American electric vehicle manufacturer Rivian announced Monday that it is ceasing its plans to start manufacturing electric commercial vans in Europe. The company also publicly stated that it would "no longer pursue" its agreement with Mercedes-Benz back in September.
Rivian Pauses Europe Electric Van Plans
As reported by CNBC, Rivian CEO RJ Scaringe said that the company decided to pause discussions with Mercedes-Benz regarding the Memorandum of Understanding that both parties signed earlier this year for the joint production of electric vans in Europe.
The CEO noted that his company was pursuing the best risk-adjusted returns on its capital investments.
The company believes that focusing on consumer business as well as existing commercial business represents the most attractive near-term opportunities to maximize value for Rivian, according to the CEO. This comes as the company strives to become cash flow positive in its US businesses.
"The pausing of this partnership reflects our process of continually evaluating our major capital projects, while taking into consideration our current and anticipated economic conditions," Rivian Chief Financial Officer Claire McDonough noted in a statement.
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Amid this announcement, the American automotive technology company expressed that it remains open to exploring future work with Mercedes-Benz at a more appropriate time, Rivian emphasized.
Under the 50-50 joint venture, the businesses signed a memorandum of understanding three months ago to manufacture electric vans in a factory in Poland, Hungary, or Romania within the next several years.
The New York Times called the move "a rare example of cooperation between a traditional carmaker and a new challenger," noting that Mercedes' enormous production knowledge may help Rivian overcome its own challenges with it.
Rivian's latest move, on the other hand, will not affect the pace of the German luxury vehicle brand's electrification ambition or the projected ramp-up of its newest electric vehicle production plant in Jawor, Poland.
According to Reuters, Rivian is among a competitive marketplace of startups attempting to capitalize on the demand for commercial electric vans pushed by established automakers such as Ford and General Motors.
In other news, CNA reports that Mercedes-Benz Vans will invest more than 1 billion euros ($1.05 billion) in establishing its first electric-only vans manufacturing facility in Jawor, Poland, pending acceptance of conditions such as the granting of subsidies for its investment.
About Rivian
Mercedes-Benz, the van maker, has signed a statement of intent with the Polish government and other partners to add van manufacturing to its Jawor complex, which also produces combustion engines and batteries for Mercedes-Benz Cars.
Mercedes has stated that its van manufacturing will eventually be fully electric and that no new designs with internal combustion engines will be introduced after 2025.
About Rivian
The RCV platform, which the automaker uses to build the Amazon.com Inc. van in Illinois, is a part of Rivian's commercial division. The firm's largest investor, Amazon, has a deal with the company to purchase 100,000 electric delivery vehicles.
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