Rivian facing challenges in fulfilling Amazon’s EV order
Nearly three years ago, Amazon announced that it would buy 100,000 custommade delivery vehicles from Rivian Automotive, a fledgling maker of electric vehicles. Last week, 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 a competitive auto industry. 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.
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. Earlier this month, 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.
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.
Rivian’s production problems are symptomatic of the difficulties that young electric vehicle manufacturers face as they try to challenge the traditional automakers. Many are discovering how difficult and costly it is to mass-produce vehicles.
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.
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.
Amazon has been investing heavily to build its own network of delivery contractors and already has far more than 100,000 vans, most of them diesel-powered. It delivered about 6 billion packages in the United States last year, surpassing UPS, according to estimates from Bank of America.