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As one of the most prominent entities in the world right now, Amazon is constantly looking for ways to innovate its operations. Business leaders now have the task of balancing cost-cutting practices with ones that preserve or help the environment. Eco-friendly practices often have the negative association of being expensive to invest in — which can make CEOs hesitant to invest — but rebates and cost recuperations are making them much more enticing. Such is the case with the Rivian Amazon van.
Rivian is an electric vehicle (EV) manufacturer currently supplying Amazon’s fleet of delivery vans. While EVs have a high adoption cost, their refueling savings often recoup the cost fairly rapidly. Amazon also has a deal with Rivian that requires the automaker to produce vans for the shipping entity only. However, talks are underway to end this exclusive partnership, potentially opening the doors for many more delivery companies to acquire these vehicles. What’s going on between Amazon and Rivian?
The Original Rivian-Amazon Deal
Amazon CEO Jeff Bezos announced the partnership between the retail giant and the startup EV manufacturer back in 2019. This deal aimed to help Amazon meet the targets set forth by the Paris climate agreement in 2015. Bezos believed the contract guaranteeing the company would buy 100,000 electric delivery vans from Rivian would help it hit its carbon-neutral target by 2040. That means Amazon would be about a decade ahead of its sustainability plans.
John Q. Anderson of Greenbriar Equity Group said this transition would influence all other retail and shipping businesses to take the dive and switch to electric. Because Amazon is such a significant player in the world’s economy, other entities will want to make their fleets electric as well to stay competitive. Anderson believed the 2019 partnership would transform the delivery scene — so much so that most delivery vehicles would be electric within a decade.
While the initial cost of EVs is relatively high, Amazon is doing more than upgrading its fleet — it’s going all in on Rivian. Bezos initially invested more than $1.3 billion into the automaker and spent another $490 million on convertible notes. At the end of October 2021, Amazon announced it had a 20% stake in Rivian, equating to about $3.8 billion.
Talks of Ending Rivian’s Exclusivity
Rivian Amazon delivery vans started hitting the road in July 2022. However, there are already discussions about canceling this exclusive partnership after it finally started coming to fruition.
What’s happening to the Rivian-Amazon partnership? Though Amazon promised to buy 100,000 EVs from Rivian, it only plans to purchase 10,000 this year. This number is reportedly at the far low end of what Amazon pledged to buy. Rivian also announced plans to make 50,000 EVs in 2023, meaning it would have around 40,000 extra delivery vehicles. This has led Rivian to attempt to end the terms requiring it to sell its electric delivery vans only to Amazon.
Not to mention, economic challenges have recently plagued the partnership. Amazon laid off 18,000 workers and halted new D.C. construction as e-commerce purchases slowed. Though John Q. Anderson said Amazon’s EV adoption would inspire more shippers to invest in electric fleets, he also stated the purchasing rate would depend on the economics. This notion has proven very true.
Rivian is under pressure to increase its output and reduce costs despite the increasing prices of EV materials. It, too, initiated two rounds of layoffs to curb these monetary struggles and cope with economic turbulence. However, a recent drop in lithium prices could signal good news for the manufacturer.
Supply issues aside, Rivian has also been costing Amazon a lot of money. In the fourth quarter of 2022, Amazon lost $2.3 billion due to its investment in Rivian. Stock in the automaker has also lost a significant amount of value. Shares started at around $130 when they debuted but currently sit at under $14. As Amazon looks to save, ending exclusivity with Rivian may be part of the decision.
What Widespread Rivian EVs Could Look Like
Despite ongoing theories about the Rivian Amazon van partnership ending, an Amazon representative said their relationship with the manufacturer is still highly positive. The plan to buy 100,000 EVs is allegedly still on and Amazon remains excited about the future of its collaboration with Rivian. For now, it seems Rivian will continue only selling its EVs to Amazon.
However, Amazon has said it always intended for other companies to utilize the tech, as it could powerfully influence local communities and the entire environment. Having more electric cars on the road lowers the amount of greenhouse gases commuters release daily. Such a simple change could drop pollution rates and influence investors and customers to put more money into corporations making the transition.
Recent research shows consumers are paying much more attention to how a business affects the environment. Items with an environmental, social or governance claim averaged 28% growth over five years and were 56% of all development. As the consequences of climate change begin to appear in more aggressive weather patterns worldwide, people are voting with their dollars. If Rivian provided their vehicles to more shippers, those companies could see increased investments.
Additionally, there are plenty of positives to the Rivian Amazon delivery van. According to one driver, the shelves are much more ergonomic than previous vehicles and the cargo door opens automatically once the van shifts into park. The EV also makes no noise as it drives, providing a better commuting experience. These vans also feature 360° camera systems to aid in parking and pedestrian-detection features to reduce the number of accidents.
Other delivery fleets would benefit from all the tech these vans hold. They could increase sales, reduce insurance costs by lowering accident rates and improve the driver’s day-to-day, lowering turnover rates.
The Future of the Rivian Amazon Van
Will Rivian and Amazon end their exclusive partnership? For the time being, it looks like the EV manufacturer will continue only providing their vans to the e-commerce corporation. But if Rivian gets the opportunity to expand, it could offer significant advantages to shipping companies, shareholders, employees, community members and the Earth.