Rivian, the electric truck startup, received a major boost Friday with the announcement of a $700 million investment round led by Amazon.
The nascent manufacturer, which debuted its prototype all-electric truck and SUV models at the Los Angeles Auto Show in November, is gearing up to begin building the vehicles at the shuttered former Mitsubishi plant in Normal, Ill., beginning in 2020.
“We’re inspired by Rivian’s vision for the future of electric transportation,” Jeff Wilke, Amazon’s worldwide consumer CEO, said in a news release. He added that Rivian’s CEO RJ Scaringe “has built an impressive organization, with a product portfolio and technology to match. We’re thrilled to invest in such an innovative company.”
Online retail giant Amazon has been building its delivery capabilities to take more control of its massive shipping operations, and analysts believe investments in such cutting-edge technologies as autonomous and all-electric vehicles are part of that strategy.
Industry analysts believe Rivian could become the Tesla of trucks, creating a niche coveted by consumers and automakers alike. The company, which had previously raised nearly $700 million in funding, gains both additional capital and legitimacy through the partnership while still in pre-production mode.
Founded by Scaringe in 2009, Rivian employs about 750 people at its headquarters in Plymouth, Mich.; its technology and engineering operations in California; and its plant in Normal, Ill., which the company bought for $16 million from a liquidation firm in Jan 2017.
Rivian received a $200 million loan last year from Standard Chartered Bank, and previously secured more than $450 million from equity investors including the Saudi company Abdul Latif Jameel and Sumitomo Corporation of America.
Amazon is leading the new $700 million investment round, which also includes participation from several existing shareholders, according to Rivian.
“This investment is an important milestone for Rivian and the shift to sustainable mobility,” Scaringe said in the release. “Beyond simply eliminating compromises that exist around performance, capability and efficiency, we are working to drive innovation across the entire customer experience.”
In addition to $4 million in local incentives, Rivian is set to receive $49.2 million in state tax credits over 15 years if it meets employment and investment targets for the Normal facility. Those goals include creating 1,000 new jobs by 2024.
Michelle Krebs, a Detroit-based analyst for Autotrader, said the new partnership with Amazon makes sense for Rivian.
Amazon was among several investors in a $530 million funding round announced earlier this month by the autonomous vehicle startup Aurora Innovation. A future delivery service pairing self-driving technology with an all-electric truck fleet would be logical, Krebs said.
“Amazon is an obvious player. For them, it’s not that much money, but it does fit into their ideas for a future commercial fleet,” Krebs said. “I’ve always thought electric and autonomous make the most sense when you use them in commercial fleet, because you can plan rides and charging.”
Adam Jonas, an equity analyst with Morgan Stanley, issued a bullish note on Rivian on Monday, calling it the “next serious competition” to take market share from Tesla in the electric vehicle segment. The company “will take elevated importance in investors’ minds as EVs become the focus” of automakers’ investment and strategy, he said.
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