Rivian Shares Fall After Amazon Announces Deal To Buy EVs From Rival

The lesson appears to be that as more competitors enter the electric vehicle market, some of the higher profile entrants like Rivian and Tesla may begin to see their growth scaled back by customers seeking better deals based on price and reliability, not just on hype. JL 

Claire Bushey and colleagues report in the Financial Times:

The stock price for electric truck company Rivian fell below the price of its initial public offering after Amazon said it would also buy electric delivery vans from Chrysler owner Stellantis. Amazon is Rivian’s second-largest shareholder, and a deal to buy 100,000 electric vans from the start-up formed one of the cornerstones of the company’s appeal during its soaring IPO in November. The stock price for electric truck company Rivian fell below the price of its initial public offering after Amazon said it would also buy electric delivery vans from Chrysler owner Stellantis. Amazon is Rivian’s second-largest shareholder, and a deal to buy 100,000 electric vans from the start-up formed one of the cornerstones of the company’s appeal during its soaring IPO in November.

 

But on Wednesday, Stellantis announced a deal to sell its own electric Ram ProMaster vans to the online shopping company from 2023. Competition among carmakers is heating up in electric commercial vehicles: General Motors unveiled its battery-powered Chevrolet Silverado on Wednesday, a work truck starting at $40,000 and meant to challenge Ford’s F-150 Lightning electric pick-up. Ford said on Tuesday that it would increase production of the Lightning to satisfy strong consumer demand. Carlos Tavares, Stellantis chief executive, described estimates that the deal with Amazon would lead to “tens of thousands” of van sales as “extremely conservative” — raising the prospect that the order rivals the size of Rivian’s deal with Amazon. The vehicles would “have specific features that will be focused on enhancing performance of last mile delivery”, Tavares told the Financial Times.

 

Rivian’s stock fell as much as 16 per cent to $75.13 on Thursday, below its IPO price of $78 a share. The shares recovered, but still ended the day 3 per cent lower at $87.33. The California-based company had surged as high as $179.47 within days of its November 10 listing, with a torrent of options trading associated with its stock. At one point the lossmaking group had a market valuation higher than Volkswagen, Ford and General Motors.

 

Rivian said Amazon’s deal with Stellantis was “good news for the industry” because it furthers efforts to reduce carbon emissions by electrifying large fleets. “Amazon’s scale is globally unprecedented, and we expect them to purchase vehicles from many providers,” the company said. “Our own partnership with them is intact, thriving and growing.” Amazon said in 2019 that it planned to buy 100,000 electric delivery vans from Rivian, a deal that marked the start-up as a serious competitor to more established electric vehicle manufacturers such as Tesla or traditional carmakers. The ecommerce company did not immediately respond to a request for comment.

 

Rivian is a member of the tech-heavy Nasdaq Composite index. Last year’s rally in lossmaking tech shares has faltered, with declines accelerating alongside a sell-off in the $22tn US Treasury bond market, the backbone of the global financial system. As yields on government debt have climbed, the appeal of many lossmaking companies has faded given their valuations have been reliant in part on easy monetary policy and low interest rates. A closely followed Goldman Sachs index of unprofitable technology companies has fallen almost 10 per cent this year.