Shares of Rivian (NASDAQ:RIVN) stock are in focus after the company announced a joint venture with Mercedes Benz (OTCMKTS:DMLRY) to build electric commercial vans in Europe. The vans produced by each company will be different but will share the same assembly line. In addition, the joint venture will provide synergies for the two companies by sharing investments, technology, costs and suppliers. The companies will explore further options for synergies as well.
A new production facility exclusively for electric vehicles (EVs) will be built at Mercedes’ existing facility in Central or Eastern Europe. Production will begin “in a few years.”
Mercedes has been building electric vans for over a decade, so the company will be able to provide expertise to Rivian. Rivian began producing its electric delivery van (EDV) for Amazon (NASDAQ:AMZN) earlier this year. The e-commerce giant has ordered 100,000 EDVs from Rivian which are set to be completed by 2030.
RIVN Stock: Rivian Taps Mercedes Benz for Electric Van Production
The two companies will manufacture vans on Mercedes’ MB Vans Electric Architecture electric-only platform and Rivian’s Rivian Light Van (RLV) platform. Both companies are planning to rapidly scale the production of electric vans to move toward cleaner transportation. Head of Mercedes Mathias Geisen added:
“I am delighted that as part of this transformation we are now joining forces with Rivian – a highly dynamic and inspiring partner with a strong technology position. We are sharing investments and technology because we also share the same strategic ambition: accelerating the electrification of the van market with sustainable and superior products for our customers.”
Production ramp up has been a glaring issue for Rivian. Supply chain inefficiencies, higher shipping costs and shortage of raw materials have all hampered Rivian’s efforts to ramp up. For 2022, the EV maker expects to produce a total of 25,000 vehicles. In its initial public offering (IPO) roadshow, Rivian had forecasted 50,000 vehicles for 2022. The joint venture will not change 2022 production, as production with Mercedes will not start this year. As of the end of Q2, the company had 98,000 preorders for its R1 vehicles, which does not include the 100,000 EDV order from Amazon.
On the date of publication, Eddie Pan held a long position in AMZN. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.