Rivian might get billion-dollar investment from Amazon and GM

[Domenick]

Rivian In Talks With GM & Amazon For Billion-Dollar Truck Investment Deal.

Rivian is reportedly in talks with GM and Amazon (which strikes me as an odd pairing). They say the deal could value the company at between $1 and 2 billion afterward.

I'm not sure what the company is worth now, but I think this means the investment would be in the billion dollar neighborhood.

The InsideEvs article speculates Amazon could use Rivian vehicles for delivery, but that strikes me as overkill. But, maybe with GM as a manufacturing partner leaning on Rivian battery pack technology, delivery vehicles with healthy range could be part of it.

Earlier today there was a rumor that GM was actually teaming up with Tesla, but that's been apparently proven false. GM did issue a statement on this report which is encouraging:
“We admire Rivian’s contribution to a future of zero emissions and an all-electric future.”

Basically, this is a classic non-denial type statement with positive overtones, which to me says, why, yes, we are in talks but we aren't going to say anything public about it for now.

For me, this is the one piece of the Rivian puzzle that was sorely needed: money. I believe they have a few hundred million, but launching a company at scale requires billions. This could really help them get to the starting line.

 

[Guildenstern]

If this gets them to the starting line, then what happens? IPO?

 

[Domenick]

Electric vehicle YouTuber Sean Mitchell has a nice little video on this investment deal and what it could mean.

 

[Domenick]

If this gets them to the starting line, then what happens? IPO?

Yes. I think Rivian will IPO once it gets closer to production. It's going to need a lot of money to fund stores, charging, and other things it needs to scale.

 

[Detroitable]

Please don’t take GMs money.

 

[Pushmi-Pullyu]

Rivian is reportedly in talks with GM and Amazon (which strikes me as an odd pairing).

I'm puzzled at all the comments to the InsideEVs News article on this subject, trying to figure out what Rivian would offer Amazon.com. Delivery services?

Seems perfectly normal to me. Companies with "liquid assets" to invest may invest for the same reason any investor invests; just to make money on an investment. I don't see that this necessarily indicates Amazon.com is interested in building cars, EVs or otherwise.

On the other hand, auto makers rarely if ever have excess cash to use for speculative investments. If GM is investing in Rivian, it's because they want something out of it. I'm quite worried that this is a large step towards GM acquiring Rivian, which would be the end of any innovation or competition in the EV market from Rivian.

So, obviously, I hope that doesn't happen. The EV market needs more players and more competition! I certainly hope GM doesn't buy Rivian so it can, so to speak, "strangle it in a bathtub".

​

 

[Domenick]

If GM is investing in Rivian, it's because they want something out of it. I'm quite worried that this is a large step towards GM acquiring Rivian, which would be the end of any innovation or competition in the EV market from Rivian.

So, obviously, I hope that doesn't happen. The EV market needs more players and more competition! I certainly hope GM doesn't buy Rivian so it can, so to speak, "strangle it in a bathtub".

I think Rivian believes in its mission and it won't let GM strangle it in the bathtub. It would be odd to not take investment if the terms didn't interfere with the mission.

 

[ron in new mexico]

I guess I am reading this way different.
I see Gm as way behind the eight ball on EV pick ups. As this is nationally their largest segment(pickups) how could they stay there?
Of course they are doing this and strangling in a bath tub would be furthest from their mind.
Amazon as with whole foods they are acquireing without real direction but with connection. The largest product mover of things is interested in the technology of the future to move things with....seems a no brainer to me as does GM's interest.
How could this not happen is my question. With GM involved by my guess they will want GM centered items of production tailored to their lineup which would not mean a IPO. A IPO would present a adverse self intending result for the company. Does GM want that...I would say not at all.
If I was GM I would insist on no IPO as a first condition of investment.
GM plainly has to gain ground. Ford it is revealed is on the hunt and Tesla is already a known. They absolutely have to protect market share. This is how. Work trucks northeast and all, cities, Boston Philly, how better than EV pickup? Every single large company who services in these areas will go EV's in pick ups. It will simply be cheaper and more maintance free for the most part. Who needs a chevy truck that has problems almost right away.
With the companies will go the ordinary civilians, the consumers. They want to look like contractors they must have pickups the contractors have. Not all but a bunch. To protect market share they are forced into EV.

 

[ron in new mexico]

I guess I am reading this way different.
I see Gm as way behind the eight ball on EV pick ups. As this is nationally their largest segment(pickups) how could they stay there?
Of course they are doing this and strangling in a bath tub would be furthest from their mind.
Amazon as with whole foods they are acquireing without real direction but with connection. The largest product mover of things is interested in the technology of the future to move things with....seems a no brainer to me as does GM's interest.
How could this not happen is my question. With GM involved by my guess they will want GM centered items of production tailored to their lineup which would not mean a IPO. A IPO would present a adverse self intending result for the company. Does GM want that...I would say not at all.
If I was GM I would insist on no IPO as a first condition of investment.
GM plainly has to gain ground. Ford it is revealed is on the hunt and Tesla is already a known. They absolutely have to protect market share. This is how. Work trucks northeast and all, cities, Boston Philly, how better than EV pickup? Every single large company who services in these areas will go EV's in pick ups. It will simply be cheaper and more maintance free for the most part. Who needs a chevy truck that has problems almost right away.
With the companies will go the ordinary civilians, the consumers. They want to look like contractors they must have pickups the contractors have. Not all but a bunch. To protect market share they are forced into EV.

I find GM being forced this way by market forces and threats of competition on the horizon amuses me to no end.
Did some of their execs get a bit wet down low when they first saw a mock up tesla prototype or was it a bit later the release of press related to fords project pick up. In any event I suspect clearly some of them had to have a necessary pants change at that point in time.
Their whole market profitable model disappearing before the eyes perhaps, in the one slight swing of a EV pickup blow.
Yes it will not happen that quickly and it will not happen at all for a bit. But some of them surely remember 08 when gas prices at 4 or so and dealers stocks stuffed with well thought things like hummers….bankruptcy faced them down a year or two prior all things going quite well. Surely at least one or two from that day remembers in their heart of hearts how quickly can come change to the space of auto manufacture at times. AT the drop of a hat or blink of a eye.
EV pickups GM has no choice in this.

 

[Pushmi-Pullyu]

I think Rivian believes in its mission and it won't let GM strangle it in the bathtub. It would be odd to not take investment if the terms didn't interfere with the mission.

Let's not make the mistake of believing in the legal myth of a "corporate person". Rivian isn't a person. Rivian is a company which, like all companies, is run by real living, breathing human beings. Such human beings can be tempted by a buyout offer. I think we all know that startups are often bought out by market leaders.

Sometimes the innovations created by a startup so acquired are actually used by the legacy company to improve its products. Other time the acquisition is used to bury possibly competing technology; perhaps the most notorious example in the EV industry is Chevron (a Big Oil company) buying up the patent for large-format NiMH battery cells, then refusing to license the tech to any battery maker.

That's not a myth or an exaggeration; that actually happened. See details here:

From Wikipedia: "Patent encumbrance of large automotive NiMH batteries"

​

 

[Pushmi-Pullyu]

The largest product mover of things is interested in the technology of the future to move things with....seems a no brainer to me as does GM's interest.
How could this not happen is my question.

The answer to your question is "The Innovator's Dilemma", and that is a behavior seen in every disruptive tech revolution. The behavior of existing market leaders trying to protect their market share with the old tech during such a disruption in the market, rather than spending their resources and efforts in transitioning to the new tech. For example, GM spending money to bribe lobby Congress to roll back emission mandates, and bribe lobby various State legislatures in an attempt to misuse State laws intended to protect auto dealers from auto manufacturers... misuse those laws to prevent Tesla from doing direct sales of cars in that State.

In other words, GM not only isn't actively trying to engage in transitioning its business to take advantage of the new tech, it is actively trying to slow and/or stall the EV revolution, so it can keep making and selling gasmobiles.

Quoting from Wikipedia's article on "The Innovator's Dilemma":

...demonstrates how successful, outstanding companies can do everything "right" and yet still lose their market leadership – or even fail – as new, unexpected competitors rise and take over the market. There are two key parts to this dilemma ​

1. Value to innovation is an S-curve: Improving a product takes time and many iterations. The first of these iterations provide minimal value to the customer but in time the base is created and the value increases exponentially. Once the base is created then each iteration is drastically better than the last. At some point the most valuable improvements are complete and the value per iteration is minimal again. So in the middle is the most value, at the beginning and end the value is minimal.​

2. Incumbent sized deals: The incumbent has the luxury of a huge customer set but high expectations of yearly sales. New entry next generation products find niches away from the incumbent customer set to build the new product. The new entry companies do not require the yearly sales of the incumbent and thus have more time to focus and innovate on this smaller venture.​

For this reason, the next generation product is not being built for the incumbent's customer set and this large customer set is not interested in the new innovation and keeps demanding more innovation with the incumbent product. Unfortunately this incumbent innovation is limited to the overall value of the product as it is at the later end of the S-curve. Meanwhile, the new entrant is deep into the S-curve and providing significant value to the new product. By the time the new product becomes interesting to the incumbent's customers it is too late for the incumbent to react to the new product. At this point it is too late for the incumbent to keep up with the new entrant's rate of improvement, which by then is on the near-vertical portion of its S-curve trajectory.
​

For a real-world example in the automotive industry, we need look no farther than the Stanley Motor Carriage Co. Maker of what was once the market leading steam car, the Stanley Steamer, the company failed to make the transition to gas-powered cars after Ford disrupted the market with the Model T.

A more recent example, of Toyota eating GM's market share in the '70s and '80s, can be found here.

The irony now is that Toyota is in the same position vs. Tesla that GM was in vs. Toyota, in an earlier generation. Toyota is now busily trying to deny the reality of the EV revolution, repeatedly insisting "there is no market for BEVs" and promoting the dead-end tech of fuel cell cars.

 

[ron in new mexico]

The answer to your question is "The Innovator's Dilemma", and that is a behavior seen in every disruptive tech revolution. The behavior of existing market leaders trying to protect their market share with the old tech during such a disruption in the market, rather than spending their resources and efforts in transitioning to the new tech. For example, GM spending money to bribe lobby Congress to roll back emission mandates, and bribe lobby various State legislatures in an attempt to misuse State laws intended to protect auto dealers from auto manufacturers... misuse those laws to prevent Tesla from doing direct sales of cars in that State.

In other words, GM not only isn't actively trying to engage in transitioning its business to take advantage of the new tech, it is actively trying to slow and/or stall the EV revolution, so it can keep making and selling gasmobiles.

Quoting from Wikipedia's article on "The Innovator's Dilemma":

...demonstrates how successful, outstanding companies can do everything "right" and yet still lose their market leadership – or even fail – as new, unexpected competitors rise and take over the market. There are two key parts to this dilemma ​

1. Value to innovation is an S-curve: Improving a product takes time and many iterations. The first of these iterations provide minimal value to the customer but in time the base is created and the value increases exponentially. Once the base is created then each iteration is drastically better than the last. At some point the most valuable improvements are complete and the value per iteration is minimal again. So in the middle is the most value, at the beginning and end the value is minimal.​

2. Incumbent sized deals: The incumbent has the luxury of a huge customer set but high expectations of yearly sales. New entry next generation products find niches away from the incumbent customer set to build the new product. The new entry companies do not require the yearly sales of the incumbent and thus have more time to focus and innovate on this smaller venture.​

For this reason, the next generation product is not being built for the incumbent's customer set and this large customer set is not interested in the new innovation and keeps demanding more innovation with the incumbent product. Unfortunately this incumbent innovation is limited to the overall value of the product as it is at the later end of the S-curve. Meanwhile, the new entrant is deep into the S-curve and providing significant value to the new product. By the time the new product becomes interesting to the incumbent's customers it is too late for the incumbent to react to the new product. At this point it is too late for the incumbent to keep up with the new entrant's rate of improvement, which by then is on the near-vertical portion of its S-curve trajectory.
​

For a real-world example in the automotive industry, we need look no farther than the Stanley Motor Carriage Co. Maker of what was once the market leading steam car, the Stanley Steamer, the company failed to make the transition to gas-powered cars after Ford disrupted the market with the Model T.

A more recent example, of Toyota eating GM's market share in the '70s and '80s, can be found here.

The irony now is that Toyota is in the same position vs. Tesla that GM was in vs. Toyota, in an earlier generation. Toyota is now busily trying to deny the reality of the EV revolution, repeatedly insisting "there is no market for BEVs" and promoting the dead-end tech of fuel cell cars.

I don't know could be, never say never. But see it more on the dealer thing, laws were put in place years decades ago to prevent independents like tesla from coming in. Texas I think this is old legislation which they used to protect their industry. It is bad sure for tesla but do not see it was in response to them.
Eating up the technology. Sure they did that and also bought up the LA trolley system to devolve mass transit back in the day. Now, the tech is to widespread and it is global. They cannot stop china and that is the future for EV, many more will end up being sold there than here. This market is no longer it. China for one the government will not allow anyone to crush EV.
They are already not really selling autos but pickups. Can they keep tesla or other players from using auto tech in pickups...I can only say good luck with that. If it is not ford or tesla or this company or that it will be Tata or who knows how many other global companies. This reminds me in a way of discussing the oil trade. It is all global and went global around the 60's. But people still to this day think it is national and it matters where the oil is drilled. Same now with autos, this is all global now. GM is trying to compete globally America is but one part of the pie. They are lucky they survive at all, nevertheless try to spend time stifleing things. My guess is they do not.
I will not say no, I have no inside track but will say I don't think so. The 80's all that, GM ran things. They are a skeleton of that past time. No direction no future hanging on. Throwing everything into bloated pickups all because they so desperately need the gross profits they provide. Really just like their line up things like hummer before GM went bankrupt. People thought they were GM great grand and powerful they were in the real on the edge one step from bankruptcy. Probably that now by my guess.

 

[interestedinEV]

Rivian In Talks With GM & Amazon For Billion-Dollar Truck Investment Deal.

Rivian is reportedly in talks with GM and Amazon (which strikes me as an odd pairing).

Not really an odd pair. The obvious reason may look like Amazon wants delivery capabilities that this would provide or possibly if there is a taxi service, providing those services that Amazon could track.

But there is another reason and in my opinion more important: Alexa. We may think of Alexa as something that recognizes voices and turns on the TV. It is actually a very deep AI engine, with a lot of analytical capabilities. Now I do not know if Amazon wants to get into self driving cars, even without that if they can embed their AI capabilities, which will improve and increase their platform. For example all the controls could be managed by Alexa or the programming behind Alexa. Another benefit to Amazon would be using of the Amazon Cloud Platform, albeit may not be an important reason now unless they start adding inter-connectivity capabilities, in which case Amazon can mine the data. Even today Amazon could be offering to mine the data collected in tests. I am personally aware that Amazon is very interested in pushing Alexa capabilities into everyday devices and to a big thinking company like Amazon, cars are a everyday device.

GM obviously has more direct reasons for joining in. However it makes sense for GM to pair with Amazon for the deep analytics expertise.

 

[interestedinEV]

I googled it and noticed that Amazon is interested in self driving technology
Amazon invests in self-driving vehicle startup Aurora
https://www.cnn.com/2019/02/07/tech/amazon-autonomous-vehicles/index.html

I can see it making a lot of sense to put the self driving technology from Aurora into Electric Cars also. There could be obvious synergies in the investment in Aurora and Rivian. Soon you might be saying "Alexa drive me home and wake me with Puccini 10 minutes before we arrive" and your Rivian car drives you while you nap.

 

[ron in new mexico]

I googled it and noticed that Amazon is interested in self driving technology
Amazon invests in self-driving vehicle startup Aurora
https://www.cnn.com/2019/02/07/tech/amazon-autonomous-vehicles/index.html

I can see it making a lot of sense to put the self driving technology from Aurora into Electric Cars also. There could be obvious synergies in the investment in Aurora and Rivian. Soon you might be saying "Alexa drive me home and wake me with Puccini 10 minutes before we arrive" and your Rivian car drives you while you nap.

My personal opinion it is all about the self driving technology. Amazon has already been experimenting with drones for home delivery. Of course this is only suitable for certain applications but those applications are enormous. Why pay UPS why hire their own drivers(which is a gross expense) when a remote operator may move ten unmanned vehicles with products a thousand miles. Amazon thrives as they have already and are continuing to apply robotic technology and AI.
The whole trucking industry is within ten years of being remotely guided in most applications.
A presidential candidate who I truthfully did not know existed a month ago, a fellow named Yang, elaborates upon this point to quite a defining degree. I am not saying he is a good candidate necessarily, I know few of his other stances, but the consequences and reach of AI on movement of materials he has nailed. I suggest all to watch a podcast by Joe Rogan with him as guest.

In the context of what is coming of course amazon will do this. EV in the main driverless vehicles, we all will continue to mostly just see UPS Fed Ex and all the rest but in certain applications they do not make sense and this does.

 

[Pushmi-Pullyu]

My personal opinion it is all about the self driving technology. Amazon has already been experimenting with drones for home delivery.

Sure. The advantages to Amazon.com for self-driving delivery vehicles is pretty obvious. The navigation system may be applicable to flying drones, too. I'm not sure I believe Amazon.com will ever see widespread use of flying drones to deliver packages, but certainly they have made that claim.

And okay, I was wrong about Rivian and self-driving cars. I see Rivian is indeed making claims for that tech:

An article from March 2018: "First Rivian Adventure Vehicles Will Be Self-Driving"

So that clears up that mystery, at least for me.

​

 

[Domenick]

The numbers in this deal have now been made public, along with some other details. $700 million dollars!

No word about GM in the press release, but I suspect they are still involved.

 

[Pushmi-Pullyu]

$700 million is quite a large investment!

Rivian already owns a former auto assembly plant, and to all appearances has not one, but two production-ready prototype vehicles, both of which appear well designed. So this new, very large investment from Amazon.com appears to be all the additional money Rivian needs to actually put either the R1T or the R1S into production. Or if it's not, then the very fact that Amazon.com has made such a huge investment will attract enough other investors for Rivian to get the funding it needs to start production.

Today I am a very, very happy EV enthusiast! This is one of the most positive stories ever posted to InsideEVs.

Go Rivian!

 

[ron in new mexico]

Agree. They are now fact. This will happen. It is no longer a question of will it, the question is what direction they are going with it.
Amazon the first question I find is , will this be then for common use or only to focus on shipping commercial use?
Industry application will have carryover, but a formal GM involvement would infer more so common use in a shorter time period.
They would, that large a investment, they will be allowed to provide direction of that sort. Selling PU's on amazon to rival Teslas novel way of distribution I am not hoping for nor expecting. Great such a thing, but expect this is tied into their objective which is moving products not selling individual ones with least cost and human involvement.
Walmart has their own drivers trucks and all that, and are having problems with it, now raising their salaries. This would be corporately a perhaps finisher, not at the start, but eventually. Moving their products in house without in the main drivers, electrically at lowest cost. AS opposed to in house drivers higher cost trucks fuel.....Walmart. Or farmed out UPS fed ex, highest cost of all. Same product sold who moves it cheaper?

 

[RLXXI]

That's great that Amazon has bolstered Rivian. If GM puts one tax payer dime into it. I'll have to pass on principle alone.