Rivian gets a leg-up from Mercedes-Benz

MERCEDES-BENZ Vans has decided to jump into bed with EV start-up Rivian to make electric vans for Europe and the United States. 

In what some commentators see as a get out of jail free card for Rivian, the pair last week signed a Memorandum of Understanding (MOU) to form a joint venture that will result in the partnership building large, full-electric vans together at a factory in Europe.

According to a report in Automotive News Europe (ANE): “Sharing the costs of a European assembly plant with Mercedes should help the start-up, which burned through $1.2 billion in the second quarter, conserve cash and save for its second US assembly plant planned for 2025.”

It will also aid diversification for Rivian, elevating the company from a one-trick pony status and help it fulfil a massive van purchase contract with online shopping giant Amazon.

Rivian is currently experiencing multiple litigations including class action securities lawsuits as well as attracting the ire of many would-be customers with vehicle reservations for upping the price of their vehicles, unilaterally changing its line-up to more expensive trim options and dropping certain models altogether.

The company has a contract to supply 100,000 electric delivery vans to Amazon by 2030. A pilot package delivery program has started in the US but Rivian is already struggling to deliver on its large order bank for electric pick-up trucks.

Rivian’s MOU with Mercedes is for the joint venture to produce electric vans at a factory in central or eastern Europe within the next few years, Mercedes-Benz Vans said last week in a media statement.

Mercedes said the companies are planning ways to produce both their models on a joint production line, adding it was also developing a new all-electric van architecture of its own called VAN.EA. 

ANE reports the two companies will make two large vans – one based on the Mercedes VAN.EA platform and the other based on the Rivian Light Van electric platform – at the plant, the location of which is so far undisclosed.

Mercedes also said it would restructure German factories that currently build large Sprinter vans to offset higher costs for electric vehicles.

The ANE report says it (Mercedes) will invest €400 million ($A587m) in its Dusseldorf factory as part of the transition. The company also said it would add “an established plant" from the Mercedes production network based in central and eastern Europe as a third van production site, joining the German facilities in Dusseldorf and Ludwigsfelde.

Auto industry insiders are tipping the Mercedes plant in Kecskemet, Hungary, as likely to be on the shortlist for the joint venture.

ANE says the plant was opened in 2012 and currently makes entry Mercedes cars such as A-Class, B-Class and C-Class models. The manufacturer plans to reduce the production of such vehicles as part of a strategy of shifting to higher-end, higher value models.

The VAN.EA platform will be used for full-electric medium and large commercial vans, Mercedes said in the media statement. By 2025, all newly introduced Mercedes van models will be electric only. 

In a move highlighting ongoing rationalisation in the van space, Mercedes already has a partnership with Renault, which builds its Citan and T-Class compact vans as versions of Kangoo. These vans have a full-electric option as does Mercedes’ medium van, the Vito.

Rivian’s link with Mercedes comes at a crucial time for the company which, apart from aforementioned legal wrangles and customer dissatisfaction, has struggled to ramp up production at its Illinois factory as supply chain disruptions and rising materials prices forced it to cut staff and delay product programs.

Rivian shares have plummeted nearly 68 per cent so far this year.

News outlet Reuters reports: “Rivian is playing in a crowded field of start-ups trying to cash in on demand for electric commercial vans under pressure from established auto-makers who have moved quickly to counter the threat with electric vans of their own.”

These include Ford, Stellantis and Mercedes-Benz itself, whose order books are full with no end in sight of supply chain difficulties.