Rivian and Mercedes-Benz Vans signed a memorandum of understanding to create a new joint venture for building electric vans in September. But the deal seems to have fallen apart, with reports confirming that the EV startup has pulled the plug just a few months into the planned partnership.
Though we don’t actually know if Rivian was the one who made the call, as both entities acknowledged that the deal was dead – “paused” officially – on Monday. Reasons as to why have likewise been difficult to come by. Reports have broadly indicated that Rivian was the business to signal the retreat, though it’s unclear what the company had to gain. Perhaps leadership didn’t believe it could meet other obligations ( e.g. electric vans for Amazon) or maybe the terms of the joint venture weren’t to everybody’s liking.
Under the initial agreement, the duo was set to produce two electrified vans – one using Mercedes’ architecture and a successive generation of vehicles reliant on Rivian technology. The latter business is fairly cash-rich due to its massive IPO price of $78.00. That juicy offering resulted in the brand raising nearly $12 billion in revenue in 2021. However, Rivian has since been burning through capital and watched its share price drop over 70 percent within the last year. The EV company ended September with $13.8 billion in cash, though that’s several billion less than the $17 million it had lying around in March.
Mercedes’ share price has also declined since last year, bouncing back a bit in October after the joint venture was announced. But it’s not taken the same hit as Rivian, and enjoyed a comparatively healthy third quarter this year.
“At this point in time, we believe focusing on our consumer business, as well as our existing commercial business, represent the most attractive near-term opportunities to maximize value for Rivian,” CEO RJ Scaringe was quoted as saying by CNN.
"The pausing of this partnership reflects our process of continually evaluating our major capital projects, while taking into consideration our current and anticipated economic conditions," added Rivian CFO Claire McDonough said in a separate statement.
It really sounds as though Rivian was the one backing out of the deal. But it’s difficult to identify what advantages that offers the business here and feels like a rehash of the earlier plan to have Ford and Rivian collaboratively develop an electric vehicle – something that was similarly canceled late in 2021.
Meanwhile, Mercedes has announced that it will be the one keeping the factory in Jawor, Poland, which was outlined in the agreement with Rivian. Shortly after news broke about the deal being paused indefinitely, Mercedes-Benz confirmed that it has signed a new memorandum of understanding with the Polish government to build electric vehicles at the plant. Until then, it’ll continue producing a mix of internal combustion engines and electric motors.
“We will continue with full speed and determination to scale up electric vehicle production in our first dedicated electric van plant,” said Mathias Geisen, head of Mercedes-Benz Vans.
Perhaps Mercedes was worried about Rivian falling short of production goals or maybe the sudden crash of EV stocks scared it away. Maybe some of the content requirements outlined in the Biden administration’s Inflation Reduction Act, which are tied to EV subsidies, scared the U.S.-based company away from wanting to utilize any European factories. Without either company coming forward and giving concrete answers, all we can do is speculate.
[Image: Rivian]
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via Autobuzz Today
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