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Home » GM, Amazon Are Very Interested in This Electric Truck Startup

GM, Amazon Are Very Interested in This Electric Truck Startup

GM, Amazon Are Very Interested in This Electric Truck Startup
February 14, 2019
Bloomberg

Rivian Automotive LLC is moving to gain an edge over bigger electric-car rivals before it even starts manufacturing plug-in pickups.

The startup is in talks with General Motors Co. and Amazon.com Inc. about an investment that would value the company at $1bn to $2bn, people familiar with the matter said. If the deal closes, Rivian would get a partner in GM that brings manufacturing expertise and could help it avoid the trouble Tesla Inc. had mass-manufacturing Model 3 sedans. With Amazon, the world’s largest web retailer, Rivian could have a potential blockbuster customer for its electric trucks and SUVs. A deal could be announced as soon as Friday, the people said.

GM and Amazon also stand to benefit from a common alliance. Trucks and SUVs are gas-guzzling cash cows for Detroit automakers. An investment in Rivian could help GM get an electric pickup to market faster and help ward off upstarts such as Tesla. Amazon would have a fleet of electric vehicles for its Prime fast-delivery service, and both would get these perks in exchange for investments that won’t break either company’s balance sheet.

“Rivian is being cast in the same light as Tesla, a startup that’s outside the inner circle of the auto industry, and that’s appealing to GM,” said Jeff Schuster, senior vice president of forecasting at researcher LMC Automotive. “GM could clearly do an electric pickup itself — it has the technology and a strong base of pickup buyers. But they don’t have Rivian’s image and separation.”

The Plymouth, Michigan-based startup is working on electric pickup and sport utility vehicle and debuted concept versions at the Los Angeles Auto Show in November. Tesla and Ford Motor Co. have each also said they’re planning electric pickups.

GM and Amazon shares both rose about 0.7 percent before the start of regular trading Wednesday. Reuters first reported Tuesday that the companies were in talks to invest in Rivian.

Barra’s Hint

GM has dropped hints that a plug-in pickup could be a possibility. When asked at an investor conference in January whether the company will sell one, Chief Executive Officer Mary Barra replied to an analyst: “You’ll have to stay tuned.”

“We admire Rivian’s contribution to a future of zero emissions and an all-electric future,” Pat Morrissey, a GM spokesman, said in a statement. Representatives for Amazon and Rivian declined to comment.

GM said more than a year ago it plans to sell 20 electric vehicles by 2023. Many of them would be electric cars and crossover SUVs for China. Rivian plans to have its truck in production in 2020.

Like Tesla, Rivian acquired a vehicle assembly plant for a bargain from an established automaker. It bought a factory in Illinois for just $16m from Mitsubishi Motors Corp. in early 2017. Tesla builds its electric cars at a facility shuttered by Toyota Motor Corp. after GM pulled out of a joint-manufacturing venture as part of its 2009 bankruptcy.

Rivian is billing its R1T electric pickup as being able to reach 60 miles an hour in three seconds and tow 11,000 pounds. Its battery will boast as much as 400 miles of range.

Amazon’s Angle

The rapid growth of Amazon’s e-commerce business has put pressure on the company to expand capacity and reduce its reliance on its delivery partners that include United Parcel Service Inc., FedEx Corp. and the U.S. Postal Service.

Parcel delivery is an ideal use for electric autos, as the vehicles can begin and end trips at designated charging points and take anxiety over battery range out of the equation.

Amazon is expanding its delivery capabilities through a network of independent contractors. Some drive their own vehicles, guided by an Amazon smartphone app. Others lease fleets of vans from Daimler AG’s Mercedes or Fiat Chrysler Automobiles NV’s Ram and hire teams of drivers.

“This gives Amazon the ability to jump into the automotive space,” Schuster said. “They’re probably thinking of delivery applications. And this gives them a safe entree.”

Amazon last year announced a delivery service partner program that encouraged entrepreneurs around the country to start their own businesses by hiring drivers and leasing vans to make deliveries. The company helps by securing discounts on van leases, insurance and other expenses and offers a steady stream of business.

In just a few months, Amazon had more than 100 new businesses around the country making deliveries on its behalf, and the company continues to recruit for the partners program.

If Amazon backs Rivian, it’ll be the company’s second auto investment in short order. Amazon was among the participants in a $530m funding round that self-driving startup Aurora Innovation Inc. announced this month.

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