Amazon is ready to hit the road 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 were on hand Thursday afternoon to unveil the electric vans at an Amazon delivery station in the Pullman neighborhood on Chicago’s South Side, where packages will be loaded for delivery to doorsteps.
“We’re going to be putting a lot more of these on the road,” said Scaringe, perched in the driver’s seat of a road-ready EDV 700 electric van. “And we’re going to start seeing, hopefully in every neighborhood in every city in the U.S., these deliver your packages.”
Delivery of the electric vans, however, is running behind schedule.
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.
Udit Madan, vice president of Last Mile Delivery for Amazon, said the company is happy with the progress of the ambitious electric van rollout.
“When we started out in 2019, we started out with a sketch,” Madan said Thursday. “We didn’t know there was going to be a pandemic, we didn’t have supply chain issues. And so considering all of that, I think this has been a remarkable job to make progress at this speed, and at speeds that typically are unheard of in the automotive industry.”
Features include a large windshield, exterior cameras offering a 360-degree view, hands-free navigation guidance and an automatic bulkhead door that opens and closes the cargo area when the driver stops and starts 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.
While Madan touted the arrival of the first electric delivery vans as a “really big milestone,” the company 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.
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.
Amazon electric delivery vans accounted for about a third of the nearly 8,000 EVs produced through the second quarter, the company said.
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 $34.13 per share Thursday and cutting Rivian’s market cap to about $30 billion.
California-based Rivian, which has about 6,000 employees at its Normal plant and 14,000 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.
“The hardest part of this process has been working through our organization to assess the size and structure of our teams and how well this aligns with our strategic plan,” Scaringe said in the memo. “Our team is the core of Rivian and we are working to be as thoughtful as possible as we consider any reductions.”
There are no plans to downsize the manufacturing workforce in Normal, according to the Scaringe memo, and ramping up the R1 and Amazon EDV was listed as job one for the company.
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.
At least one Amazon driver Thursday seemed enthused by the new electric delivery vans, dozens of which were hooked up to charging stations in the parking lot, baking in the sun as temperatures reached the high 90s by early afternoon.
In addition to features such as high-tech video display screens that include pre-programmed route maps and delivery itineraries, Darin Watkins, who works out of the South Woodlawn Avenue delivery station, was grateful for robust air conditioning and a temperature-controlled driver’s seat, which are standard in the new EDV.
“I love driving these vans,” said Watkins, 29, of Chicago. “The seats are so comfortable. And on top of that, they give us heated and air conditioned seats. You can’t beat it.”
