Ford Motor Co. will invest $500 million in electric-truck developer Rivian and will use the startup’s “skateboard” platform to develop a new electric vehicle.
Rivian and the 116-year-old carmaker announced the partnership Wednesday but provided no information about what type of vehicle Ford plans. Ford already is working on an electric crossover based on Mustang styling and an electric version of its flagship F-150 pickup truck.
“It gives Rivian funding, and that is important. This money doesn’t come with strings. It is another vote of confidence in their technology and their plan,” said Stephanie Brinley, an analyst at IHS Markit.
Brinley said Rivian is building a deeper well of automotive expertise than Tesla.
The investment also demonstrates the viability of Rivian’s business model, which includes both selling the skateboard and producing its own vehicles, Brinley said.
“This strategic partnership marks another key milestone in our drive to accelerate the transition to sustainable mobility,” said RJ Scaringe, Rivian founder and chief executive.
“We are excited to invest in and partner with Rivian,” said Bill Ford, Ford’s executive chairman.
Rivian, based in Plymouth, Mich., is raising funds to complete development and launch production of the all-electric R1T pickup truck and R1S SUV it unveiled at the Los Angeles Auto Show in November. Both are billed as adventure vehicles that can easily navigate rugged terrain and would compete directly with Ford vehicles including the F-150, Ranger pickup truck and upcoming Bronco SUV. Deliveries of the five-passenger R1T pickup and seven-passenger R1S SUV – they will deliver up to 400-plus miles of range and have off-road capability – are expected to start in late 2020, according to Rivian.
Morgan Stanley analysts have said the real benefit of Rivian’s alliance with Amazon will be leveraging its technology as a platform for building commercial vehicles.
“This is an interesting investment for Ford and seemingly a good fit because Ford has a substantial commercial vehicle footprint as well as its long history as a leader in trucks. How the partnership is handled, of course, will determine if this is a good move,” said Mike Ramsey, an analyst at Gartner Inc.
“Ultimately, Ford may see a faster way to market with electric vehicles at a lower cost,” he said. “For Rivian, Ford’s commercial footprint in sales and service is very compelling for a partnership.”
Ford would likely use Rivian’s understructure to build larger commercial vehicles like delivery vans. That’s a category in which Rivian won’t compete. Scaringe said earlier this year the company has turned down multiple approaches from commercial-fleet buyers that want to electrify service vehicles and other working trucks. Those types of vehicles, Scaringe said, would not align with the brand Rivian intends to build.
NEW YORK EVENT
Rivian held a preview event in New York earlier in April to which it invited “tens of thousands” of people who had put down refundable $1,000 deposits each for a place in line to buy either vehicle. It expected about 500 responses; it got more than 1,000, many from people who flew to New York City at their own expense.
Thus far, Ford has announced plans for two fully electric vehicles. The first would be a compact crossover utility vehicle that would sport, the company says, “Mustang-inspired” styling. The second would be a fully electric version of its well-known F-150 full-size pickup. Those vehicles are likely well along in development, with sales of the crossover planned to start by the end of 2020.
One area Ford may help with is production technology. Rivian owns a former Mitsubishi assembly plant in Normal, Ill., and is equipping the empty factory with tooling to build its trucks. “We believe Rivian can benefit from Ford’s industrial expertise and resources,” said Ford Chief Executive Jim Hackett.
The investment and vehicle partnership are subject to approval by various regulatory agencies. Once the deal is approved, Joe Hinrichs, Ford’s automotive president, will join Rivian’s board of directors.
Rivian will remain an independent company. It received earlier funding from Standard Chartered Bank, Sumitomo, and Mideast investment funds, among others.