Rivian (RIVN) is receiving a much-needed psychological boost as Amazon (AMZN) has begun rolling out some of the company's long-awaited delivery vans.
Amazon began its rollout on July 21 and will use Rivian electric trucks to make deliveries starting in 10 cities, including Baltimore, Chicago, Dallas, Kansas City, Nashville, Phoenix, San Diego, Seattle and St. Louis.
Amazon has long-standing plans to purchase 100,000 Rivian electric vans by 2030 to increase deliveries.
The partnership with Rivian is part of Amazon's larger game plan to lead the market in making quicker deliveries and also address climate change issues by purchasing electric trucks. Other big retailers are acquiring electric delivery fleets as well. Walmart has a deal with Canoo to buy 4,500 EVs.
Amazon CEO Andy Jassy said on Twitter that he likes the design and low emissions of the Rivian delivery vehicles.
Why Amazon Partnered With Rivian
Amazon has been an investor in Rivian since 2019 as part of its strategy to use more EVs in its massive delivery network and is the first customer for its electric delivery van EDV.
The internet behemoth has a 17.74% stake with nearly 20 million shares as of Dec. 31 and has maintained its holding even as the EV manufacturer's stock tanked by 68.38% year-to-date.
Another shareholder upped its stake recently - as of March 31, George Soros' Soros Fund Management had purchased a little over 6 million additional Rivian shares -- 6,045,000 -- according to a May 13 filing with the SEC.
The billionaire's fund owns just over 25.88 million shares of Rivian, which was founded in 2009 and went public in 2021.
"Rivian is an important partner for Amazon, and we are excited about the future," a spokesperson said previously in an emailed statement. "Putting 100,000 electric delivery vehicles on the road by 2030 is no small feat, and we remain committed to working with Rivian to make it a reality.”
Shares of Rivian have risen in recent days. The stock fell by 49.2% during the first six months of the year.
Rivian's Headwinds
This latest news could augment Rivian since it has faced some setbacks.
Interest in Rivian's three vehicles has been strong, but the automaker has faced production issues due to semiconductor chip shortages that have plagued the rest of the sector as well.
Shortages of chips and soaring prices of raw materials such as cobalt, nickel and palladium have also contributed to delays.
The company announced on July 6 that it produced 4,401 vehicles at its plant in Normal, Illinois during the second quarter. Rivian currently manufactures the R1T electric pickup, the R1S electric SUV, and the RCV electric commercial van at its Illinois plant.
Rivian delivered 4,467 vehicles during the same period and increased its production by 72.4% from one quarter to the next. Rivian produced 2,553 vehicles and delivered 1,227 in the first quarter.
The company said during its first-quarter earnings that its cash level was $17 billion as of March 31, which should be sufficient to manufacture its next model, a lower-cost vehicle called R2, at a new factory in Georgia by 2025.
The automotive group said in its earnings release that it had received 90,000 reservations for its R1T and R1S models. The problem for Rivian is whether the company can deliver the promised products.
Rivian reported a net loss of $1.6 billion in the first quarter compared to a loss of $414 million for the same period in 2021 due primarily to higher operating losses, the company said.
The automaker signed an agreement with authorities in Georgia in early May to enable the carmaker to accelerate the construction of its $5 billion factory east of Atlanta. Once manufacturing operations are ramped up, the facility will be able to produce as many as 400,000 vehicles a year.
Rivian faces other growing pains as some investors have trimmed their stakes.
A major shareholder, Ford (F), sold more shares. In a Securities and Exchange Commission document filed on May 13, the legacy carmaker said it sold 7 million Rivian shares the same day at a price of $26.88. Ford still owns only 86.95 million Rivian shares.
That sale marked the second time in less than a week that Ford sold Rivian shares. On May 9, the legacy auto giant sold 8 million Rivian shares at a price of $26.90.
