Rivian Automotive Inc (NASDAQ: RIVN) is in focus on Monday after the EV company said it’s decided to walk away from an agreement it signed with Mercedes-Benz only three months ago.
Rivian wants to focus on its consumer business
In September, Rivian had partnered with Mercedes to build all-electric commercial vans in Europe – a joint venture it cancelled this morning saying:
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At this point in time, we believe focusing on our consumer business as well as our existing commercial business represent the most attractive near-term opportunities to maximise value for Rivian Automotive Inc.
Nonetheless, the electric vehicles manufacturer remains open to working with Benz in the future, as per the press release.
Earlier in 2022, Rivian started delivering electric vans to Amazon.com Inc in the United States. Its shares are down nearly 75% for the year at writing.
iSeeCars.com analyst reacts to the news
Working with Mercedes in Europe could have been the holy grail for Rivian Automotive Inc to expand its global reach.
But it’s choosing to pull the plug because it wants to conserve cash amidst a challenging macroeconomic landscape, said Karl Brauer (Executive Analyst at iSeeCars.com) on Yahoo Finance.
They don’t want to have two battlefronts. They’re too far down the consumer side now. If they start to divert the other way, it could not work for them on the consumer side as quickly as they needed to.
Last month, Rivian Automotive Inc revealed to have burned through $1.37 billion in its fiscal Q3 (detailed here). That said, the pullback today may have created an opportunity to buy Rivian stock considering Wall Street has a consensus “overweight” rating on it.
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