Does this mean trouble on the horizon for the startup?
Ford Motor Co. has whittled its investment in Rivian to a mere 1.15% share. The news has once again sent shockwaves through the industry as everyone realizes what promised to be a cooperative business arrangement has soured to an extent as Ford and Rivian are going their separate ways.
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After the news hit on February 10, shares of Rivian dropped 3.4% during afternoon trading. While not a catastrophic fallout, this has obviously shaken the confidence of at least some investors, although it’s hardly a surprise.
In December 2021, Ford had an 11.4% stake in Rivian as things looked promising. Then in 2022, Ford made a drastic move with EV startup Rivian, drawing down its investment in the other automaker by $7.4 billion. Now this news hits, making it apparent the Blue Oval no longer has the stomach to back its once partner.
According to Reuters, Rivian has been planning to reduce its workforce by 6% as it faces dwindling cash reserves. The company has also ran into a series of roadblocks as it’s tried to hit lofty production figures, including supply chain shortages and a bedbug infestation, only to fall quite short of those goals.
Trouble at the company triggered a stock selloff among many investors in 2022, with stock values dropping almost 82%.
Originally, Ford and Rivian planned to co-develop an electric pickup truck. However, Ford later developed the Lightning in-house, signaling early on that the strategic partnership between the two automakers might not have been as rosy as was being reported in the automotive media. At this point, the future of Rivian, which is based in Irvine, California doesn’t look horribly certain. It currently sells a pickup and SUV and has a contract with Amazon to provide all-electric delivery vans.
Images via Rivian