John Paul M. Joaquin Auto 12.12.2022 20:Dec PM EST

Rivian Halts Electric Van Production Partnership With Mercedes-Benz Indefinitely

Rivian and Mercedes-Benz have parted ways for the time being.

Rivian recently put its partnership to develop and manufacture electric vans on hold for an indefinite time due to its revenue issues.

The two companies signed a Memorandum of Understanding that established their partnership on Sept. 8 to "set the standard in sustainable and all-electric transportation."

Rivian - Mercedes-Benz Partnership Hold Details

Rivian recently said in its statement on the matter that it is pausing plans to produce its commercial electric vans in Europe, along with the cessation of its pursuit of the Memorandum of Understanding it signed with Mercedes-Benz in September.

According to company CEO RJ Scaringe, he and Rivian's executives decided to pause its plans to pursue the best risk-adjusted returns on its capital investments.

As a result, the company believes that focusing on its consumer and existing commercial business, represent the most attractive near-term opportunities to maximize value.

However, this doesn't mean it won't honor the Memorandum it signed with Mercedes-Benz at a later and more appropriate date. Scaringe said that Rivian shares the same goal as Mercedes-Benz in helping the world make the transition to electric vehicles and that it is looking forward to exploring opportunities with them in the future.

Rivian's pause doesn't come as a surprise. A report from The Verge mentioned that the company took a $1.71 billion loss in the second quarter of 2022, with the company being 7,000 electric vehicles (EVs) short of its initial one of 25,000 by the end of the year as of press time.

The revenue loss also resulted in the termination of 800 of its employees to cut costs and prevent further losses.

Mathias Geisen, the head of Mercedes-Benz Vans, said that he respects Scaringe's decision due to the partnership they established was based on a common engineering passion and a "strong" spirit of partnership.

Despite this setback, however, the automaker will still go through with its own electrification strategy without Rivian, with it scaling up EV production in its first dedicated electric van plant with "full speed and determination."

Geisen also agreed with Scaringe's words, saying that exploring strategic opportunities with Rivian remains an option in the future.

Rivian's Partnership With Mercedes-Benz

You may remember that the partnership Rivian and Mercedes-Benz established in September was to create a new joint venture manufacturing company to invest in and operate a factory in Europe to produce large electric vans for both companies.

Had Rivian stayed the course with its partnership with Mercedes-Benz, it would have been its first entry into the European market and one of the first deals to sell vans to companies aside from Amazon.

It would have also learned how to better produce commercial vans from the other company had their partnership gone through. On the other hand, Mercedes-Benz would have benefited from Rivian's electric platform expertise to better pursue its electrification goal.