To the Rivian Board: Get your priorities straight

[André]

Facts you stated above should be discomfiting, not reassuring.
1. If Tesla almost went under several times trying to ramp 1 vehicle at a time, what happens to a brand new startup trying to ramp 3 vehicles at time?
2. Amazon's leverage over Rivian may lead to an outright buyout if/when IPO cash runs dry in a year or possibly less. This situation would not be good for the consumer, as Amazon will likely then fully prioritize remaining assets to expand its internal delivery fleet if anything. R1T will become a collectable like the DeLorean, and production R1S will likely never see the light of day. I hope I can return to this post in year+ and be proven wrong.

We will agree to disagree then… it wouldn’t be smart from Amazon (even if they end up buying Rivian) to allocate all their resources to their sole EDV Requirements. They need to ensure a strong customer base to scale volume so Rivian stays a going concern to service their fleet. Never heard of a integrated delivery vehicules manufacturer and logistics giant. I hope I can return to this post in year+ and be proven wright.

And BTW with an expected IPO size of 10B$ I hope they stay afloat for more than a year !

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[Mister Person]

The board should so whatever is in the best interest of Rivian shareholders. Right now that's Amazon, Ford, RJ & some insiders, and some angel investors, but none of us.

 

[Trekkie]

where does this 'amazon is flexing and prioritizing' thing come from? i mean from besides the obvious of 'people making it up' ? i don't see anything that indicates Amazon has said 'make our vans first' from what i've seen it basically gives them the option of buying the cars with the most flexible 'we don't have to' options ever.

 

[André]

where does this 'amazon is flexing and prioritizing' thing come from? i mean from besides the obvious of 'people making it up' ? i don't see anything that indicates Amazon has said 'make our vans first' from what i've seen it basically gives them the option of buying the cars with the most flexible 'we don't have to' options ever.

The contract can be terminated if they don’t buy a minimum of 10,000 units in 2 consecutives years…

EDV Agreement

In February 2019, we entered into a commercial letter agreement with Amazon and in September 2019, we entered into a related framework agreement with Logistics. Amazon is the parent company of both Logistics and NV Holdings. We refer to these agreements, together with any work orders, purchase orders, related agreements and amendments thereunder or thereto, collectively, as the “EDV Agreement.” Under the EDV Agreement, we and Logistics have agreed to collaborate to design, develop, manufacture and supply to Logistics EDVs and/or certain component parts and related services for use in Amazon’s last mile delivery operations. We also have agreed under the EDV Agreement that until the fourth anniversary of the Initial Delivery Date, whether or not Amazon purchases any EDVs from us, we will exclusively provide last mile delivery vehicles to Logistics, and from the fourth anniversary to the sixth anniversary of the Initial Delivery Date, Logistics will have a right of first refusal to purchase last mile delivery vehicles that we produce. The EDV Agreement does not restrict Logistics from developing vehicles or collaborating with, or purchasing similar vehicles from, third parties. We have developed a limited number of prototype EDVs, which are currently being tested by Logistics and us in operational scenarios as part of a joint research and development effort to ensure functionality and suitability for the EDVs’ designed purpose. Each party generally retains ownership of its respective technology (including inventions, know-how and designs) and intellectual property rights (including patents, copyrights and trade secrets) if not developed in connection with the performance of services under a work order, the terms of which shall otherwise govern.

Given the lead time necessary for the production of vehicles, the EDV Agreement contemplates Logistics’ provision to us of longer-term order forecasts and medium-term order plans for planning purposes, all of which are non-binding and subject to amendment or modification. Thereafter, the EDV Agreement provides that Logistics will regularly update its forecast to specify actual vehicle quantities desired, including the specific product mix. In response, we will then provide Logistics with a price quote for the specific quantities and product types requested (excluding final delivery costs) in accordance with the pricing parameters set forth in the EDV Agreement, at which point Logistics, or its affiliated approved purchaser, will issue a purchase order to us for specific quantities and product types.

The EDV Agreement does not contain a minimum order quantity or minimum purchase requirements. Additionally, forecasts, order plans, and purchase orders are subject to modification or cancellation upon notice, as set forth in the EDV Agreement. However, in the event that Logistics terminates the EDV Agreement prior to the purchase of a minimum threshold of 100,000 vehicles (except, for the avoidance of doubt, a termination for cause due to our material breach), or if we terminate the EDV Agreement due to Logistics’ failure to order an aggregate of at least 10,000 vehicles over the course of two consecutive calendar years, Logistics is required to reimburse us for our investment costs in accordance with a reimbursement formula set forth in the EDV Agreement, in addition to other applicable wind-down costs.

The EDV Agreement (excluding any work order or purchase order as a part thereof) has a one-year initial term that automatically renews for additional one-year periods unless earlier terminated. If at any time all work orders or purchase orders have been completed or terminated in accordance with their terms and the terms of the EDV Agreement, either party may terminate the EDV Agreement for convenience upon 90 days’ written notice. In addition, either party may terminate the EDV Agreement (excluding any work order or purchase order thereunder) if the other party materially breaches any term of the EDV Agreement and does not cure such breach after 60 days’ written notice.

 

[kylealden]

I have a hell of a lot more confidence in Rivian's ability to prioritize their survival than I do in a bunch of armchair forum strategists, even if it means my truck is later.

 

[Dbeglor]

We can kill this thread. The updated S1 projects they will deliver a total of 10 vans by the end of the year, vs. 1,200 consumer vehicles.

 

[doozenberg]

We can kill this thread. The updated S1 projects they will deliver a total of 10 vans by the end of the year, vs. 1,200 consumer vehicles.

They also “projected” to deliver in 2020.
Then July 2021. Then Sept 2021. Oh wait, those are just to employees, not the average customer. Oh wait, projections actually mean nothing at this point. The company has proven they can’t live up to them.

 

[doozenberg]

where does this 'amazon is flexing and prioritizing' thing come from? i mean from besides the obvious of 'people making it up' ? i don't see anything that indicates Amazon has said 'make our vans first' from what i've seen it basically gives them the option of buying the cars with the most flexible 'we don't have to' options ever.

Check Bezo’s tweet asking point blank, “now RJ, where are our vans?” If that is Bezos in public, I cannot imagine what he is demanding in private

 

[Trekkie]

Check Bezo’s tweet asking point blank, “now RJ, where are our vans?” If that is Bezos in public, I cannot imagine what he is demanding in private

or it could be a terrible attempt at a joke by one of the worlds richest people

 

[doozenberg]

I have a hell of a lot more confidence in Rivian's ability to prioritize their survival than I do in a bunch of armchair forum strategists, even if it means my truck is later.

Pretty sure delorean and the rest of the graveyard of failed auto startups prioritized their survival too. The chasm between “prioritization” and actual mass manufacturing and delivery is large at this point. Really wishing them the best but so much yet to demonstrate and prove

 

[Trandall]

Rivian has far more stable funding than Tesla in 2017-18. With current revenue on hand $12B and expected expenditures $8B through 2024 they would cover obligations with $0 in revenue and have a second factory built.
I personally hope RJ and his core team can resist the noise from investors to rush products out the door and dilute their products to maximize profits. If I has looking for that I would have bought and invested in Nissan.
My wife mocks me when I talk about Rivian and I use only the first name of the CEO and lead designers as if we're on a first name basis. They started a company with a blank slate and had the wherewithal to knock it out of the park. I wouldn't try to mess with the recipe they have going.

 

[Arthur Itiz]

The recent IPO filings revealed that Amazon have not only ordered 100,000 vans for delivery over the next 10 years, but that Amazon also controls ~20% of Rivian. Amazon is now flexing its muscle to prioritize their custom delivery van over the R1T.

The board needs to wake up and view the Amazon influence for what it is in the long run -- a lucrative sideline, not the main business. Rivian is poised to capture a large part of their target market, but only if they can deliver in a timely manner. While Rivian’s customers have a certain amount of brand loyalty, as soon as a Ford F150 is available it will be extremely enticing. Rivian has a very limited window in which they can capture market share. After that, their innovation edge will have a lot of competitors, and potential customers will have a lot of options. Availability is a huge motivator. 10,000 vans this year is nothing compared to 40,000 or more trucks, and in the long run, hundreds of thousands more trucks. Yes, the vans are an important part of the business, but they are only a sideline, not the main event.

Prioritizing the vans at the expense of the R1T is not good business for Amazon either. If the truck fizzles, “their” company will become an also-ran. Rivian’s customer base will migrate elsewhere, leaving Amazon with an investment in a failing company. It is in Amazon’s best interest, as well as Rivian’s, to prioritize the R1T to capture market share to insure the company is a powerhouse in the long run.

Interesting take.

I see it differently: Amazon is a huge company with very deep pockets. I doubt they dumped billions into a start up just to use it as their own personal production facility; it's not cost effective. But it IS attractive as an entry into the automotive market space for them. Think about it: they now have a company that can build out their EV fleet of delivery vehicles while simultaneously staking into the EV automotive world. It's a damn smart move by Bezos.

I could go on explaining the logic in having Amazon back Rivian and how it only increases my confidence, but I think the points I would write would only be obvious to everyone, so I won't.

 

[jjswan33]

Didn’t RJ squash this rumor last week? He said clearly in one of the interviews last week that there was different teams and production lines and they were not prioritizing the vans, I think he specifically said that rumor was misunderstood.

 

[crashmtb]

The board should so whatever is in the best interest of Rivian shareholders. Right now that's Amazon, Ford, RJ & some insiders, and some angel investors, but none of us.

FTFY.

 

[2021R1T]

I don't think the board needs any prompting and this includes Amazon. It is quite clear if Rivian doesn't start shipping consumer products in volume soon and very soon the stock is going to see a dramatic pullback. It is coming!!

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