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Ford bets US$500m on Tesla rival Rivian
[NEW YORK] Ford Motor has agreed to invest US$500 million in Rivian, an electric-car startup that is widely seen as a potential rival to Tesla, Ford announced Wednesday.
Rivian, based in Plymouth, Michigan, plans to begin producing a pickup truck and an SUV by the end of next year. Both will be powered by battery packs and are designed to be luxury vehicles that could appeal to many of the consumers drawn to Tesla and its upscale models. Retail giant Amazon led a US$700 million investment in Rivian in February.
Ford is counting on the partnership to accelerate its efforts to field a range of electric cars and trucks, while it also pushes to streamline operations, slash costs and increase profitability. The company's turnaround effort has shown little tangible progress since Jim Hackett became chief executive two years ago. Ford's stock has fallen about 9 per cent since his arrival.
On Thursday, Ford is scheduled to report its first-quarter earnings, and many analysts expect a decline. In 2018, its profits fell more than 50 per cent.
"We can learn a lot from Rivian, how quickly they turn around ideas," Ford's chairman, William C. Ford Jr, said in an interview. "There's a great benefit from working with a clean-sheet approach" to electric vehicles.
Ford's investment reflects a changing dynamic in the auto industry as newcomers find a foothold based on technological advances. Traditional automakers like General Motors and Ford have introduced electric vehicles, but Tesla has become the US market leader by far. And some analysts say Waymo, a division of Google's parent company, Alphabet, has moved to the front in developing autonomous vehicles.
"The traditional auto industry is under a lot of pressure to develop tremendously expensive technology, and the way to do that and make it financially viable is by sharing and working with others," said Rebecca Lindland, founder of RebeccaDrives.com, a new-car information provider. "The demands of the industry are calling for alliances, and you're seeing that in Ford and Rivian."
Ford and Volkswagen are discussing ways of pooling efforts to develop self-driving technology. GM is already working with Honda on autonomous vehicles. That effort also has financial backing from SoftBank, the Japanese technology giant.
Rivian, which was founded in 2009 by RJ Scaringe, an MIT-trained engineer, introduced its truck and SUV in public in November. It builds each model on a chassis, shaped like a skateboard, containing all the components that propel the vehicle — a large battery pack, axles, suspension, cooling system and four electric motors. With a full charge, Rivian's pickup will have a range of 400 miles, the company says.
Mr Scaringe said that Rivian had held talks with a variety of automakers but that he and Ford, long a proponent of zero-emissions vehicles, shared a similar vision about developing sustainable transportation. "We believe the world needs to electrify," he said.
Rivian's pickup, the R1T, and its SUV, the R1S, are expected to sell for US$68,000 or more. Mr Scaringe hopes the R1S competes with Tesla's Model X and SUVs produced by Land Rover and Porsche. Tesla is also working on a pickup.
Rivian has set a goal of selling about 20,000 vehicles in 2021 and twice that many in 2022. Tesla sold about 245,000 last year, although sales have slumped this year and Tesla reported a loss for the first quarter Wednesday.
On Monday, Tesla's chief executive, Elon Musk, said the company planned to operate a fleet of one million self-driving taxis by the end of next year. Both Ford and Rivian are also developing autonomous driving technology. Like other industry executives, Mr Scaringe said Mr Musk's plans appeared overly optimistic, adding that autonomous driving "will come into play in the next 10 years".
Rivian plans to make its vehicles at a shut-down auto plant in Normal, Illinois, that it acquired in 2016.
Ford had already planned to spend US$11 billion to develop nearly two dozen electric vehicles, including a small SUV due next year and a version of its F-150 pickup truck. The company plans to use Rivian's skateboard chassis to produce additional models.
"We can go faster working with Rivian," said Joe Hinrichs, president of Ford's global automotive businesses.
Previous investments in Rivian include US$500 million from Sumitomo, a Japanese conglomerate known for its tire division, and Abdul Latif Jameel, a Saudi industrial group.
Ford's investment is subject to regulatory approval. The two companies declined to detail how much of an ownership stake Ford would take in Rivian. Mr Hinrichs is expected to join the Rivian board.