Amazon wants 100,000 e-vans; can Irvine-based Rivian deliver?
Questions remain about how fast it can fulfill the retail giant’s huge order
A Rivian truck at the Consumer Electronics Show in Las Vegas is seen Jan. 8, 2019. Rivian and Amazon said Thursday that hundreds of custom-made delivery vans are finally on the road.
Nearly three years ago, Amazon announced that it would buy 100,000 custom-made delivery vehicles from Rivian Automotive, the Irvine-based fledgling maker of electric vehicles. On Thursday, after some delays, the companies said hundreds of the vans were finally on the road.
The battery-powered trucks are crucial to Rivian’s business plan and survival in the competitive auto industry. And they are an important element of Amazon’s plan to limit carbon emissions as it builds its own fleet and relies less on contractors like UPS to deliver billions of orders of toothpaste,
Irvin-based Rivian is planning to have 10,000new vehicles on the road for Amazon as early as this year.
hair dryers, dog toys and sundry other products.
But questions remain about how fast Rivian, about 18% of which is owned by Amazon, can fulfill the retail giant’s order. The automaker, which began producing vehicles in small numbers last year, is struggling to ramp up while there
are shortages of semiconductors and other components. And recently, Rivian warned employees that they should expect layoffs and other cost-cutting measures.
“We are making some adjustments to certain teams within the business,” R.J. Scaringe, founder and CEO of Rivian, said last week. He declined to say how many jobs might be cut.
“These are some of the hardest decisions that one has to take as a leader, to recognize where we spend our dollars, where we spend our focus or spend our time,” he added.
Amazon has said it does not expect all 100,000 trucks to be delivered until the end of the decade. In a November securities filing, Rivian said it planned to deliver the 100,000 trucks “by 2025.” Scaringe declined to say if that was still the plan, saying only that he hoped to deliver the vans sooner than Amazon was expecting them.
In January, Ross Rachey, who oversees Amazon’s global fleet, said the companies expected to have 10,000 deployed as early as this year. So far, Rivian has delivered several hundred, and Amazon now expects to have “thousands” by the end of the year, said Udit Madan, vice president for transportation at Amazon.
Rivian also makes a pickup truck and a related sport utility vehicle. That means the company is trying to ramp up two assembly lines at once — a tall order for any carmaker, especially a relative newbie.
The nascent market for electric delivery vans is getting more competitive. Ford Motor, a large shareholder in Rivian, began selling an electric version of its popular Transit van several months ago and has delivered about 3,000 so far. Ford has sold some of its shares in the company in recent months.
Rivian’s production problems are symptomatic of the difficulties that young electric vehicle manufacturers face as they try to challenge traditional automakers. Many are discovering how hard and costly it is to mass-produce autos, and time’s not on their side because the established companies also are moving quickly toward electrification.
So far, Tesla, which sells more electric cars than any other manufacturer, is the only electric-vehicle maker to have gained significant market share. But that company does not yet make or sell trucks.
Canoo, which has announced plans to offer a roomy electric van this year, warned in May that it could run short of cash. Management “has identified substantial doubt about our ability to continue as a going concern,” Canoo said in a regulatory filing. The company’s prospects improved this month when Walmart said it would buy 4,500 Canoo vehicles to make deliveries.
Amazon is not depending solely on Rivian for emission-free vehicles. It also plans to order electric vans from Stellantis and other manufacturers, albeit in smaller numbers.