Adam Jones, Global Auto Analyst at Morgan Stanley, warned that the production of an electric vehicle by either Tesla or Rivian could be bad news for traditional car makers in Detroit. Why? This wildly profitable segment of the vehicle industry is one that auto companies don’t mess around with.
As CCN.com reported, Amazon led a $700 million funding round in Tesla rival Rivian Automotive LLC. According to the reports, while GM wasn’t included in the round as previously speculated, analysts expect the automaker to inject funds into Rivian in the future.
Speaking on the funding round, Rivian CEO RJ Scaringe remarked:
“Beyond simply eliminating compromises that exist around performance, capability and efficiency, we are working to drive innovation across the entire customer experience. Delivering on this vision requires the right partners, and we are excited to have Amazon with us on our journey to create products, technology and experiences that reset expectations of what is possible.”
This Amazon-led Rivian funding round likely won’t be the EV startup’s last, but for now, the automaker is flush with cash and it could be knocking on Tesla’s door in 2020 – when it plans to launch its first batch of trucks. Tesla holds the aces for the EV market, and it has been doing so for a while.
Recent reports show the California car maker has extended its run on the leaderboard by some distance thanks to the continued production of the Model 3, which shipped almost 56,000 units in the U.S. alone. While Tesla is king for sedans, there’s no king for pickup trucks yet, simply because no one has produced any.
Rivian will be looking to gain the incumbency power by developing the first electric pickup truck in the U.S. With a vibrant pool of farmers, professional contractors, and recreational drivers, there’s a large market waiting for an EV truck when it launches.
Rivian has taken a giant step, previewing its R1T at the Los Angeles Auto Show in November. Company CEO RJ Scaringe explained that the R1T would deliver 400 miles of range, be able to hit 60 mph in 3 seconds, and tow up to 11,000 pounds – not bad for an EV truck. For pickup drivers, the towing capacity of their trucks matter and this option from Rivian could be a game changer.
Last year, Americans purchased 2.7 million pickup trucks, and heavy-duty versions accounted for more than 35 percent, according to IHS Markit. Why the pickup truck market could favor EV manufacturers is due to the evolving needs of buyers. The profile of the average heavy-duty buyer has changed over the years from contractors and builders to include non-commercial buyers who now make up two-thirds of the market.
While Rivian’s R1T got top marks at last year’s Los Angeles Auto Show and now has a major stamp of approval from Amazon, it will have to contend with future competition from Tesla, the electric market’s reigning king.
Tesla CEO Elon Musk has bragged about the company’s plan for trucks, saying that he would love to work on pickup truck vehicles, including those with all-wheel drive and “crazy torque & a suspension that dynamically adjusts for load.”
No Tesla truck has been formally announced, but that could change soon. Speaking on a conference call after Tesla’s Q4 2018 earnings report, Musk said:
“We might be ready to unveil that this summer. It will be something quite unique, unlike anything.”
Featured Image from Ben Moon / Rivian / Handout via REUTERS
Last modified: July 2, 2020 7:31 PM UTC