Ford’s (F, $10.39) new partnership with Rivian seeks long-term mutual benefits
Ford’s $500 million investment in the electric truck maker Rivian looks all the more promising after the latter’s deal with General Motors (GM) came to a final stall. It is rumored that GM wanted all the technology rights of the start-up that eventually led to the dropping of the deal.
On the other hand, the deal with Ford is progressing fast as the deal allegedly allows Rivian to move ahead with its own plans and also to sign up with other potential partners. The deal is also consistent with Ford’s own electrification program that would additionally invest $11 billion to develop battery-based vehicles, including hybrids, plug-ins and pure battery-electric models.
Rivian has recently unveiled its two battery-electric vehicle models, the R1T pickup and the R1S sport utility vehicle, whose unique layout lowers a vehicle’s center of gravity – enhancing handling — and also frees up space normally devoted to an engine compartment for adding passenger and cargo space.
Ford will use Rivian’s flexible skateboard platform to address the problems of its own electrified vehicles that have reduced passenger and cargo space to make room for batteries and other components. The Rivian platform will also be used to for other electric vehicles at Ford to help maximize economies of scale.
But Rivian’s potential capacity of its assembly plant in Normal, Illinois may not be fully in line with its ambition to roll out a sale of 70,000 – 80,000 models of R1T and R1S annually. Plus, it has also partnered with Amazon (AMZN) to help the e-commerce giant launch its electric delivery truck. So, Rivian will use its normal plant to produce the platforms that Ford plans to use, then will ship the products to a Ford assembly plant for the rest of the process.
The deal looks a like a mutual benefit is in the order. Both companies plan to share intellectual property, Rivian could help Ford learn how to speed up its own EV developments, and in turn, Ford could teach its new partner a lot about mass production.
