Electric vehicle manufacturer Rivian and Amazon are in active discussions about ending the exclusivity provision of their delivery van deal, according to multiple media reports.
First reported Monday by the Wall Street Journal, Rivian is trying to remove the exclusivity terms from its Amazon deal due to a lower-than-expected order number for 2023.
The two companies entered into an agreement in 2019 for Amazon to buy 100,000 delivery vans from Rivian by 2030, providing the Irvine, California-based startup a big-name and stable customer. But Amazon only plans to buy roughly 10,000 EV vans this year, which is at the low end of a range previously provided to Rivian, according to the Journal.
An Amazon spokesperson told The Atlanta Journal-Constitution that “nothing has changed with our agreement with Rivian.”
“We’ve always said that we want others to benefit from their technology in the long run because having more electric delivery vehicles on the road is good for our communities and our planet,” the spokesperson said.
Rivian officials said they aim to manufacture 50,000 vehicles this year, consisting of an unknown split between delivery vans, R1T trucks and R1S SUVs.
A Rivian spokesperson declined to comment about the reported negotiations.
“We continue to work closely together (with Amazon) and are navigating a changing economic climate, similar to many companies,” the spokesperson said in a statement. “The relationship we have with Amazon is a very positive one.”
Amazon is Rivian’s largest stakeholder and has a vested interest in the company’s progression from startup to profitable company. Rivian is staking its long-term future in Georgia, promising to build a $5 billion EV plant an hour east of Atlanta that will employ 7,500 workers. Cox Enterprises, owner of The Atlanta Journal-Constitution, owns about a 4% stake in Rivian.
Both Amazon and Rivian have undergone layoffs this year to cut costs, and Amazon went further to pause construction on its second headquarters — known as HQ2 — in the Washington, D.C., area. Other prominent tech companies, such as Meta, Microsoft and Google, have also delayed office plans and cut their workforce.
Inflation, supply chain issues and fears of an economic slowdown have weighed on all automakers, but upstart EV companies in particular.
Rivian burned through $6.8 billion in 2022 and has watched its stock drop more than 90% since its IPO in November 2021. By midday Monday, Rivian’s stock was less than $14 a share.
In last month’s call with investors, Rivian officials said they have enough cash in reserves — about $12 billion — to last through 2025, but the company issued $1.3 billion in bonds last week to raise funds to launch its new R2 crossover at its planned Georgia factory.
Grading work is currently taking place on the 2,000-acre site in southern Morgan and Walton counties. But multiple lawsuits have threatened the project, which Gov. Brian Kemp’s office touts as the second largest in Georgia history.
A legal challenge from residents near the proposed factory prompted a local judge to strike down some $700 million in property tax cuts — nearly half of the $1.5 billion incentive package state and local leaders used to woo Rivian to Georgia. The ruling has been appealed. Rivian will have the option to terminate its agreement with the state in May if the lawsuit isn’t concluded in the state’s favor.
Two other lawsuits challenge the state takeover of the Rivian site, arguing that it improperly circumvented local zoning codes and permit requirements. The state denies those allegations, calling the lawsuits “frivolous.”
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