Rivian Automotive Inc (NASDAQ: RIVN) and Ford Motor Company (NYSE: F) have ended their collaboration to make electric vehicles. The CEO of Ford, Jim Farley, states that the company won’t need Rivian as it plans to produce 600,000 cars by the time 2023 ends.
The companies announced their partnership in 2019 after Ford invested $500 million in Rivian. They would create a Ford-branded electric vehicle with the start-up’s skateboard power train. The companies canceled the Lincoln-branded car in 2020 because of the pandemic. However, they still planned to make an alternative vehicle with Rivian’s technology.
The companies have grown in different directions
According to Farley, Ford is confident it can win the electric space. He adds that a lot has changed for both companies since they made the investments. The companies now have significant differences in their directions and ability. For this reason, it makes sense for both of them to work separately.
Another reason Rivian and Farley decided against working together is because it would be complex to merge their software and hardware. Despite this, Farley applauded the company for willing to cooperate with Ford even though they had different business models.
The decision will not hurt their relationship
Moreover, Farley claims the move will not hurt their relationship. There has also been an increased demand for Rivian-branded cars. Ford, on the other hand, has developed a strategy to make electric vehicles. Nevertheless, Ford is an investor for Rivian and supports its venture into making electric cars. Ford still has a 12% stake in the company.
Rivian now has a higher market value than Ford.
Farley became Ford’s CEO in November 2020 after Jim Hackett. At this time, the deal with Rivian was already underway. Farley strengthened the arrangement by buying $415 million in convertible notes from Rivian. Troy Design and Manufacturing, Ford’s wholly-owned subsidiary, also supplies parts to Rivian for the company’s R1 vehicle program.
At the moment, Rivian is making plans for a second plant that would allow it to satisfy customer needs and that of Amazon, its most prominent backer. Meanwhile, Ford has outpaced the means of production for its battery production facilities. Farley has said that 129 gigawatt-hours annually will not be enough for the company.
