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Amazon’s Rivian Vans Run Into Supply Snafus

The misses continue to mount for Irvine electric vehicle startup and Amazon last-mile partner Rivian Automotive.

The Irvine, Calif.-based company, which went public in November and is seen as a competitor to Tesla, reported disappointing fourth-quarter results Thursday, missing on targets and slashing its production estimate for the year in half as parts shortages due to supply chain constraints continued to hamper the company’s ability to roll vehicles off the assembly line.

Rivian makes electric vehicles for consumers in the R1T truck and R1S SUV, in addition to a commercial business line focused on electric vans, with Amazon’s 100,000-vehicle order seen as the halo use case for that division.

Amazon also holds about an 18 percent stake in Rivian.

The automaker said revenue in the fourth quarter totaled $54 million after delivering 909 vehicles. The company’s net loss widened in the quarter to $2.5 billion from $353 million in the year-ago period as Rivian cut its production estimate for this year from over 50,000 to 25,000 vehicles—a combination of the consumer truck and SUV, along with the commercial van.

Investors sent the company’s shares down in midday trading Friday 8.1 percent to $37.83 on the news, with Rivian’s market cap at $33.4 billion. The company’s stock has fallen more than 70 percent since its November IPO.

While the first of Amazon’s delivery vans began to slowly roll out last year, Rivian has disclosed little in specifics on how many vehicles have been delivered to the e-commerce giant. That remained the case during Thursday’s earnings call when CEO and founder RJ Scaringe was pressed on Amazon deliveries and confirmed there are not a significant number out making deliveries today.

“Right now, we have a number of vehicles that are deployed as part of this testing, pilot fleet,” Scaringe said, adding of the Amazon vans that “we wouldn’t see significant [production] scale until second quarter of this year.”

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The CEO told analysts the company is using the vans that have so far been produced to be further refined with software integration.

Rivian sold its first production electric delivery van, the EDV-700, to Amazon at the end of last year and the company said Thursday it’s now “exploring ways to further expand our commercial partnership with Amazon.”

The e-commerce company holds an exclusivity contract with the automaker.

“In the commercial space, we’re launching an initial focus on last mile delivery through our partnership with Amazon, and we’ll use this critical scale to support growth across the commercial space,” Scaringe said. “We are in a unique position to establish significant last mile market share through our Amazon partnership and have the opportunity to capitalize on software and services through FleetOS.”

Scaringe painted a rosy outlook on delivery van production saying its assembly line has benefited from the learnings in producing the company’s truck and SUV, making it easier to ramp production once the company is able to do so.

Even with a name like Amazon as its first commercial partner, Rivian has acknowledged it needs to build out its commercial business beyond Amazon, with Chief Growth Officer Jiten Behl telling analysts in December that, outside last mile delivery, there is “a huge market out there.”

Rivian came under fire earlier this month after the company cited an increase in parts costs for a price hike on all new vehicle deliveries, including preorders made prior to the announcement. The move prompted a number of customers to cancel their orders.

Scaringe later walked back the pricing announcement and said the company would honor the original vehicle prices for preorders as of March 1.

Company executives attempted to soothe concerns Thursday that the pricing news had done more permanent damage.

Behl said the company saw “massive reinstatement requests,” with more than half requesting to reverse the cancellations after the company corrected itself.

“So what we basically saw was the demand continues to be very robust and—both from a reinstatement point of view as well as from the new orders point of view,” Behl said.

The executive also confirmed the pace of new orders remains the same as before the price increases were announced.

Scaringe went further in explaining the reason for the walk back in pre-order pricing.

“This wasn’t driven by some mass cancellation, but rather the recognition that the brand we’re building is the foundation, is the platform upon which, ultimately, we’re going to be selling millions of different vehicles per year across different vehicle types and, of course, across different markets,” the CEO said. “And these early customers are such a critical part of what we’re building as an organization.”