Amazon and Rivian Automotive are reportedly in talks to remove the exclusivity part of their electric-van deal after Amazon's order for 2023 came in at the low end of a previously provided range.
According to an article from The Wall Street Journal, the agreement, signed in 2019, required Rivian to sell all the vans it produces to Amazon.
However, Rivian sought to remove the exclusivity terms after Amazon notified the automaker that it wanted to buy only about 10,000 vans this year.
Talks are ongoing between the two companies, and Amazon has reiterated its commitment to buy 100,000 vans from Rivian by 2030.
The deal with Amazon has provided steady demand for one of the three vehicles that Rivian builds at its Illinois factory, but if Amazon agrees to end the exclusivity arrangement, Rivian would need to find new commercial customers for the vans.
The Pressure Rises
Rivian is under pressure to cut costs and boost factory output, and the Amazon deal has been viewed favorably by investors as a stabilizing factor for the startup automaker.
Rivian is among the more prominent electric-vehicle startups to emerge in recent years, and its shares have dropped about 90% since their post-IPO highs in late 2021.
The company burned through $6.6 billion in 2022 but said it has enough cash to last through 2025. To conserve cash, Rivian has conducted two rounds of layoffs and pushed back plans for future business lines, such as its more-affordable R2 line of vehicles.
According to the article, Rivian Chief Executive RJ Scaringe told The Wall Street Journal that it's important that Rivian focuses on vehicles and projects that are critical in the near term for helping it turn a profit.
Plus, Several top executives departed in recent months, including the head of supply chain and the vice president overseeing body engineering. Rivian has since hired a new supply-chain chief alongside a number of other executives that have recently filled roles.