Dive Brief:
- Thousands of Rivian-produced Amazon electric vehicles are set to begin delivering packages in more than 100 cities this year, the company announced in a blog post Thursday.
- Hundreds of the vehicles are already on the road and have been making deliveries in Baltimore, Chicago, Dallas, Kansas City, Nashville, Phoenix, San Diego, Seattle and St. Louis, in addition to other unspecified cities.
- Amazon plans to have 100,000 Rivian EVs making deliveries by the end of 2030. The EVs will help the company save millions of metric tons of carbon per year and advance its goal to reach net-zero carbon emissions across its operations by 2040, per the post.
Dive Insight:
Rivian's custom-made vehicles for Amazon are finally hitting the road after extensive collaboration with the e-commerce giant, in addition to supply chain hurdles sweeping the automotive industry. Amazon first announced its EV order from Rivian in 2019.
Developing the vehicle design involved "a heavy amount of iteration and refinement with Amazon" and driver feedback, RJ Scaringe, founder, chairman and CEO of Rivian, said on a May earnings call. Amazon had previously been testing Rivian vehicles in pre-production, delivering more than 430,000 packages and accumulating more than 90,000 miles during testing, according to the blog post.
"We are excited to have been through that [and] have made a whole host of improvements over the course of really the last year, such that the deliveries that are now happening are going to start to ramp up, and you’re going to start to see a lot more of them, hopefully, coming into all of our neighborhoods delivering packages," Scaringe said.
Meeting the needs of Amazon and other customers will require ramping up production at Rivian's EV-making factory in Normal, Illinois. Rivian said in a July 6 news release that it is on track to produce 25,000 vehicles for the year. It will have to increase its current production pace to get there, however — the company produced a combined 6,954 vehicles in Q1 and Q2.
Rivian outlined the production boost as its top priority this year in a Q1 letter to shareholders, while pointing to supply chain challenges such as sourcing semiconductors as a production bottleneck.
"Since March 31, 2022, we have been forced to stop production for longer periods than anticipated, resulting in approximately a quarter of the planned production time being lost due to supplier constraints," the letter said.
Rivian's last mile delivery vehicles will only be available to Amazon for the four years following the first delivery, according to Rivian's 10-K. Exclusivity agreements between EV makers and major customers aren't unique to Amazon, however. EV startup Canoo cannot design, manufacture or sell EVs to Amazon as part of its agreement to supply 4,500 EVs to Walmart.
