Amazon, Ford hit by massive losses on Rivian investments
Last night in its first quarter earnings report, Amazon (AMZN) revealed it booked a $7.6 billion mark-to-market loss on its investment in Rivian, which led to an overall $3.8 billion net loss for the quarter. Amazon owns an 18% stake in the electric vehicle maker.
Earlier this week, Ford reported an overall $3.1 billion loss for the first quarter, due to its mark-to-market loss of $5.4 billion on its Rivian investment. Ford has a 12% stake in Rivian.
While the two companies are still up on their initial investments, it’s been a rocky road for Rivian shareholders recently. Rivian shares were down more than 50% in the first quarter, and down nearly 70% year to date. Recall after its IPO, Rivian had a market cap of around $86 billion; today it’s around a third of that, at $28.9 billion.
The future of these investments in Rivian by Ford and Amazon is an open question. When asked about Ford’s Rivian investment as the 180-day lockup period nears expiration, Ford CEO Jim Farley made it firmly clear the company would not be commenting on the future of the investment at this time.
Note that Rivian and Ford’s Lincoln luxury brand were planning to make an electric vehicle (EV) together, but those plans were squashed. That, combined with Ford’s definitive “no comment” on Rivian raises the question whether Ford’s Rivian investment might change in some manner.
Amazon was not asked about its investment in Rivian on the earnings call, but with its 100,000 electric delivery van order in the books with Rivian, and Rivian SUVs appearing at Amazon founder Jeff Bezos’s Blue Origin rocket launches as service vehicles, it seems the online retail behemoth may stick with its stake, for now.
Regardless of what Amazon and Ford do, Rivian has a lot of work to do. Rivian produced 2,553 vehicles in Q1 and delivered 1,227 of them. If the company intends to hit its goal of 25,000 vehicles produced in 2022, it will really have to ramp up as the year progresses.
Rivian CEO RJ Scaringe isn’t exactly signaling that this won’t be a problem. In an interview last week with the Wall Street Journal from the Rivian factory floor, Scaringe said, “The world’s [battery] cell production combined represents well under 10% of what we will need in 10 years … Meaning, 90% to 95% of the supply chain does not exist.”
Ford and its crosstown rival GM (GM) have both said they have acquired enough battery materials and semiconductor chips to meet their initial goals of EV production over the next couple of years. Based on what Scaringe said last week, it seems Rivian is foreshadowing future issues it sees with acquiring battery materials like lithium.
Investors and industry watchers will get to hear more on Rivian’s production and financial standing when the automaker reports first quarter financial results on Wednesday, May 11, after the market close.