Yahoo Autos Rivian Really Hoped Amazon Would Buy More of Its Vans
Rivian expected more from Amazon, Porsche doesn’t want to look back in 10 years to find it invested all its money in synthetic fuels for nothing and Volkswagen CEO Oliver Blume is dreaming of a Skoda stock market spinoff, among other things. All that and more in The Morning Shift for Monday, March 13, 2023.
In case you missed it:
1st Gear: Rivian Breaking Free
Amazon owns 17 percent of Rivian, and in exchange, Rivian is required to sell all of its vans to the online retail giant. That must’ve seemed like a pretty good arrangement to Rivian at the time that deal was minted in 2019, but Amazon only intends to buy 10,000 vans from the startup this year, and Rivian’s got to put bread on the table. The EV maker is now looking to end the commercial exclusivity part of the deal, per the Wall Street Journal:
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An Amazon spokeswoman said the company remains committed to buying 100,000 vans from Rivian by 2030, which were the terms outlined in the original agreement. “Rivian remains an important partner for Amazon, and we’re excited about the future,” she said.
A Rivian spokeswoman said: “Our relationship with Amazon has always been a positive one. We continue to work closely together and are navigating a changing economic climate, similar to many companies.”
Executives at both companies have touted the deal, which gave Rivian an anchor customer and Amazon a key component of its pledge to slash carbon emissions. [...]
Amazon has initiated cost-saving measures over the past year amid a slowdown in e-commerce sales, following a surge during the pandemic. The online retailer has said it is pausing construction on its second headquarters in the D.C. area and laying off more than 18,000 workers, one of the largest reductions among technology companies.
For Rivian, the Amazon contract has provided steady demand for one of the three vehicles the auto maker builds at its Normal, Ill., factory. If Amazon agrees to end the exclusivity arrangement, Rivian would need to find new commercial customers for the vans.
The thing is, while Rivian is beholden to sell all its vans to Amazon, Amazon can get its fleet from wherever it pleases, including Rivian’s competitors. You can understand why Rivian might feel like its wings are clipped by the state of things, then — though it remains to be seen how the company’s funding could suffer if the exclusivity terms are revised. Something tells me Rivian would have no trouble finding other, more interested buyers.
2nd Gear: Porsche Has a Lot Riding on E-Fuels
It’s important to Porsche’s future that the European Union works a provision for synthetic fuel into its next wave of regulations. So you can imagine how the brand’s (and Volkswagen’s) CEO, Oliver Blume, feels about the challenge facing lawmakers in the coming weeks, and how he’s hoping this all plays out. From the Financial Times:
Porsche chief executive Oliver Blume said on Monday that synthetic fuels would be a “useful addition” to the transition towards sales of battery-driven cars, adding that “I know no other way to decarbonise [existing] combustion engine cars.”
Calling on tax benefits to make e-fuels cheaper as well as political support for the alternative fuel, Blume said that “the federal government has to undertake the respective steps”. He added that he saw “no conflict between electro mobility and e-fuels”.
The comments are in contrast to those made by Markus Duesmann, the head of Audi, which like Porsche is part of the Volkswagen empire. He warned in an interview with German magazine Der Spiegel that anything that risked putting the EU’s combustion ban into question — spurring uncertainty over future rules — “would be fatal for the car industry”.
The idea that owners of existing cars will just switch to synthetic fuel — the cost of that fuel being what it is — is a big assumption for anyone except the people rich enough to buy a Porsche. This is less about the majority of cars on the road and more to do with the automaker’s ability to keep its most loyal customers happy, and give them an ICE option as EVs take over.
3rd Gear: Blume’s All About the IPOs
In other news around the Volkswagen extended universe, apparently Blume gathered top managers across the group’s various brands in Berlin in January to figure out how Lamborghini, Bentley, Seat and even Skoda could get in on some of that sweet IPO juice that’s done so well for Porsche lately. It sounds like it was a really weird retreat, if you can call it that, according to Bloomberg:
The exercises the chief executive officer ordered after Porsche AG’s successful listing last year had advisers from McKinsey & Co. and Wall Street banks including Goldman Sachs Group Inc. salivating over a potential role in VW’s next blockbuster IPO.
But some attendees walked away from the 25 Hours Hotel Bikini with little new insight on Blume’s concrete strategy for the brands, according to people present at the event. Participants struggled to craft meaningful IPO narratives for certain units because they lacked up-to-date details on financial figures, spending priorities and new models, said the people, who asked not to be named discussing private talks.
Blume, who took over in September, is under growing pressure to reveal more about his strategy for Europe’s biggest carmaker when Volkswagen reports earnings next week as well as at its yet-to-be-scheduled capital markets day. The CEO is focused on fixing a chaotic software push and scrutinizing costly projects started by his predecessor Herbert Diess, but hasn’t said much on how he plans to ramp up Volkswagen’s electric-vehicle output to catch up with Tesla Inc.
Of course, the big problem with Blume’s hope to pull another Porsche is that Skoda is not Porsche. Hell, Bentley isn’t either, and while Lamborghini would probably be the best poised to have a successful IPO among that group, I’m not even sure it could pull it off. Porsche’s kind of the closest thing the automotive industry has to Apple — a brand that could really do no wrong. Those don’t come around often.
