Rivian claims it will begin accepting orders for electric delivery vans in 2022, and will deliver them "early 2023" to fleet customers. This puts into question Amazon's exclusive rights.
The buzzy EV startup, which is slated for a public offering this week at a value of $50 billion or more, quietly revealed details about its fleet sales plans on Friday's new section of its website. It also stated that it will sell its R1T and R1S electric pickup trucks in fleet form, which will allow it to compete with Ford's F-150 Lightning commercial model.
Electric vans and fleet versions of R1T or R1S will be available
Rivian could make more money by selling electric delivery vans to commercial fleet customers, other than Amazon, in the short term. The market for these vehicles remains wide open. The startup is at risk of taking on too much. Rivian is yet to prove its ability to produce vehicles at scale; the startup has just begun making and delivering R1Ts and is currently preparing for mass production.
Rivian's fleet section was launched one day after the company was sued for alleged gender discrimination. She claimed Rivian was manufacturing quality problems and had too lofty delivery targets.
Rivian and Amazon announced their collaboration on an electric delivery van in 2019, As part of its efforts to reduce carbon emissions, the conglomerate stated it will order as many as 100,000 vans by 2024. Amazon has confirmed that it now owns 20% of Rivian, after having participated in multiple funding rounds prior to the IPO.
Rivian, which announced its intention to go public earlier in the year, shared more details about the deal that it had with Amazon in filings to the Securities and Exchange Commission. After Rivian had provided the first batch, the two companies agreed that Amazon would own the exclusive rights to the delivery van for the next four years. Amazon would have the right to first refusal for the next two years over any other company that wants to purchase the vans from Rivian.
Rivian admitted to potential investors that Amazon would account for a significant portion of the company's "near-term revenue." Some were listening. Equity research firm New Constructs stated in a report last Wednesday that Rivian's market share could be significantly hampered by the exclusivity clause in this agreement.
However, neither company could explain the current status Amazon's exclusive rights over Rivian van. Amy Mast, communications director at Rivian, tweeted the new section, which states that customers will be able "to use an online fleet configurator to plan your fleet order" in early 2022 and that deliveries of the van are expected to start in early 2023. Mast declined comment due to the SEC's mandatory silence period during a public offering. Amazon declined to comment on the status of the exclusive period.
Although they aren't yet applicable, there are some provisions in the Amazon agreement that could invalidate the exclusivity period. Amazon would need to reimburse Rivian for certain costs if it doesn't order 10,000 vans from Rivian within the two-year period after they start production. The exclusivity period would also be void if Rivian didn't place orders in the same time frame. The same applies if Amazon ends its Rivian agreement before it orders all 100,000 vans.
Rivian still boasts about the Amazon deal on the new fleet page. Rivian wrote that Rivian designed vehicles and infrastructures in order to meet the needs of the United States' largest retailer. Rivian intends to deliver 100,000 electric delivery vans to Amazon in order to assist Amazon in reaching its ambitious goals for the world. The startup confirmed that it will still deliver 10 of the first 10 vans by 2021.
This could have a semantic explanation. Rivian's and Amazon's exclusive agreement refers to "last mile transport vehicles," which the companies vaguely define as "any other delivery carriers or systems designed or manufactured for use in a vehicle fleet for logistics or last-mile transportation of goods to their final destination."
Rivian's fleet site refers to the van as a "commercial vehicle" and may indicate that Rivian is trying to sell vans to other companies than those in delivery. The exclusivity is less about Rivian keeping vans from Amazon's direct competitors. FedEx has been working closely with General Motors' commercial electric vehicle effort, BrightDrop. UPS also invested in Arrival. It seems that Rivian's deal to Amazon isn't as prohibitive than it first seemed. The company will likely share more information about it after it goes public next week.
