Rivian halts plans to build electric vans with Mercedes

London
CNN
—

Rivian said Monday he would no longer pursue a deal with Mercedes to build electric vans for businesses in Europe.

In a statement, CEO RJ Scaringe said the company needed to be strategic in its investments.

“Right now, we believe that focusing on our consumer businesses, along with our existing commercial businesses, represents the most attractive near-term opportunities to maximize the value of Rivian,” Scaringe said.

A memorandum of understanding between Rivian and Mercedes was agreed just three months ago. They had planned to produce two large vans – one based on Mercedes engineering and the other with “second generation” Rivian engineering.

The two companies said on Monday that they may collaborate again in the future.

Rivian, which is known for its electric trucks, generated huge hype when it debuted in the public market in 2021. It raised around $12 billion in the biggest U.S. offering since Facebook’s debut in 2012.

But deteriorating market conditions have hurt the loss-making company, whose shares have fallen 74% year-to-date.

The business also burns cash. It ended September with $13.8 billion in cash, down from nearly $17 billion at the end of March. Over the summer, it laid off 6% of its workforce.

Mercedes announced on Monday that it has signed a memorandum of understanding with the Polish government to build its first factory dedicated to electric vans in Jawor, where it currently manufactures combustion engines and batteries for cars. The construction would not be affected by Rivian’s decision to withdraw from their agreement, according to the company.

“We will continue with full speed and determination to increase production of electric vehicles at our first factory dedicated to electric vans,” said Mathias Geisen, Head of Mercedes-Benz Vans.

Subsidies under U.S. President Joe Biden’s Inflation Reduction Act for automakers that buy U.S.-made components, including electric vehicle batteries, are also clouding the investment outlook. Europe says the law will make it harder for European companies to compete and could divert investment from the bloc.

— Anna Cooban contributed reporting.