Amazon's electric-van deal with Michigan startup Rivian is biggest EV order ever

Ian Thibodeau
The Detroit News

Plymouth-based electric vehicle startup company Rivian Automotive has an agreement to fill the largest order of fully electric vehicles in automotive history.

The startup is to build 100,000 electric vans for e-commerce giant Inc. over the next decade, Rivian said Thursday. The first batch of vans is expected to hit U.S. roadways by 2021, with 10,000 on the road by late 2022, said Rivian spokeswoman Amy Mast. All 100,000 are to be operating in Amazon's fleet by 2030.

Amazon announced the order of 100,000 electric delivery vehicles from Rivian, the largest order ever of electric delivery vehicles, with vans starting to deliver packages to customers in 2021.

That's a big step for a company that last fall didn't even have signs identifying its Plymouth headquarters when it surprised the Los Angeles Auto Show with sleek prototypes of the electric seven-passenger RS1 SUV and four-passenger RT1 pickup with a claimed 400-mile-plus range. And it could prove a smarter way to do business than Tesla Inc., the company to which Rivian will inevitably be compared.

"It's a real vote of confidence from Amazon," said Sam Abuelsamid, principal analyst at Ann Arbor-based Navigant Research, who focuses on mobility. "Buying early vehicles would be an indicator for other companies who are considering electrifying their fleet that Rivian is a company they need to take a look at if they're going to do this. Amazon doesn't make decisions like this lightly."

The vans are to be built at Rivian's plant in Normal, Illinois, alongside the SUVs and pickups Rivian plans to build in a former Mitsubishi plant.

"This provides an opportunity for mega-tech, through the sheer size and capital available, to invest in electric vehicle and accelerate EV penetration," Morgan Stanley analyst Adam Jonas wrote in a Thursday note to investors.

When Mitsubishi ran the Illinois plant, it churned out around 250,000 vehicles annually, Abuelsamid said. Between the pickup, SUV and Amazon van, Rivian would likely be approaching 100,000 vehicles per year in the early years of the plant, which should be fully operating by the end of next year. There's also an as-yet-unnamed vehicle that Rivian and Ford Motor Co. plan to partner on that might run on the line.

Approaching 100,000 units annually so early on could be a boon for the startup, and help it avoid pitfalls that Tesla CEO Elon Musk encountered with his first three Tesla models. Tesla models don't share many common parts. Rivian's vehicles will share the most expensive and important components, including the battery and powertrain.

The scale offered by opening a plant that would be manufacturing multiple models in its first couple years will offer the capital Rivian needs to grow its business, Abuelsamid said. He and others have said it would be difficult for Rivian to sell enough of its consumer-targeted SUV and pickup to sustain the business.

The Amazon order is the largest order of a fully electric fleet to date. Alphabet Inc.'s Waymo has contracts to buy up to 62,000 Pacifica Hybrid minivans from Fiat Chrysler Automobiles, as well as 20,000 fully electric Jaguar I-Pace SUVs. The city of Sacramento has a fleet of 80 electric Chevrolet Bolts. United Parcel Service joined several companies in late 2017 to reserve Tesla semi-truck tractors, which have yet to be built.

Amazon CEO Jeff Bezos announced the Rivian deal at an event Thursday at the National Press Club in Washington, D.C., with a speech focused on addressing climate change. Rivian's Mast told The Detroit News the vans would eliminate 4 million metric tons of carbon-dioxide emissions when the fleet is fully operational.

Even though Amazon led a $700 million round of funding for Rivian earlier this year, the vans were negotiated outside that partnership, Mast said. Rivian and Amazon did not disclose a price for the fleet. The vans will not be sold to other customers.

Though they share underpinnings such as battery assembly, powertrain, electrical components and connectivity, with Rivian's forthcoming pickup and SUV, the interior and other pieces of the "top hat" of the vehicle were designed specifically for Amazon, Mast said.

Amazon announced the order of 100,000 electric delivery vehicles from Rivian, the largest order ever of electric delivery vehicles, with vans starting to deliver packages to customers in 2021.

The Amazon vans are the latest in a growing string of partnerships and investments in Rivian. The automaker, which has yet to build a production vehicle, netted a $350 million investment from Atlanta-based Cox Automotive earlier this month.

That announcement followed a $500 million investment from Ford Motor Co. and's $700 million earlier this year. The automaker has grabbed the attention of big-name investors and the public for its vision of rugged, longer-range electric vehicles that can go off-road, haul cargo and stand up to wear-and-tear.

The automaker has poached engineers and others from the Detroit Three, including a designer who worked on Ford's forthcoming Bronco SUV.

Twitter: @Ian_Thibodeau