The Rivian Automotive Inc. R1S electric sports utility vehicle (SUV) is displayed during a reveal event at AutoMobility LA ahead of the Los Angeles Auto Show in Los Angeles, California, U.S. (Photographer: Patrick T. Fallon/Bloomberg)

GM, Amazon Discuss Backing Electric Truck Maker Rivian

(Bloomberg) -- General Motors Co. and Amazon.com Inc. are in talks about investing in electric-vehicle maker Rivian Automotive LLC in a deal valuing the startup at $1 billion to $2 billion, said people familiar with the matter.

The Plymouth, Michigan-based startup is working on electric pickup and sport utility vehicle and debuted concept versions at the Los Angeles Auto Show in November. Talks are progressing and a deal could be announced as soon as Friday, said one of the people, who asked not to be identified because the negotiations are private.

Trucks and SUVs are gas-guzzling cash cows for Detroit automakers. An investment in Rivian could help GM get an electric pickup to market faster and help ward off upstarts such as Tesla Inc. For Amazon, investing in Rivian would signal an ambition to shift a portion of the massive vehicle fleet that delivers its packages to zero-emission vehicles.

GM, Amazon Discuss Backing Electric Truck Maker Rivian

“Rivian is being cast in the same light as Tesla, a startup that’s outside the inner circle of the auto industry, and that’s appealing to GM,” said Jeff Schuster, senior vice president of forecasting at researcher LMC Automotive. “GM could clearly do an electric pickup itself -- it has the technology and a strong base of pickup buyers. But they don’t have Rivian’s image and separation.”

Barra’s Hint

GM has dropped hints that a plug-in pickup could be a possibility. When asked at an investor conference in January whether the company will sell one, Chief Executive Officer Mary Barra replied to an analyst: “You’ll have to stay tuned.”

GM, Amazon Discuss Backing Electric Truck Maker Rivian

“We admire Rivian’s contribution to a future of zero emissions and an all-electric future,” Pat Morrissey, a GM spokesman, said in a statement. Representatives for Amazon and Rivian declined to comment.

Reuters reported the talks between the three companies earlier Tuesday.

Like Tesla, Rivian acquired a vehicle assembly plant for a bargain from an established automaker. It bought a factory in Illinois for just $16 million from Mitsubishi Motors Corp. in early 2017. Tesla builds its electric cars at a facility shuttered by Toyota Motor Corp. after GM pulled out of a joint-manufacturing venture as part of its 2009 bankruptcy.

Rivian executives have said their R1T electric pickup will be able to reach 60 miles an hour in three seconds and tow 11,000 pounds. Deliveries are expected to start in 2020.

Amazon Angle

Parcel delivery is an ideal use for electric autos, as the vehicles can begin and end trips at designated charging points and take anxiety over battery range out of the equation.

Amazon is expanding its delivery capabilities through a network of independent contractors. Some drive their own vehicles, guided by an Amazon smartphone app. Others lease fleets of vans from Daimler AG’s Mercedes or Fiat Chrysler Automobiles NV’s Ram and hire teams of drivers.
“This gives Amazon the ability to jump into the automotive space,” Schuster said. “They’re probably thinking of delivery applications. And this gives them a safe entree.”

Amazon last year announced a delivery service partner program that encouraged entrepreneurs around the country to start their own businesses by hiring drivers and leasing vans to make deliveries. The company helps by securing discounts on van leases, insurance and other expenses and offers a steady stream of business.

In just a few months, Amazon had more than 100 new businesses around the country making deliveries on its behalf and continues to recruit for the partners program.

The rapid growth of Amazon’s e-commerce business has put pressure on the company to expand capacity and reduce its reliance on its delivery partners that include United Parcel Service Inc., FedEx Corp. and the U.S. Postal Service.

Betting on Rivian would be Amazon’s second auto investment in short order. The company was among the participants in a $530 million funding round that self-driving startup Aurora Innovation Inc. announced this month.

©2019 Bloomberg L.P.