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EV maker Rivian recently scrapped its electric vans deal with Mercedes to focus on its own consumer vehicle operations.
Rivian (NASDAQ: RIVN) has suspended its plans with Mercedes-Benz to manufacture electric vans in Europe. According to reports, the American electric vehicle (EV) maker will instead focus on its line of consumer and commercial vehicles. A statement issued by Rivian chief executive officer RJ Scaringe read:
“At this point in time, we believe focusing on our consumer business, as well as our existing commercial business, represent the most attractive near-term opportunities to maximize value for Rivian.”
Rivian decided to scrap the Mercedes joint venture only three months after both parties agreed to collaborate on automobile production. In September, the California-based EV maker signed a memorandum of understanding with Mercedes to invest in and share the costs of an existing Mercedes plant. However, by now focusing on its consumer and existing commercial venture, Rivian looks to conserve cash in the long run. Weighing in on the company’s broader effort to become cash flow positive in its American operations, Rivian chief financial officer Claire McDonough explained:
“The pausing of this partnership reflects our process of continually evaluating our major capital projects, while taking into consideration our current and anticipated economic conditions.”
Rivian believes that its current business venture, which entails selling trucks and SUVs to retail customers, is best-positioned to drive profitability. In addition, the EV manufacturer is also banking on a commercial-van deal with Amazon.com to boost its operational outlook.
Despite scrapping the short-lived Mercedes deal, Rivian only considers pursuing another collaborative effort with the German automaker at a later time.
Mercedes to Go On with Europe Electric Vans Agenda in Wake of Rivian Deal Severance
Head of Mercedes-Benz, Mathias Geisen, also commented on the development with Rivian. In his own words, “our collaboration with the Rivian team has been based on a common engineering passion and a strong spirit of partnership. That’s why I respect and understand the decision of Rivian to prioritize the delivery of their consumer business and existing commercial business in the near term.”
According to Geisen, severance with the American EV maker would not affect Mercedes’ plans to electrify Europe vans. The German luxury and commercial vehicle automotive brand will continue to operate out of a dedicated electric van facility in Jawor, Poland.
When Rivian first announced the electric vans deal with Mercedes in September, investor optimism skyrocketed, sending Rivian’s stock up 11%. At the time, that figure accounted for the company’s biggest gain in four months. Furthermore, the deal also revealed that both companies would produce the electric vans in Hungary, Romania, or Poland within the next few years.
Rivian’s shares are now down roughly 74% year-to-date. Furthermore, the company has endured a challenging year as it struggled to gain ground on the prominent EV industry mainstay, Tesla (NASDAQ: TSLA). Rivian is part of a larger, crowded pool of startups looking to earn a respectable market share in the electric vehicles space. One way many of these newer EV companies hope to do so is to capitalize on the rising demand for commercial electric vans.