Rivian makes electric delivery vans for Amazon.
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Rivian Automotive and Mercedes-Benz will partner to build all-electric commercial vehicles. Investors didn’t expect this bit of good news.
Mercedes (ticker: MGB.Germany) and Rivian (RIVN) signed a memorandum of understanding for a partnership that will produce commercial electric vehicles for both companies.
That means shared investment dollars, shared costs and a more rapid scale-up for Rivian commercial vehicle production. The deal “potentially accelerates their entry into Europe’s attractive van market,” said RBC analyst Joseph Spak in a research report. He rates Rivian shares at Buy and has a $75 price target on the stock.
It also means new models. The project will produce two large electric vans. One based on Mercedes architecture and another based the Rivian Light Van, or RLV, platform. Rivian isn’t yet making the RLV.
Those commercial vehicles should be rolling off the lines in a few years, according to the news release.
Rivian shares were up about 6% on Thursday. The S&P 500 and Dow Jones Industrial Average were both down about 0.1% after the European Central Bank raised benchmark interest rates by 0.75%.
Rivian makes all-electric pickup trucks and SUVs. It also makes other electric-elivery vehicles. Amazon.com (AMZN) has an order for 100,000 vans it will used to bolster its logistics capabilities. Amazon owns about 17% of Rivian stock.
Rivian also is piloting its current electric vans for customers beyond just Amazon.
Coming into Thursday trading, Rivian shares have fallen about 68% this year.Inflation and rising interest rates have hit all automotive stocks. Auto stocks in the Russell 3000 Index have declined about 22% this year, on average.
Rivian shares have also been hurt by a slower-than-expected production ramp-up. At the start of the year, Wall Street was looking for 40,000 Rivian deliveries. The company expects to do closer to 25,000.
Write to Al Root at allen.root@dowjones.com
Source: finance.yahoo.com