Amazon’s head honcho Jeff Bezos last week announced that his company had placed an order for 100,000 electric delivery vans from EV start-up Rivian. The plan is for the first Rivan-built vans to go into service by 2021, with 10,000 on the road by 2022 and all 100,000 operational by 2030. The order was announced by Bezos as he unveiled the Climate Pledge, calling on signatories to reach net-zero carbon by 2040, 10 years ahead of the targets set by the Paris Accord. The investment in the vans will ’ accelerate the production of electric vehicles critical to reducing emissions from transportation’.
Amazon has long been looking at ways to improve efficiency and reduce the costs of its delivery operation, especially in terms of the ‘last mile’ deliveries to consumers in large cities. Switching to electric vans would both cut fuel costs and ensure Amazon vehicles were not affected by low emissions zones increasingly being established in cities.
Rivian was one of the less well-known names to the electric vehicle industry, although it has been in the business for 10 years. After a quiet start the company’s main push started earlier this year with a massive fundraising effort, with a host of major players investing big money, Amazon included. They led the way with a USD700mln funding round in February. This was flowed by Ford, who announced a USD500mln investment, and will result in Ford selling electric vehicles made by Rivian. More recently the company landed USD350mln investment from Cox Automotive. The companies will explore partnerships in logistics, service operations and digital retailing.
Should other EV start-ups (or even the bigger players) be worried? With an order of this size, Rivian can now forward plan with confidence and as the industry knows, there is only so much lithium to go around. Rivian will no doubt get preferential treatment from the battery makers due to the size and certainty of forward orders, which will at the very least squeeze others in the marketplace.