs
A spokeswoman for Amazon said it is committed to procuring 100,000 electric vans by 2030, honoring the original pact with Rivian. She went on to say that the company is excited about the future, and Rivian will remain a trusted partner for Amazon.
A spokeswoman for Rivian said its relationship with the e-commerce giant is intact and it will work closely with it in the future. Rivian is also navigating the changed economic conditions just like other companies. Both companies’ executives touted the deal in which Rivian became an important supplier for Amazon in fulfilling the dream of the e-commerce giant in reducing carbon emissions. Amazon holds a 17% stake in Rivian.
The shares of Amazon and Rivian declined by 2% and 5%, respectively, on Monday’s trade. After witnessing a boom in sales during the pandemic, Amazon began experiencing a slowdown in sales and initiated cost-saving measures.
Amazon halts the construction of its second headquarters
Amid sluggish e-commerce sales, Amazon announced a halt to its second headquarters construction in Washington, DC. It is also removing over 18,000 of its workforce, making it one of the biggest reductions in technology companies.
Amazon contract helped Rivian win the confidence of investors
Rivian witnessed an increase in demand for one of its three EVs being built at its Normal, Illinois, factory following a contract with Amazon. According to the latest auto news, Rivian needs to score new clients for its EVs if Amazon agrees to end the exclusivity. Investors favored Rivian because of its deal with Amazon, which acts as a stability factor. The deal also endorses its technology.
In late 2021, RJ Scaringe, CEO of Rivian, said Amazon is an important and largest customer and improves demand for its vehicles. Both companies worked closely on building the EV. Ending a relationship with Amazon creates a challenge for the EV maker, which is under pressure to improve factory output by lowering costs. Rivian is also engaged in the production of the R1S SUV and the R1T pickup truck to satisfy the demand from retail customers.