Rivian scraps electric van plan

Would have made vehicles in Europe alongside Mercedes

Rivian is shelving plans to jointly build electric vans in Europe with MercedesBenz AG, aborting a deal signed just three months ago to share costs and technology.

Rivian will no longer pursue the memorandum of understanding signed with the German automaker in September to invest in and jointly operate an existing Mercedes plant, the U.S. company said in a statement Monday. Mercedes said separately that the factory it was going to share with Rivian in Jawor, Poland, will produce medium and large vans that will hit the market in 2025.

“At this point in time, we believe focusing on our consumer business, as well as our existing commercial business, represent the most attractive near-term opportunities to maximize value for Rivian,” Chief Executive Officer RJ Scaringe said in Rivian’s statement.

Walking away from an agreement that would have eased the path to entering a new market represents another setback to Rivian’s ambitions to challenge Tesla for electric vehicle leadership. After staging one of the biggest U.S. initial public offerings ever just over a year ago, the company flagged that its factory would only produce half the number of vehicles it has capacity to build this year, due to supply chain issues. It’s also had to cut jobs and recall almost all the EVs it delivered to customers.

Rivian shares fell as much as 4.6% as of 9:35 a.m. Monday in New York, while Mercedes traded down 1% in Frankfurt.

Mercedes saw partnering with Rivian as a chance to share tech and investment with an upstart as it electrifies its van lineup. While it will still invest in making vans at its Jawor plant that’s been producing combustion engines and batteries, further expansion to make room for Rivian is now on hold.