Rivian-Samsung Battery Joint Venture is Dead

[WheeledLife]

Battery Building Joint Venture Between Rivian and Samsung is Dead

Matt St-Pierre
NEWS
January 31, 2022

Rivian’s “mismanagement” of its dealings with Samsung led the latter to launch a partnership with Stellantis

• Rivian’s multiple delays are partially at fault.
• The EV start-up company also made unreasonable requests according to Samsung.

It’s unclear what impact this falling-out with Samsung will have on Rivian’s production and product plans. The pair were in talks to form a battery-making joint venture but it’s no longer going to happen.

Samsung will continue to supply Rivian with batteries. The goal of this venture was to build a factory capable of producing 100GWh annually by 2025. According to thelec, Rivian went a little too far with its demands and requirements.
One of the issues is that Rivian would not commit to purchasing a certain amount of batteries from Samsung. The EV company also wanted to inspect the interior of the factories where the batteries are made. And potentially the most unacceptable request of all was that Rivian wanted a transfer of the battery-making technology.

The constant production woes and delays at Rivian, along with the above, were enough for the leadership of the Samsung Group to decide that they were no longer going ahead with the alleged joint venture plans.
Back in October of 2021, Stellantis and Samsung announced a partnership of their own. The two situations may not be coincidental.

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[moosetags]

I hope that this falling out with Samsung doesn't result in significant production delays.

Brian

 

[Guy]

Battery Building Joint Venture Between Rivian and Samsung is Dead

Matt St-Pierre
NEWS
January 31, 2022

Rivian’s “mismanagement” of its dealings with Samsung led the latter to launch a partnership with Stellantis

• Rivian’s multiple delays are partially at fault.
• The EV start-up company also made unreasonable requests according to Samsung.

It’s unclear what impact this falling-out with Samsung will have on Rivian’s production and product plans. The pair were in talks to form a battery-making joint venture but it’s no longer going to happen.

Samsung will continue to supply Rivian with batteries. The goal of this venture was to build a factory capable of producing 100GWh annually by 2025. According to thelec, Rivian went a little too far with its demands and requirements.
One of the issues is that Rivian would not commit to purchasing a certain amount of batteries from Samsung. The EV company also wanted to inspect the interior of the factories where the batteries are made. And potentially the most unacceptable request of all was that Rivian wanted a transfer of the battery-making technology.

The constant production woes and delays at Rivian, along with the above, were enough for the leadership of the Samsung Group to decide that they were no longer going ahead with the alleged joint venture plans.
Back in October of 2021, Stellantis and Samsung announced a partnership of their own. The two situations may not be coincidental.

Interesting timing, ahead of the IPO with Samsung setting up another partnership. Unless Samsung was unreasonable in the quantities the first demand seems straightforward since Rivian would be building unto 600K vehicles a year by 2026. Wanting the tech transferred was also always going to be a hard demand. Makes the Q4 analyst call more interesting.

 

[CommodoreAmiga]

Seems odd that Rivian wouldn't commit to buying a certain number of batteries... Rivian has a large order backlog; why are they not confident they need batteries? Were the quantities unreasonable?

 

[KiloV]

I don't know what to think about this article. It appears to come from a single source that is presumably employed by Samsung SDI. There aren't any indications that any information was sought from Rivian. The implication of the article is that Samsung SDI were the reasonable party and Rivian were the unreasonable party. In my experience, when two parties end up not consummating a business deal, neither party is the hero or the villain. They just can't agree on terms. If a source is implying that their company were terrific and the other company were a bunch of boobs, then I generally view that source with some hefty skepticism. That seems to be the case here.

I don't know the details, but I don't think that co-ownership of technology that results from a joint venture is an unreasonable ask, in most cases. Both parties invest and both parties share in the results. And refusal to allow a joint venture partner the right to inspect the facilities? That's crazy talk. There's no way that refusing to allow your partners to inspect the operation of the factory is a reasonable position. If Rivian were unwilling to guarantee the purchase of any batteries, then that would be unreasonable. But we don't know what Samsung's purchase guarantee ask was. If Samsung wanted Rivian to buy billions of batteries, when Rivian could only use millions, based on their production constraints, then that would be an unreasonable expectation on Samsung's part (I'm not saying this actually happened; this is just an example).

 

[electruck]

yawn. this news is soooo last week.

 

[Scoiatael]

Samsung is still going to provide batteries. This is just them not building a joint battery factory.

 

[SeaGeo]

Samsung is still going to provide batteries. This is just them not building a joint battery factory.

Right, but what manufacturer who is planning to ship EVs at a significant volume in the near future not actively building a plant with a battery supplier?

Lucid? BMW?

Stellantis is missing from here. IIRC Volvo is in Europe.

VW is making six in Europe.

 

[SANZC02]

Right, but what manufacturer who is planning to ship EVs at a significant volume in the near future not actively building a plant with a battery supplier?

The question was asked about battery sourcing strategy in the December earnings report, here was the question and response;

-- Ryan Brinkman, J.P. Morgan - Analyst [18] -- OK, that's very encouraging. Thank you. And just lastly on me is a question on I guess battery sourcing, strategy. How would you describe the relationship with Samsung? At what point does it make sense to have it maybe more custom-designed battery pack or maybe to in-source or partner with the battery company to vertically integrate manufacturing of the pack? Is there a, I don't know, unit volume threshold or maybe a date in mind by which you would like to bring batteries in-house? How are you thinking about that?

—- RJ Scaringe, Rivian Automotive - Founder, Chairman & CEO [19] --- You know, Ryan, this is a great question. In fact, I think it's probably one of the most important questions in the context of electrification. And really it stems from the sheer scale of increase that we're going to need to see as an industry to produce all the batteries necessary to electrify 90 to 100 million vehicles a year and eventually in the aggregate around one and a half million cars in the planet. So, we thought about this, we developed the strategy that really has three, what I would call, parallel approaches and truly parallel, meaning these are not mutually exclusive. And in the first category or first element (inaudible) is sourcing and existing cell. And that's what we've done with Samsung SDI for our launched vehicles and it's a cylindrical 2170 cell, nickel content cell and we sourced that from existing capacity, capacity that already existed in the world. That type of deal we see is really being -- we don't see a lot more deals like that happening across the industry. Essentially if the demand for cells starts to climb, we need to be building new capacity and what we see is the second category or second approach again happening in parallel is the need to create capacity or co-investment capacity with cell suppliers, and we're certainly doing that. We haven't announced any of those relationships yet but for us to continue to scaling out year 2023 and beyond, that co-investment in capacity is going to be critical for us. And then really the last parallel path, last arm of the strategy for us is taking an even more vertically integrated approach where we simply control the design of the cell and the sourcing of the raw materials that go into the cell. And that third approach is core to our strategy. We've been working on that for quite some time and in fact we'll be producing cells in pilot form starting late next year. And that vertical integration of the cell doesn't mean the first two categories don't remain super important, it just simply is in response to our intended growth. And when one looks at the amount of cells we'll need as a company, all three of those approaches, meaning source capacity that was already existing in the world, newly created capacity that we co-invest in with our supplier partners and newly created capacity that we entirely invest in and control, all three of those pathways are going to be critical for us as we start to look at in the second -- into the second half of the 2020s and scaling as a business. -

 

[SeaGeo]

Right. RJ hits at my point. Without a plant partner, it seems like they have a capacity problem. Do they have another partner and Samsung is throwing a corporate tantrum? Or is Samsung playing hardball? Or does Rivian suddenly have a massive capacity problem unless they are able to make cells ar scale themselves next year (I'd gladly bet against this)?

Earnings call should be interesting if Rivian doesn't address this before then.

Essentially if the demand for cells starts to climb, we need to be building new capacity and what we see is the second category or second approach again happening in parallel is the need to create capacity or co-investment capacity with cell suppliers, and we're certainly doing that. We haven't announced any of those relationships yet but for us to continue to scaling out year 2023 and beyond, that co-investment in capacity is going to be critical for us.

 

[SANZC02]

Right. RJ hits at my point. Without a plant partner, it seems like they have a capacity problem. Do they have another partner and Samsung is throwing a corporate tantrum? Or is Samsung playing hardball? Or does Rivian suddenly have a massive capacity problem unless they are able to make cells ar scale themselves next year (I'd gladly bet against this)?

Earnings call should be interesting if Rivian doesn't address this before then.

I’m sure it will be addressed in the next earnings call either directly or in the Q&A after.

 

[SeaGeo]

I’m sure it will be addressed in the next earnings call either directly or in the Q&A after.

Same.

 

[CommodoreAmiga]

Right, but what manufacturer who is planning to ship EVs at a significant volume in the near future not actively building a plant with a battery supplier?

Lucid? BMW?

Stellantis is missing from here. IIRC Volvo is in Europe.

VW is making six in Europe.

Volvo is building out a large manufscturing complex outside Charleston SC. Included in the plan is a battery plant.

https://electrek.co/2020/01/16/volv...a-battery-plant-to-support-all-electric-xc90/

 

[koersontap]

Right. RJ hits at my point. Without a plant partner, it seems like they have a capacity problem. Do they have another partner and Samsung is throwing a corporate tantrum? Or is Samsung playing hardball? Or does Rivian suddenly have a massive capacity problem unless they are able to make cells ar scale themselves next year (I'd gladly bet against this)?

Earnings call should be interesting if Rivian doesn't address this before then.

Honestly, I wouldn't even call it Samsung playing hardball. Rivian's ask was frankly crazy. After Rivian publicly announced that they wanted to vertically integrate, and build their own cells, they ask Samsung if they can borrow their manufacturing line for a few years. I'd never say OK to that either.

That said, I hope their backup plans are closer to real than we may be led to believe.

 

[kanundrum]

Wasn't SK in the mix as well?

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