Report: Rivian and Mercedes Cancel Joint Partnership

Matt Posky
by Matt Posky

Rivian and Mercedes-Benz Vans signed a memorandum of understanding to create a new joint venture for building electric vans in September. But the deal seems to have fallen apart, with reports confirming that the EV startup has pulled the plug just a few months into the planned partnership.

Though we don’t actually know if Rivian was the one who made the call, as both entities acknowledged that the deal was dead – “paused” officially – on Monday. Reasons as to why have likewise been difficult to come by. Reports have broadly indicated that Rivian was the business to signal the retreat, though it’s unclear what the company had to gain. Perhaps leadership didn’t believe it could meet other obligations ( e.g. electric vans for Amazon) or maybe the terms of the joint venture weren’t to everybody’s liking.

Under the initial agreement, the duo was set to produce two electrified vans – one using Mercedes’ architecture and a successive generation of vehicles reliant on Rivian technology. The latter business is fairly cash-rich due to its massive IPO price of $78.00. That juicy offering resulted in the brand raising nearly $12 billion in revenue in 2021. However, Rivian has since been burning through capital and watched its share price drop over 70 percent within the last year. The EV company ended September with $13.8 billion in cash, though that’s several billion less than the $17 million it had lying around in March.

Mercedes’ share price has also declined since last year, bouncing back a bit in October after the joint venture was announced. But it’s not taken the same hit as Rivian, and enjoyed a comparatively healthy third quarter this year.

“At this point in time, we believe focusing on our consumer business, as well as our existing commercial business, represent the most attractive near-term opportunities to maximize value for Rivian,” CEO RJ Scaringe was quoted as saying by CNN.

"The pausing of this partnership reflects our process of continually evaluating our major capital projects, while taking into consideration our current and anticipated economic conditions," added Rivian CFO Claire McDonough said in a separate statement.

It really sounds as though Rivian was the one backing out of the deal. But it’s difficult to identify what advantages that offers the business here and feels like a rehash of the earlier plan to have Ford and Rivian collaboratively develop an electric vehicle – something that was similarly canceled late in 2021.

Meanwhile, Mercedes has announced that it will be the one keeping the factory in Jawor, Poland, which was outlined in the agreement with Rivian. Shortly after news broke about the deal being paused indefinitely, Mercedes-Benz confirmed that it has signed a new memorandum of understanding with the Polish government to build electric vehicles at the plant. Until then, it’ll continue producing a mix of internal combustion engines and electric motors.

“We will continue with full speed and determination to scale up electric vehicle production in our first dedicated electric van plant,” said Mathias Geisen, head of Mercedes-Benz Vans.

Perhaps Mercedes was worried about Rivian falling short of production goals or maybe the sudden crash of EV stocks scared it away. Maybe some of the content requirements outlined in the Biden administration’s Inflation Reduction Act, which are tied to EV subsidies, scared the U.S.-based company away from wanting to utilize any European factories. Without either company coming forward and giving concrete answers, all we can do is speculate.

[Image: Rivian]

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Matt Posky
Matt Posky

A staunch consumer advocate tracking industry trends and regulation. Before joining TTAC, Matt spent a decade working for marketing and research firms based in NYC. Clients included several of the world’s largest automakers, global tire brands, and aftermarket part suppliers. Dissatisfied with the corporate world and resentful of having to wear suits everyday, he pivoted to writing about cars. Since then, that man has become an ardent supporter of the right-to-repair movement, been interviewed on the auto industry by national radio broadcasts, driven more rental cars than anyone ever should, participated in amateur rallying events, and received the requisite minimum training as sanctioned by the SCCA. Handy with a wrench, Matt grew up surrounded by Detroit auto workers and managed to get a pizza delivery job before he was legally eligible. He later found himself driving box trucks through Manhattan, guaranteeing future sympathy for actual truckers. He continues to conduct research pertaining to the automotive sector as an independent contractor and has since moved back to his native Michigan, closer to where the cars are born. A contrarian, Matt claims to prefer understeer — stating that front and all-wheel drive vehicles cater best to his driving style.

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2 of 6 comments
  • El scotto El scotto on Dec 14, 2022

    -channeling my inner BAFO- This is just a new and clever way of the US implementing the Chicken Tax that unfairly gives ALL US manufacturers an hugely unfair advantage!!

    Overall this post didn't make much sense. Why did MB sign a deal with an electric van company when they have an electric motor plant in Poland? Also, it didn't stare where the joint venture vans were actually going to be built.

    I've never understood why Amazon didn't slap their name on the EV-VAN and pay Rivian to do the detailed manufacturer work. That plan worked out OK for Freightliner.

  • Fred Fred on Dec 19, 2022

    It seems that MB has a problem working with other manufacturers. I present the Chrysler merger as an example.

  • Lorenzo The unspoken killer is that batteries can't be repaired after a fender-bender and the cars are totaled by insurance companies. Very quickly, insurance premiums will be bigger than the the monthly payment, killing all sales. People will be snapping up all the clunkers Tim Healey can find.
  • Lorenzo Massachusetts - with the start/finish line at the tip of Cape Cod.
  • RHD Welcome to TTAH/K, also known as TTAUC (The truth about used cars). There is a hell of a lot of interesting auto news that does not make it to this website.
  • Jkross22 EV makers are hosed. How much bigger is the EV market right now than it already is? Tesla is holding all the cards... existing customer base, no dealers to contend with, largest EV fleet and the only one with a reliable (although more crowded) charging network when you're on the road. They're also the most agile with pricing. I have no idea what BMW, Audi, H/K and Merc are thinking and their sales reflect that. Tesla isn't for me, but I see the appeal. They are the EV for people who really just want a Tesla, which is most EV customers. Rivian and Polestar and Lucid are all in trouble. They'll likely have to be acquired to survive. They probably know it too.
  • Lorenzo The Renaissance Center was spearheaded by Henry Ford II to revitalize the Detroit waterfront. The round towers were a huge mistake, with inefficient floorplans. The space is largely unusable, and rental agents were having trouble renting it out.GM didn't know that, or do research, when they bought it. They just wanted to steal thunder from Ford by making it their new headquarters. Since they now own it, GM will need to tear down the "silver silos" as un-rentable, and take a financial bath.Somewhere, the ghost of Alfred P. Sloan is weeping.