By Claudia Assis
Amazon's rollout of EV delivery vans is 'just the beginning'
Shares of Rivian Automotive Inc. rose more than 3% Thursday as Amazon.com Inc. started rolling out the first of the electric-vehicle maker's custom-made last-mile delivery vans in several U.S. cities, including Baltimore and Chicago, saying that more will come by the end of the year.
Rivian (RIVN) has struggled with production ramps of its SUV and pickup electric trucks. The agreement with Amazon (AMZN) is exclusive through 2025 and is a "cost-plus" arrangement, limiting its upside, Joseph Spak at RBC Capital said in a note.
"So while that may help (Rivian's) gross margins in the near term, ultimately the (Amazon) vehicles have lower gross margin potential than the consumer vehicles or other electric-van variants" that Rivian could do at a later date, Spak said.
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Amazon said the rollout is "just the beginning" of what it expects to be thousands of Amazon's custom electric delivery vehicles in more than 100 cities by the end of this year, and 100,000 across the U.S. by 2030, it said.
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Amazon said it had been testing the vans since last year, using them to deliver more than 430,000 packages and clocking in more than 90,000 miles.
The testing allowed Rivian to "continuously improve the vehicle's performance, safety and durability in various climates and geographies as well as its state-of-the-art features to ensure driver satisfaction, and overall functionality," Amazon said.
Amazon was one of the original Rivian backers, and the contract for the delivery vans an important lifeline for the company. Rivian debuted as a public company in November, the largest initial public offering of the year and the seventh largest U.S. IPO by offer size in nearly 30 years.
Rivian's stock soared in its first few months of trading, but so far this year has lost nearly 68% so far this year. That compares with losses of around 17% for the S&P 500 index year to date.
(END) Dow Jones Newswires
July 21, 2022 12:06 ET (16:06 GMT)
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