Rivian Automotive Inc. is abandoning plans to jointly construct electric vans in Europe with Mercedes-Benz AG, cancelling a three-month-old agreement to share costs and rapidly scale up production.
Rivian said in a statement Monday that it will no longer pursue the memorandum of understanding agreed with the German automaker in September, which included intentions to invest in and jointly operate an existing Mercedes vans plant. Instead, Rivian will concentrate on its own consumer and business products.
"At this time, we think that focusing on our consumer business as well as our existing commercial company represents the most appealing near-term possibilities to maximise value for Rivian," said Chief Executive Officer RJ Scaringe in a statement.
The conclusion of the short-lived initiative caps a rough year for Rivian, which has struggled to gain ground on Tesla Inc., the leader in electric vehicles. At its Normal, Illinois plant, the company produces two customer models: the battery-powered R1T pickup and the R1S sport utility vehicle. It also has an agreement with Amazon.com Inc., one of its largest shareholders, to produce 100,000 electric delivery vehicles.
Rivian's diverse product selection contributed to the company's November 2021 initial public offering. Its offering was the sixth-largest in US history, providing it with a war chest worth billions of dollars to scale and thrive. Expanding manufacturing outside of the United States was a priority for Rivian, according to Bloomberg News.
Rivian, on the other hand, has had a difficult first year of production. The company decreased its full-year manufacturing target to 25,000 vehicles in March, blaming supply chain difficulties. Without such obstacles, the plant would have been able to produce 50,000 EVs this year, according to the business. Rivian later announced a 6% reduction in employees as macroeconomic conditions worsened. Due to a small structural flaw, the business was forced to recall practically all of the automobiles it had produced in October.
Mercedes' ambitions to electrify trucks and increase output in Europe remain unaffected, according to Mathias Geisen, head of Mercedes-Benz Vans. The company will continue to operate an electric van facility in Jawor, Poland.
"Our work with the Rivian team has been founded on a shared engineering enthusiasm and a strong collaborative spirit," Geisen stated. "As a result, I support and understand Rivian's decision to prioritise the delivery of their consumer and existing commercial operations in the short term."
This is not the first time Rivian has lost control of a potential product and production collaboration with a major automaker. Plans to create an electric vehicle with Ford Motor Company — one of Rivian's earliest and largest financial backers — were scrapped in November 2021, shortly after the IPO. In the months that followed, Ford reduced its stake in Rivian.
Rivian also intends to invest $5 billion in a new factory outside of Atlanta, Georgia.
When the potential alliance with Mercedes was first disclosed in September, investors delighted, sending Rivian's stock up 11%, the most in four months. Through Friday's close, the EV maker's stock was down 74% this year.
The companies' door to future collaboration remains open, according to the statement.
"We share the same purpose as Mercedes-Benz Vans, and we look forward to exploring prospects with them at a more appropriate moment for Rivian," Scaringe added.
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