Amazon is ready to hit the road in Chicago and across the U.S. with the first of its custom-made Rivian electric delivery vans, and a lot may be riding on it for both companies.
Rivian CEO and founder R.J. Scaringe and top Amazon executives are expected to be on hand Thursday afternoon to unveil the electric vans at an Amazon delivery station on South Woodlawn Avenue in the Pullman neighborhood on Chicago’s South Side, where packages will be loaded for delivery.
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“In 2019, Rivian and Amazon committed to fast-tracking a new type of delivery vehicle that would result in a significant reduction of carbon emissions,” Scaringe said in a news release. “Thanks to our teams’ dedication, hard work and collaboration, and a shared commitment to make the world a better place for our kids’ kids, that vision is now being realized.”
Delivery of the electric vans, however, is running behind schedule.
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An early investor in Rivian, Amazon ordered 100,000 electric delivery vans from the startup EV truck manufacturer, which has struggled with a slower than expected ramp-up since launching production in September from a converted Mitsubishi plant in downstate Normal. In addition to the commercial vans, Rivian has more than 90,000 consumer orders for its R1T pickup and R1S SUV.
When the Amazon deal was announced in 2019, the online retail giant expected to have its first Rivian electric delivery vans on the road by 2021, and 10,000 delivering packages by the end of this year. Amazon still plans to have all 100,000 EDVs in service by 2030.
The electric delivery vans will launch in more than a dozen cities including Chicago, Baltimore, Dallas, Kansas City, Nashville, Phoenix and St. Louis, with “thousands” of the vehicles rolling out to more than 100 cities by the end of the year, Amazon said Thursday.
The vans come in two models, the EDV 700 and the smaller EDV 500, and are an integral part of Amazon’s climate pledge to reach net-zero carbon by 2040. Amazon is projected to reduce carbon emissions by 4 million metric tons per year by 2030, when the full 100,000 electric delivery van fleet is on the road.
Features include a large windshield, exterior cameras offering a 360-degree view, hands-free navigation guidance and an automatic door that locks and unlocks as the driver approaches or leaves the van. Amazon has been testing deliveries with preproduction vehicles since last year, delivering over 430,000 packages and logging over 90,000 miles, the company said.
“In addition to being sustainable, these new vehicles are also great for drivers — they were designed with driver input and feedback along the way, and they’re among the safest and most comfortable delivery vehicles on the road today,” Amazon CEO Andy Jassy said in the news release.
Rivian, which expects to build 25,000 commercial and consumer EVs this year, still has a long way to go to get the Amazon order filled.
The Normal plant has an annual production capacity of 150,000 vehicles, and was projected to build 50,000 in 2022, before global supply chain issues, including the ongoing semiconductor shortage, cut the first-year target in half. Earlier this month, Rivian announced it had produced 4,401 vehicles during the second quarter, up from 2,553 built in the first quarter.
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In May, Rivian said the Amazon electric delivery vans accounted for about a third of the Normal plant’s total production.
When Rivian went public in November, investors were betting the EV startup would become the Tesla of trucks, pushing its valuation north of $100 billion. But the stock, which hit a high of $179.47 in mid-November, has fallen sharply this year amid the slow ramp-up, closing at $32.74 per share Wednesday and cutting Rivian’s market cap to about $29 billion.
California-based Rivian, which has more than 5,800 employees at its Normal plant and nearly 13,400 overall, is “halting certain non-manufacturing hiring” and reducing expenses as it realigns the organization to support “sustainable growth,” Scaringe told employees in an all-staff memo sent earlier this month.
Ramping up the R1 and Amazon EDV was listed as job one on the Scaringe memo.
Delivery stations are the last-mile stop in the Amazon shipping process, where packages from the fulfillment centers are sorted and loaded into vans for delivery to customers. Amazon has 20 fulfillment centers and 20 delivery stations in Illinois. Charging stations are being installed to support the rollout of the electric delivery vans, the company said.
In December, dozens of employees at two Chicago-area Amazon delivery stations staged a walkout to demand higher pay and better working conditions, disrupting operations just days before Christmas.
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While Amazon touted the arrival of the first electric delivery vans as a “major milestone,” it has a lot more at stake in Rivian’s success than getting its 100,000-vehicle order filled. The online retail giant owns more than 162 million shares of Rivian, or 18% of the company, according to filings with the Securities and Exchange Commission.
