Amazon (AMZN) and Rivian Automotive (RIVN) are in talks to end the exclusivity part of the electric van deal the two companies signed in 2019. RIVN stock fell while Amazon climbed.
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Rivian wants to renegotiate the agreement so it can sell its vans to other customers, rather than exclusively to Amazon. Rivian manufactures and delivers the R1T pickup truck and R1S sport utility vehicle, apart from the all-electric van for Amazon.
Amazon is Rivian’s largest shareholder, and has a 17% stake in the company.
The original deal was for Rivian to sell its electric vans exclusively to Amazon. E-commerce giant Amazon agreed to buy 100,000 vehicles by 2030, as part of an effort by Amazon to lower carbon emissions. Rivian said it continues to work closely with Amazon.
RIVN stock fell 2.4% to $13.80 during afternoon trading on the stock market today. AMZN stock climbed 3.5% to 93.90.
Deal Originated In 2019
In 2019, Amazon invested $700 million in Rivian. Later that year Rivian unveiled its van.
Amazon, in recent months, notified Rivian it wants to buy about 10,000 vans this year, which was at the low end of a range it previously provided Rivian, according to a Wall Street Journal report. That led Rivian to seek to end the exclusivity terms.
However, Amazon said it remains committed to buy 100,000 vans from Rivian by 2030, under the terms outlined in the original agreement.
The restructuring of the agreement comes as Amazon has initiated various cost-saving measures. This includes plans to cut 11,000 workers.
RIVN Stock Tumbles On Earnings
Rivian stock tumbled 16% on March 1. That happened after it reported mixed fourth-quarter results the day before.
The company also has lowered production estimates. Rivian already has been in cost-cutting mode to improve its competitive standing among electric-vehicle makers.
Rivian said the supply chain “continues to be the main limiting factor” of production. During the quarter it encountered “multiple days of lost production due to supplier shortages,” the company said.
RIVN stock is down 22% this year.
Please follow Brian Deagon on Twitter at @IBD_BDeagon for more on tech stocks, analysis and financial markets.
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