Business & Tech

A potential rival to Tesla in electric cars just got a big boost from Amazon

Rivian’s R1S SUV is under development.
Rivian via AFP/Getty Images
Rivian’s R1S SUV is under development.

A potential rival to Tesla in electric cars just got a big boost from Amazon.

The online retail giant is leading a $700 million investment in Rivian, a Michigan company that is developing a battery-powered pickup truck and an electric sport utility vehicle.

Rivian announced the new round of investment on Friday, offering few details but saying it would remain independent.

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Founded in 2009 by an MIT-trained engineer, R.J. Scaringe, Rivian previously raised about $500 million from Sumitomo, a Japanese conglomerate known for its tire division, and Abdul Latif Jameel, a Saudi industrial group. Those earlier investors also took part in the new investment round, though the companies did not provide details about how much money they put in.

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The deal is the latest example of how the auto industry is being reshaped by new technologies and nimble companies that have raced ahead of many traditional carmakers. While General Motors, Ford Motor and others are scrambling to introduce new electric vehicles, Tesla has become by far the leading seller of electric cars in the United States. Waymo, a division of Google’s parent company, Alphabet, is considered by some analysts to be the leading developer of autonomous vehicles.

An Amazon spokeswoman declined to elaborate on the thinking behind the Rivian investment.

Since 2015, Amazon has been building out its own logistics network, one that is a “global, end-to-end network covering all transportation modalities,” Morgan Stanley described in a research note last month. It owns dozens of planes, has a shipping operation, not to mention trucks, rail and other ways to deliver products and packages. The company spent more than $27 billion on shipping last year.

Amazon relies on contract drivers in passenger cars and trucks to make many last-minute deliveries quicker than it can through delivery partners like the US Postal Service. Last month, the company said it was testing a delivery device called Scout, which is the size of a large ice chest that can “roll along sidewalks at a walking pace” near Amazon’s Seattle headquarters.

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The company ordered 20,000 Mercedes-Benz vans last year for it delivery partners to shuttle Amazon products to consumers, but those vans run on diesel, a fossil fuel. The company has also been facing pressure from employees looking to reduce its environmental impact, particularly in its logistics operations.

And a week ago, Amazon made a “significant” investment in Aurora, a California startup that is developing self-driving technology. Aurora is led by Chris Urmson, who previously headed Alphabet’s autonomous car effort.