Amazon’s Multibillion-Dollar Bet On Electric Delivery Vans Is Game-Changer For Startup Rivian
As part of a big push to cut carbon emissions companywide, Amazon is placing an order worth billions of dollars for battery-powered delivery vans from Rivian, an electric-truck startup few people had even heard of a year ago.
Billionaire Jeff Bezos, the retail giant’s founder and CEO, told reporters at the National Press Club in Washington, D.C., that the company will buy 100,000 electric trucks from Plymouth, Michigan-based Rivian as part of Amazon’s Climate Pledge to move to 100% renewable energy use by 2030. The first 10,000 vans could be on the road by 2022, with the remainder to be added by 2030.
“We have a lot of delivery vans, and they all burn fossil fuels today,” Bezos said. “When you make a pledge like the Climate Pledge, it will drive the economy to start to build these products and services that these large companies need to meet these commitments. This is why we invested in Rivian. We invested $440 million in Rivian.”
It’s the biggest such order for electric commercial vehicles in the U.S. to date and could be worth at least $4 billion for Rivian. Amazon estimates the electric fleet will cut its carbon emissions by 4 million metric tons a year by 2030. The timing of Bezos’ announcement coincides with efforts by the Trump administration to weaken tough fuel-economy regulations set by president Barack Obama and take away California’s ability to set its own emissions rules, efforts that have pushed the auto industry to develop electric and hybrid cars and trucks.
The news also comes on the heels of a $350 million investment in Rivian by Cox Automotive this month that pushed the young company’s total fundraising to more than $2 billion as it prepares to build its electric pickup trucks and SUVs at a rehabbed auto-assembly plant in Normal, Illinois, previously used by Mitsubishi Motors. Backers of the company led by 36-year-old founder and CEO RJ Scaringe include Ford, which invested $500 million in April, along with Amazon, which led Rivian’s $700 million round in February.
“If all the orders are filled, it’s the kind of deal that could turn a startup like Rivian into a very legitimate business,” says Mike Ramsey, who tracks transportation technology for Gartner Research. “The giant caveat is if this actually happens. But if it does, it could be their whole business.”
Rivian tells Forbes there are no plans to build delivery vans for companies other than Amazon at this time. A spokesperson also said it will deliver the first units by 2021, and that production of Amazon’s fleet won’t delay the release of its own R1T electric pickups and R1S SUVs that start in late 2020. The company isn’t providing range or cost details of the vans at this time.
A Clark Kent look-alike with a Ph.D. in mechanical engineering from MIT, Scaringe has refined his ideas for electric vehicles over the past decade and could prove to be a major competitor to Tesla’s Elon Musk, who has his own plans for battery-powered trucks, ranging from a pickup to 18-wheel semis.
Scaringe has ginned up significant excitement since bringing Rivian out of stealth mode last year with plans for a line of long-range, rechargeable trucks built off a highly functional “skateboard” platform that integrates the battery pack, drive components and suspension system. Both the R1T and R1S are to have electric range of up to 400 miles per charge–well more than any of Tesla’s current EVs–and they are priced from $68,000 and $72,500, respectively. Pricing details for the Amazon vans weren’t disclosed, though it’s unlikely they’ll cost less than $40,000 per vehicle.
Amazon’s move is part of Bezos’ plan to meet the Paris Agreement a decade ahead of schedule. The Trump administration pulled the U.S. out of the Paris accords in 2017, but 10 U.S. states, 287 cities and counties, 351 colleges and universities and thousands of companies say they’re still working to meet its goals. The Climate Pledge that Amazon signed calls on participants to be net zero carbon by 2040, well ahead of the 2050 goal art in Paris.
“We’re done being in the middle of the herd on this issue—we’ve decided to use our size and scale to make a difference,” Bezos said. “If a company with as much physical infrastructure as Amazon—which delivers more than 10 billion items a year—can meet the Paris Agreement ten years early, then any company can.”
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