Report: GM and Amazon May Acquire Stake in Rivian

Discussion in 'Rivian General Discussions' started by ElectricTrucking, Feb 12, 2019.

  1. ElectricTrucking

    ElectricTrucking Well-Known Member

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    #1 ElectricTrucking, Feb 12, 2019
    Last edited by a moderator: Feb 13, 2019
    News just in. What does everybody think. Amazon coming in is exciting but GM is a little disheartening.

    GM, Amazon in talks to acquire Rivian stake, report says

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    Amazon.com Inc. and General Motors are in talks to invest in Rivian Automotive in a deal that would value the U.S. electric pickup truck manufacturer at between $1 billion and $2 billion, people familiar with the matter said on Tuesday.

    The deal would give Amazon and GM minority stakes in Rivian, the sources said. It would be a major boost for the Plymouth, Mich., startup, which aspires to be the first automaker with an electric pickup.

    If the negotiations conclude successfully, a deal could be announced as early as this month, the sources said, asking not to be identified because the matter is confidential. There is always a chance that deal talks fall through, the sources cautioned.

    "We admire Rivian's contribution to a future of zero emissions and an all-electric future," GM said in an emailed statement, declining to specifically comment on any talks with Rivian.

    Rivian declined comment. Amazon did not respond to requests for comment.

    The Rivian deal would come as its much larger electric car manufacturing rival, Tesla Inc, struggles to stabilize production and deliver consistent profits as it rolls out its flagship Model 3 sedan.

    Tesla CEO Elon Musk told investors last August that an electric pickup is "probably my personal favorite for the next product" from the company, though he has spoken only in general about a potential launch, saying that it would happen "right after" Tesla's Model Y, which the company has targeted to start production in 2020.

    'Skateboard' platform

    Rivian intends to begin selling its R1T, the pickup it debuted in November, in the fall of 2020. The company was founded in 2009 by CEO R.J. Scaringe.

    Scaringe has described the Rivian vehicle's platform as a "skateboard" that packages the drive units, battery pack, suspension system, brakes and cooling system all below wheel height to allow for more storage space and greater stability due to a lower center of gravity.

    He has also said the company plans to partner with outside firms to develop advanced self-driving technology, rather than try to do so on its own.

    Big automakers, including GM, have not jumped into the market for electric pickups thus far. GM CEO Mary Barra has said it has given a "tiny bit" of thought to developing all-electric pickups.

    The No. 1 U.S. automaker is counting on profit from sales of conventional large pickup trucks and sport utility vehicles in North America to fund its electrification push. GM said last November it was doubling resources allocated to developing electric and self-driving vehicles, as part of a significant restructuring that included ending production at five North American plants.

    GM last month announced a strategy to make its luxury Cadillac its lead electric vehicle brand, revealing it would be the first vehicle built on the Detroitautomaker’s "BEV3" platform to challenge Tesla. GM has said one of the first fully electric Cadillac models using the new platform would hit the market around 2022.

    Amazon has also invested in self-driving car startup Aurora Innovation Inc., in a $530 million funding round announced last week. The world’s largest online retailer has steadily increased its logistics footprint, building warehouses around the world and inking deals with Mercedes as well as cargo airlines to help with delivery.

    Rivian's existing financial backers include Saudi auto distributor Abdul Latif Jameel, Sumitomo Corp. of Americas and Standard Chartered Bank. ALJ has agreed to provide almost $500 million in funding, Sumitomo invested an undisclosed amount, and Standard Chartered provided debt financing of $200 million.

    https://www.autonews.com/automakers-suppliers/gm-amazon-talks-acquire-rivian-stake-report-says
     
  2. franke

    franke Member

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    Wow that's pretty big news. As long as they are minority shareholders and not having any say in the day to day operations that can only be a good thing for a startup. I just wouldn't want Rivian to turn into a stodgy old business as usual company like the traditional automakers.
     
  3. Electronaut

    Electronaut Active Member

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    Totally agree. Rivian could use their cash, as long as it doesn't come with much control. I'm sure GM is interested also because it will give them access to Rivian's technology.
     
  4. A Hawk

    A Hawk Active Member

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    Per Reuters, they would be acquiring a minority stake.

    GM is focused on making as much $ as possible from SUV/truck sales right now so it can use that $ for developing electric vehicles, but if they can make money by investing in Rivian or maybe even acquiring it later (hope not!), it allow GM to take an immediate leap forward in the EV space.
     
  5. Ricky35

    Ricky35 Member

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    Now that Amazon has invested, all eyes are on GM to see if they're the next big investor in. But here's an article saying why a GM investment would send the wrong message. Luckily none of it is actually bad for Rivian.

    https://www.autonews.com/blogs/gm-investment-rivian-would-send-wrong-messages

    A GM investment in Rivian would send the wrong messages

    The news that General Motors is contemplating investing in startup pickup maker Rivian is troubling for a multitude of reasons that have nothing to do with the quality and engineering of Rivian's slick-looking battery-powered truck.

    First, there's the optics of the situation.

    GM is closing plants when it is solidly profitable. If GM is so concerned about future profitability, how could investing tens of millions of dollars -- or more -- in an unknown product from an unknown company be wise when many internal issues could use funding to make GM's business healthier?

    Amazon will lead a $700 million investment in Rivian, we learned last week.

    GM CEO Mary Barra had nothing new to say about the automaker's potential investment at an event Monday, so apparently nothing has been finalized.

    What's the business case?
    But if I'm a GM shareholder, I would want to see the business case for an electric pickup. I'd want to know how GM has determined that its investment would be profitable and eventually repay the company.

    An electric pickup looks like a risky gamble.

    What we know about the duty cycle of most pickups is that they are often used for work -- towing trailers, hauling with beds full of heavy cargo. Because pickups are inherently nonaerodynamic, it takes a lot of energy to move them down the highway. An electric powertrain in a pickup tasked with towing or hauling would have a limited range.

    So let's be honest: Rivian's cool looking electric pickup is really more of a fashion accessory -- a toy for rich Silicon Valley and California entrepreneurs -- than a real truck designed for what real trucks do: work.

    I hope Rivian is successful, but not with GM's money.

    GM's past failures
    And let's not forget that GM has more experience -- all bad -- with electrified pickups than any other automaker. It's tried twice with hybrid versions of the Chevrolet Silverado and GMC Sierra and failed miserably, despite the fact that the 2004 and 2009 versions were solidly engineered and worked well.

    I understand that GM fears another Tesla, but an investment in Rivian -- or any other startup automaker -- is a slap in the face to GM's own engineers and designers. It tells them in part that GM's management values the work of another company more than that of its own employees.

    Any money that could go to Rivian could be better spent shoring up weak areas inside GM that need immediate attention. Here are a few suggestions:

    -- Service: Many GM customers know they can't get consistently good service at all the company dealerships. GM should invest in programs that help dealers raise the level of customer satisfaction for service to Honda and Toyota levels. In fact, this should be job one for GM.

    -- Cadillac: The brand's rebuilding could be pulled forward and accelerated with any money GM could use to invest in a vanity project.

    -- Selling technology: GM could set aside money to figure out how to solve a long-standing problem of successfully selling its technology. No automaker I know of has spent more money to develop technology only to see it fail in the marketplace.

    It goes back to the EV1 electric car of the 1990s, carried on to the short-lived four-wheel steering system on GM pickups in the early 2000s -- a revolutionary idea that made a Silverado handle like a Corvette -- and continued through iterations of hybrids, head-up displays, Night Vision and many other innovations that came out and failed. GM was the first domestic automaker with an in-car navigation system and failed to capitalize on it.

    In short: GM needs Rivian like a fish needs a bicycle.
     
  6. DiggiRob

    DiggiRob Member

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    The amazon investment is interesting. I have not followed closely, have they invested in a lot of other auto manufacturers? I know they have their hand in nearly everything but I wonder what they might be up to or what the incentive is for them here. Is this their way of dabbling into the automotive space or just a bet on self driving to assist with their retail shipments?
     
  7. A Hawk

    A Hawk Active Member

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    NY Times explains the possible reasoning behind Amazon's investment better than I ever could :)

    Since 2015, Amazon has been building out its own logistics network, one that is a “global, end-to-end network covering all transportation modalities,” Morgan Stanley said in a research note last month. It owns dozens of planes and has a transoceanic shipping operation, not to mention trucks, rail and other ways to deliver products and packages. The company spent more than $27 billion on worldwide shipping last year.

    Amazon relies on contract drivers in passenger cars and trucks to make many last-minute deliveries quicker than it can through delivery partners like the United States Postal Service. Last month, the company said it was testing a delivery device called Scout, which is the size of a large ice chest that can “roll along sidewalks at a walking pace.” The company says it is using the devices to deliver packages to customers in a suburb near Amazon’s Seattle headquarters.

    The company ordered 20,000 Mercedes-Benz vans last year for its delivery partners to shuttle Amazon products to consumers, but those vans run on diesel, a fossil fuel. The company has also been facing pressure from employees looking to reduce its environmental impact, particularly in its logistics operations.

    And last week, Amazon made a “significant” investment in Aurora, a California start-up that is developing self-driving technology. Aurora is led by Chris Urmson, who previously headed Alphabet’s autonomous car effort.

    “For Amazon, this small investment is a good way to enlarge their bet on the E.V. automotive market without having to tool up a plant to find out if it will fly,” said Matt DeLorenzo, senior managing editor of Kelley Blue Book. “Over time, the Rivian investment could give Amazon a starting point to own and operate an in-house package delivery business.”
     
  8. Rivolt

    Rivolt New Member

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    I think the talks with GM is probably still taking place int he background and I think GM's motivation for investing in Rivian would be as a hedge against its own electrification plans for its fleet. GM has yet to field a fully EV prototype so who knows how it's going to pan for for them (declaring Cadillac as their fully electric brand seems desperate and misguided to me). So in case their electrification plans don't pan out, they'll have a stake in Rivian. With their investment they can just adopt Rivian's technology or somehow try to buy the company. Either way gives them a backdoor into the EV segment if they need it.
     

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