Rivian wants to end its exclusivity agreement with Amazon after it ordered fewer-than-expected delivery vans, according to a report from The Wall Street Journal.
Rivian’s looking to exit from its agreement to exclusively provide delivery vans to Amazon, according to reports from The Wall Street Journal and CNBC. As part of a deal made in 2019, the online retailer signed on to purchase 100,000 delivery vans from Rivian, but with Amazon reportedly only meeting the bare minimum of ordering 10,000 vehicles this year, the two are renegotiating.
The terms of the original deal said Amazon would have the exclusive rights to the electric delivery vans for four years after Rivian provided the first batch of vehicles, which Rivian started delivering last year. However, the fine print states that Rivian could cut the exclusivity deal short if Amazon doesn’t purchase 10,000 of its vehicles in each of the first two years that Rivian starts producing them.
In November, Amazon said it had “over a thousand” electric vans making deliveries for the company in 100 cities throughout the US, including Austin, Boston, Denver, Houston, Indianapolis, Las Vegas, Madison, Newark, New York, and more. The vans, which come outfitted with features like 360-degree visibility, exterior cameras, and adaptive cruise control, have helped deliver over 5 million packages so far.
Despite the WSJ’s report, Amazon says its deal with Rivian remains intact. “While nothing has changed with our agreement with Rivian, we’ve always said that we want others to benefit from their technology in the long run because having more electric delivery vehicles on the road is good for our communities and our planet,” Amazon spokesperson Kate Scarpa says in a statement to The Verge.
As a major investor in Rivian, it’s in Amazon’s interest to see Rivian succeed, which may explain why it’s open to negotiating as its own orders slow down. The company’s lower-than-expected order could simply reflect its more conservative spending following layoffs of over 18,000 workers and its plans to halt the construction of its second headquarters in Arlington, Virginia. Last quarter, the company reported its first net loss since 2014.
If Rivian scraps the exclusivity portion of the deal, it could allow the automaker to sell its vans to other companies. Rivian recently put its deal to build electric vans with Mercedez-Benz on hold amidst an uncertain economy that has led it to lay off hundreds of employees within the past year.
“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,” Rivian spokesperson Marina Norville says in an emailed statement to The Verge. “The relationship we have with Amazon is a very positive one.”