Rivian shares plunge after saying it will not work with Ford on EVs

New York
CNN Enterprise

Shares of upstart electrical truck maker Rivian plunged as a lot as 17% on Monday after the corporate mentioned that it’s now not working with Ford to collectively develop automobiles.

Each Ford and Rivian had already signaled they have been shifting away from earlier plans to work collectively on EVs. However the information, first reported late Friday by Automotive Information, despatched Rivian shares down 3% within the final hour of buying and selling Friday, and wider reviews despatched shares sharply decrease Monday. By noon, Rivian shares have been off their lows of the day. The inventory rallied barely within the final quarter-hour of buying and selling however nonetheless closed down 8%.

Rivian and Ford each issued statements saying that their plans and desires had modified for the reason that authentic collaboration was introduced, and identified that Ford stays a serious investor in Rivian, holding roughly 12% of its shares excellent.

Ford had introduced a $500 million funding in Rivian in April 2019 that included plans for joint EV improvement. However a yr later it dropped plans to develop a Lincoln-branded EV pickup with Rivian, and no new plans had been introduced.

“As Ford has scaled its personal EV technique and demand for Rivian automobiles has grown, we’ve mutually determined to give attention to our personal tasks and deliveries,” mentioned an announcement from Rivian. “Our relationship with Ford is a vital a part of our journey, and Ford stays an investor and ally on our shared path to an electrified future.”

Rivian shares have soared in worth since its preliminary public providing earlier this month, although it has but to report any income from gross sales of its electrical vehicles. Even with the plunge in value Monday, the corporate’s market worth of $96 billion continues to be about 20% greater than the worth of Ford

(F)’s shares. Amazon

(AMZN), which has a contract to purchase electrical supply vans from Rivian, holds an 18% stake within the firm.

Manufacturing of Rivian’s pickup began in September, though it’s nonetheless in ramp-up mode. The corporate is planning to make use of a minimum of a number of the proceeds from its inventory gross sales to extend its personal capability.

In the meantime Ford just lately introduced a $7 billion funding — the biggest single funding in its historical past — in a brand new meeting manufacturing unit and three new battery crops it should collectively personal with Korean provider SK Improvements. The manufacturing unit, which is able to construct electrical pickups, shall be in Tennessee, and the battery crops shall be in Tennessee and Kentucky. It’s a part of Ford’s plan to speculate $30 billion in electrical automobiles within the subsequent 5 years, with the aim of 40% of its whole gross sales being of electrical automobiles by 2030.

Ford expects to start deliveries of its personal electrical pickup, the F-150 Lightning, which is being constructed at a brand new plant in Detroit, someday subsequent yr. Ford mentioned that its battery electrical car plans are in “a a lot totally different place than we have been even a yr in the past.”

“Whereas Rivian is doing numerous attention-grabbing issues and we’ve acquired nice respect for R.J. [Scaringe, the Rivian CEO] and his group, we like very a lot the place we’re at, and Ford and Rivian have each agreed we’ll not pursue any type of joint car improvement or platform sharing,” mentioned Ford’s assertion.

Shares of Ford

(F) have been up in noon buying and selling.

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