Rivian’s custom-built vehicles for Amazon are finally on the road, following extensive collaboration with the e-commerce giant, as well as supply chain challenges sweeping the automotive industry. Amazon first announced its Rivian EV order in 2019.
Rivian’s founder, chairman, and CEO, RJ Scaringe, said on a May earnings call that developing the vehicle design required “a heavy amount of iteration and refinement with Amazon” and driver feedback. According to the blog post, Amazon previously tested Rivian vehicles in pre-production, delivering more than 430,000 packages and accumulating more than 90,000 miles. “We’re excited to have gone through that [and] made a whole host of improvements over the course of really the last year, so 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.
To meet the demands of Amazon and other customers, Rivian’s EV manufacturing plant in Normal, Illinois, will need to ramp up production. Rivian announced on July 6 that it is on track to produce 25,000 vehicles this year. However, it will need to increase its current production rate to get there — the company produced a total of 6,954 vehicles in Q1 and Q2. Rivian stated in a Q1 letter to shareholders that increasing production is its top priority this year, citing supply chain challenges such as sourcing semiconductors as a production pinch point.
“We have been forced to stop production for longer periods than anticipated since March 31, 2022, resulting in approximately a quarter of the planned production time being lost due to supplier constraints,” the letter stated.
According to Rivian’s 10-K, Amazon will only be able to use Rivian’s last mile delivery vehicles for four years after the first delivery. However, exclusivity agreements between EV manufacturers and major customers are not unique to Amazon. As part of its agreement to supply 4,500 EVs to Walmart, EV startup Canoo cannot design, manufacture, or sell EVs to Amazon.