Analysts believe Rivian Automotive’s recently announced partnership with Mercedes-Benz Group bodes well for the electric vehicle manufacturer.
Rivian Automotive Inc. last week RIVN and Mercedes-Benz Group AG MBG DAII have signed an agreement for a strategic partnership and joint production of electric vans. According to the companies, the planned joint venture will produce bespoke large electric vans for Rivian and Mercedes-Benz.
The agreement calls for the construction of a new electric-only manufacturing facility on an existing Mercedes-Benz site in Central or Eastern Europe. The partnership’s financial terms have not been disclosed. According to Wedbush analyst Daniel Ives, the deal gives Rivian its first significant international footprint to meet the growing global demand for EVs. “We see this as a smart strategic move by Rivian to penetrate Europe while ramping production of the EDV [Electric Delivery Vehicle] platform to meet its long-term growth and profitability targets,” he wrote in a Monday note.
Rivian bills itself as a manufacturer of “electric adventure vehicles,” such as its R1T pickup truck and R1S SUV. AMZN recently began rolling out Rivian’s electric delivery vans, which has boosted the company’s stock. According to Ives, Rivian has a large market opportunity ahead of it. “We believe Rivian is well-positioned to capitalize on the massive influx of current and future EV demand, capitalizing on a unique global TAM [Total Addressable Market] from a core engineering and design perspective, as well as the Amazon commercial relationship, and has the potential to be a major EV stalwart over the next decade,” he wrote. “Production is improving to at least meet the 25k delivery target this year, and we are confident that customer reservations will continue to rise into FY23, setting the stage for a seminal year ahead.” According to Baird analyst Ben Kallo, the Mercedes-Benz deal is a positive for Rivian and will increase its presence in Europe. “With few details about the proposed partnership disclosed, the total addressable market (TAM) for electric vans remains hazy,” he wrote. “Despite the ambiguity, RIVN is poised to benefit from Mercedes’ scale while lending from its strong technological position.”