Tag Archives: Rivian Automotive Inc

What it’s like to deliver for Amazon in new Rivian electric vans

For the 275,000 Amazon drivers dropping off 10 million packages a day around the world, the job can be a grind. But a lot has changed since drivers in 2021 told CNBC about unrealistic workloads, peeing in bottles, dog bites and error-prone routing software.

Among the biggest developments is the arrival of a brand-new electric van from Rivian.

Amazon was a big and early investor in the electric vehicle company, which went public in late 2021 with a plan to build trucks and SUVs for consumers and delivery vans for businesses. Since July, Amazon has rolled out more than 1,000 new Rivian vans, which are now making deliveries in more than 100 U.S. cities, including Baltimore, Chicago, Las Vegas, Nashville, New York City and Austin, Texas.

The partnership began in 2019, when Amazon founder and ex-CEO Jeff Bezos announced Amazon had purchased 100,000 electric vans from Rivian as one step toward his company’s ambitious promise of reaching net-zero carbon emissions by 2040.

″[We] will have prototypes on the road next year, but 100,000 deployed by 2024,” Bezos said at the National Press Club in Washington, D.C., in September 2019. Amazon has since revised the timeline, saying it expects all 100,000 Rivian vans on the road by 2030.

Rivian has faced several challenges in recent months. It cut back 2022 production amid supply chain and assembly line issues. Its stock price dropped so sharply last year that Amazon recorded a combined $11.5 billion markdown on its holdings in the first two quarters.

CNBC talked to drivers to see what’s changed with the driving experience. We also went to Amazon’s Delivering the Future event in Boston in November for a look at the technology designed to maximize safety and efficiency for delivery personnel.

For now, most Amazon drivers are still in about 110,000 gas-powered vans — primarily Ford Transits, Mercedes-Benz Sprinters and Ram ProMasters. Amazon wouldn’t share how it determines which of its 3,500 third-party delivery firms, or delivery service partners (DSPs), are receiving Rivian vans first. 

The e-commerce giant has been using DSPs to deliver its packages since 2018, allowing the company to reduce its reliance on UPS and the U.S. Postal Service for the so-called last mile, the most expensive portion of the delivery journey. The DSP, which works exclusively with Amazon, employs the drivers and is responsible for the liabilities of the road, vehicle maintenance, and the costs of hiring, benefits and overtime pay.

Amazon leases the vans to DSP owners at a discount. The company covers the fuel for gas-powered vans and installs charging stations for electric vehicles.

The company says DSP owners have generated $26 billion in revenue and now operate in 15 countries, including Saudi Arabia, India, Brazil, Canada, and all over Europe. 

What drivers think

In the early days of testing the Rivian vans, some drivers voiced concerns about range. An Amazon spokesperson told CNBC the vans can travel up to 150 miles on a single charge, which is typically plenty of power for a full shift and allows drivers to recharge the vehicle overnight.

As for maintenance, Amazon says that takes place at Rivian service centers near delivery stations or by a Rivian mobile service team, depending on location.

Julietta Dennis launched a DSP, Kangaroo Direct, in Baltimore three years ago. She employs about 75 drivers and leases more than 50 vans from Amazon. She now has 15 Rivian vehicles.

“It’s very easy to get in and out with all of the different handles to hold on to,” Dennis said. She said that some drivers were hesitant at first because the vehicles were so new and different, “but the moment they get in there and have their first experience, that’s the van that they want to drive.”

Baltimore DSP owner Julieta Dennis shows off a Rivian electric van at Amazon’s Delivering the Future event in Boston, Maryland, on November 10, 2022.

Erin Black

Brandi Monroe has been delivering for Kangaroo Direct for two years. She pointed to features on a Rivian van that are upgrades over what she’s driven in the past. There’s a large non-slip step at the back, a hand cart for helping with heavy packages and extra space for standing and walking in the cargo area.

“We have two shelves on both sides to allow for more space,” Monroe said, adding that she’d prefer to drive a Rivian for every shift. “And then the lights at the top: very innovative to help us see the packages and address a lot easier, especially at nighttime.”

There’s even a heated steering wheel.

Former driver B.J. Natividad, who goes by Avionyx on YouTube, says his non-electric van could get very cramped.

“I remember one time I had 23 or 24 bags and over 40 oversize packages and I had to be able to figure out how to stuff that all in there within the 15 minutes that they give us to load up in the morning,” said Natividad, who now works for USPS.

The Rivian vans have at least 100 more cubic feet than the Sprinter and up to double the cargo space of the Ford Transit vans Natividad drove in Las Vegas. Rivian vans are still small enough that they don’t require a special license to drive, though Amazon provides its own training for drivers.

One driver in Seattle, who asked to remain unnamed, was especially excited about the new Rivian vans. He offered an extensive tour of the new driving experience on his YouTube channel called Friday Adventure Club.

He said one of his favorite features is a light bar “that goes all the way around the back.” He also likes that the windshield is “absolutely massive,” the wide doors allow for easy entry and exit, and the cargo door automatically opens when the van is parked. There are two rows of shelves that fold up and down in the cargo area.

There’s also new technology, such as an embedded tablet with the driving route and a 360-degree view that shows all sides of the van.

Mai Le, Amazon’s vice president of Last Mile, oversaw the testing of the center console and Rivian’s integrated software.

“We did a lot of deliveries as a test,” Le said. “As a woman, I want to make sure that the seats are comfortable for me and that my legs can reach the pedals, I can see over the steering wheel.”

She demonstrated some of the benefits of the new technology.

“When we start to notice that you’re slowing down, that means that we can tell you’re getting near to your destination,” she said. “The map begins to zoom in, so you begin to find where’s your delivery location, which building and where parking could be.”

The new vans have keyless entry. They automatically lock when the driver is 15 feet away and unlock as the driver approaches. 

Workers load packages into Amazon Rivian Electric trucks at an Amazon facility in Poway, California, November 16, 2022.

Sandy Huffaker | Reuters

Cameras and safety

Above all else, Amazon says the changes were designed to make the delivery job safer.

A ProPublica report found Amazon’s contract drivers were involved in more than 60 serious crashes from 2015 to 2019, at least 10 of which were fatal. Amazon put cameras and sensors all over the Rivian vans, which enable warnings and lane assist technology that autocorrects if the vehicle veers out of the lane.

Dennis mentioned the importance of automatic braking and the steering wheel that starts “just kind of shaking when you get too close to something.”

“There’s just so many features that would really, really help cut back on some of those incidental accidents,” she said.

Amazon vans have driver-facing cameras inside, which can catch unsafe driving practices as they happen.

“The in-vehicle safety technology we have watches for poor safety behaviors like distracted driving, seat belts not being fastened, running stop signs, traffic lights,” said Beryl Tomay, who helps run the technology side of delivery as vice president of Last Mile for Amazon.

“We’ve seen over the past year a reduction of 80% to 95% in these events when we’ve warned drivers real time,” she said. “But the really game-changing results that we’ve seen have been almost a 50% reduction in accidents.”

As a DSP owner, Dennis gets alerts if her drivers exhibit patterns of unsafe behavior. 

“If something with a seat belt or just something flags, then our team will contact the driver and make sure that that’s coached on and taken care of and figured out, like what actually happened,” Dennis said.

That level of constant surveillance may be unsettling for some drivers. Dennis said that issues haven’t come up among her staffers. And Amazon stresses it’s focused on driver privacy.

“We’ve taken great care from a privacy perspective,” Tomay said. “There’s no sound ever being recorded. There’s no camera recording if the driver’s not driving and there’s a privacy mode.”

Amazon says the cabin-facing camera automatically switches off when the ignition is off, and privacy mode means it also turns off if the vehicle is stationary for more than 30 seconds.

Safety concerns extend beyond the vehicle itself. For example, an Amazon driver in Missouri was found dead in a front yard in October, allegedly after a dog attack.

Amazon says new technology can help. Drivers can choose to manually notify customers ahead of a delivery, giving them time to restrain pets. Another feature that’s coming, according to Le, will allow drivers to mark delivery locations that have pets.

Natividad said he had multiple close calls with dogs charging at him during deliveries.

“You customers out there, please restrain your dogs when you know a package is coming,” he said. “Please keep them inside. Don’t leave them just outside.”

Optimizing routes

Providing drivers with more efficient and better detailed routes could improve safety, too. Drivers in 2021 told us about losing time because Amazon’s routing software made a mistake, like not recognizing a closed road or gated community. In response, they sometimes tried to save time in other ways.

“People are running through stop signs, running through yellow lights,” said Adrienne Williams, a former DSP driver. “Everybody I knew was buckling their seat belt behind their backs because the time it took just to buckle your seat belt, unbuckle your seat belt every time was enough time to get you behind schedule.”

Amazon listened. The company has been adding a huge amount of detail to driver maps, using information from 16 third-party map vendors as well as machine learning models informed by satellite driver feedback and other sources.

One example is a new in-vehicle data collection system called Fleet Edge, which is currently in a few thousand vans. Fleet Edge collects real-time data from a street view camera and GPS device during a driver’s route.

“Due to Fleet Edge, we’ve added over 120,000 new street signs to Amazon’s mapping system,” Tomay said. “The accuracy of GPS locations has increased by over two and a half times in our test areas, improving navigation safety by announcing upcoming turns sooner.”

Tomay said the maps also added points of interest like coffee shops and restrooms, so in about 95% of metro areas, “drivers can find a spot to take a break within five minutes of a stop.”

In 2021, Amazon apologized for dismissing claims that drivers were urinating in bottles as a result of demanding delivery schedules. Natividad said he occasionally found urine-filled bottles in his vans before his shift in the mornings.

“As soon as I open the van, I’m looking around, I see a bottle of urine. I’m like, ‘Oh, I’m not touching this,'” he said.

Pay for Amazon drivers is up to the discretion of each individual DSP, although Amazon says it regularly audits DSP rates to make sure they’re competitive. Indeed.com puts average Amazon driver pay at nearly $19 an hour, 16% higher than the national average.

Natividad started delivering for Amazon in 2021 when his gigs as a fulltime disc jockey dried up because of the pandemic. He liked the job at the time, generally delivering at least 200 packages along the same route. However, during the holiday season that year, he once had more than 400 packages and 200 stops in a single shift.

“Towards the end of my day, they sent out two rescues to me to help out to make sure everything’s done before 10 hours,” he said.

Amazon is working to optimize its routes. But it’s an unwieldy operation. The company says it’s generated 225,000 unique routes per day during peak season.

Tomay said the company looks at the density of packages, the complexity of delivery locations “and any other considerations like weather and traffic from past history to put a route together that we think is ideal.”

There’s no one-size-fits-all solution.

“Given that we’re in over 20 countries and every geography looks different, it’s not just about delivery vehicles or vans anymore,” Tomay said. “We have rickshaws in India. We have walkers in Manhattan.”

In Las Vegas, Amazon held a roundtable last year for DSP owners and drivers. Natividad says he spoke for 20 minutes at the event about the need for Amazon to improve its routing algorithms.

“I think they should do that probably once a month, with all the DSP supervision and a few of the drivers, and not the same drivers every time. That way different feedback is given. And like seriously listen to them,” Natividad said. “Because they’re not the ones out there seeing and experiencing what we go through.” 

Natividad didn’t get to try out the routing technology in the Rivian vans before he left to deliver for USPS in July. He’s excited that the postal service is following in Amazon’s footsteps with 66,000 electric vans coming by 2028.

Amazon, meanwhile, is diversifying its electric fleet beyond Rivian. The company has ordered thousands of electric Ram vans from Stellantis and also has some on the way from Mercedes-Benz.



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Tesla TSLA Q4 2022 vehicle delivery and production numbers

Tesla just published its fourth-quarter vehicle production and delivery report for 2022.

Here are the key numbers.

Total deliveries Q4 2022: 405,278
Total production Q4 2022: 439,701
Total annual deliveries 2022: 1.31 million
Total annual production 2022: 1.37 million

Deliveries are the closest approximation of sales disclosed by Tesla. These numbers represented a new record for the Elon Musk-led automaker and growth of 40% in deliveries year-over-year.

However, the fourth quarter numbers fell shy of analysts’ expectations.

According to a consensus of analysts’ estimates compiled by FactSet, as of Dec. 31, 2022 Wall Street was expecting Tesla to report deliveries around 427,000 for the final quarter of the year. Estimates updated in December, and included in the FactSet consensus, ranged from 409,000 to 433,000.

Those more recent estimates were in line with a company-compiled consensus distributed by Tesla investor relations Vice President Martin Viecha. That consensus, published by electric vehicle industry researcher @TroyTeslike, said that 24 sell-side analysts expected Tesla deliveries of about 417,957 on average for the quarter (and about 1.33 million deliveries for the full year).

Tesla started production at two new factories this year — in Austin, Texas and Brandenburg, Germany — and ramped up production in Fremont, California and in Shanghai, but it does not disclose production and delivery numbers by region.

In the fourth quarter of 2022, Tesla said deliveries of its entry level Model 3 sedan and Model Y crossover amounted to 325,158, while deliveries of its higher end Model S sedan and Model X SUV amounted to 18,672.

In its third-quarter shareholder presentation, Tesla wrote: “Over a multi-year horizon we expect to achieve 50% average annual growth in vehicle deliveries. The rate of growth will depend on our equipment capacity, factory uptime, operational efficiency and the capacity and stability of the supply chain.”

The period ending Dec. 31, 2022 was marked by challenges for Tesla, including Covid outbreaks in China, which caused the company to temporarily suspend and reduce production at its Shanghai factory.

During the fourth quarter, Tesla also offered steep price cuts and other promotions in the U.S., China and elsewhere in order to spur demand, even though doing so could put pressure on its margins.

In a recent e-mail to Tesla staff, Elon Musk asked employees to “volunteer” to deliver as many cars to customers as possible before the end of 2022. In his e-mail, Musk also encouraged employees not to be “bothered” by what he characterized as “stock market craziness.”

Shares of Tesla plunged by more than 45% over the last six months.

In December, several analysts expressed concern about weakening demand for Tesla electric vehicles, which are relatively expensive compared with an increasing number of hybrid and fully electric products from competitors.

Along with competitors ranging from industry veterans Ford and GM to upstart Rivian, Tesla is poised to reap the benefits of Biden’s Inflation Reduction Act this year, which includes incentives for domestic production and purchases of fully electric cars.

Retail shareholders and analysts alike attributed some of Tesla’s falling share price in 2022 to a so-called “Twitter overhang.”

Musk sold billions of dollars worth of his Tesla holdings last year to finance a leveraged buyout of the social media business Twitter. That deal closed in late October. Musk appointed himself CEO of Twitter and has stirred controversy by making sweeping changes to the company and its social media platform.

Shares of Tesla started to rise again in the final days of December 2022, in anticipation of record fourth-quarter and full-year deliveries.



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Horizon Therapeutics, Coupa Software, Weber and more

Check out the companies making headlines in midday trading.

Horizon Therapeutics – Shares of the drugmaker jumped 15% after the company announced it has agreed to be acquired by Amgen in a deal valued at approximately $26.4 billion, or $116.50 per share, in cash. The deal will give Amgen a chance to build its portfolio of rare-disease treatments. Amgen shares fell more than 1%.

related investing news

Weber – Shares of the grill manufacturer jumped 23% after the company announced a deal to be taken private by BDT Capital Partners. BDT will purchase Weber for $8.05 per share, according to the announcement.

Coupa Software – The maker of business spending management software jumped 26% after the private-equity firm Thoma Bravo agreed to buy the company in an all-cash deal worth $8 billion, or $81 per share.

Under Armour – The athletics apparel stock jumped 10% following an upgrade to buy from hold by Stifel. The firm cited Under Armour’s “better margin certainty” and management of inventory among its reasons for the upgrade.

Boeing – Shares of the aircraft maker jumped 2.8% after the Economic Times reported over the weekend that Air India is close to signing an order to acquire up to 150 737 Max jets.

Rivian – The electric vehicle stock shed more than 4% on news that it’s pausing plans to make electric vans in Europe in conjunction with Mercedes-Benz. Rivian CEO RJ Scaringe said the company is pursuing “the best risk-adjusted returns” on its capital investments, which includes focusing on its consumer and existing businesses. News of the agreement with the automobile maker was first announced in September.

Monday – Shares of software publisher Monday jumped 6% after JPMorgan upgraded the stock to overweight from neutral and boosted its price target.

Cheesecake Factory, Brinker International – The two restaurant stocks fell following downgrades to sell from neutral by Goldman Sachs. The firm said inflation will continue hurting the companies into 2023. Cheesecake Factory shed 1.6%, while Brinker, the parent of Chili’s and Maggiano’s Little Italy, dropped 2.9%.

Box – The software-as-a-service company gained 6.5% after JPMorgan upgraded the stock to overweight from neutral, arguing it is outperforming other technology names and can continue doing so going forward.

Tesla – Shares of Tesla fell more than 4% after a YouGov survey showed that negative views of the electric vehicle maker have overtaken positive ones just slightly. Tesla’s brand has deteriorated after CEO Elon Musk took over Twitter.

— CNBC’s Tanaya Macheel, Yun Li, Alex Harring, Samantha Subin and Jesse Pound contributed reporting.

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Horizon Therapeutics, Coupa Software, Rivian and more

Take a look at some of the biggest movers in the premarket:

Horizon Therapeutics (HZNP) – The drugmaker’s shares surged 14.7% in the premarket after it agreed to be bought by Amgen (AMGN) for $116.50 per share in cash, with the deal valued at $27.8 billion. Amgen shares fell 2.6%.

related investing news

Coupa Software (COUP) – Private-equity firm Thoma Bravo agreed to buy Coupa, a specialist in business spending management software. The deal is worth $8 billion, or $81 per share in cash. Coupa shares soared 21.6% in premarket trading.

Rivian (RIVN) – The electric vehicle maker has paused talks with Mercedes-Benz on a planned joint venture to build electric vans in Europe. The move is part of Rivian’s effort to be more conservative with its cash outlays in the face of higher interest rates and economic concerns. Rivian fell 2.5% in premarket action.

Weber (WEBR) – The maker of grills and other outdoor cooking products agreed to be taken private by BDT Capital Partners for $2.32 billion in cash, or $8.05 per share. Weber shares closed Friday at $6.50.

Accenture (ACN) – Accenture fell 1.7% in the premarket after Piper Sandler downgraded the consulting firm’s stock to “underweight” from “neutral.” The firm expects Accenture to be negatively impacted by more cautious 2023 spending in the tech sector.

Under Armour (UAA) – Under Armour jumped 2.8% in premarket trading following a Stifel upgrade to “buy” from “hold.” Stifel praised the athletic apparel maker’s inventory management, which it said gives the company better profit margin certainty.

Best Buy (BBY) – The electronics retailer’s stock added 1.6% in the premarket after Goldman Sachs upgraded it to “neutral” from “sell.” It’s among retail stocks that Goldman feels has the ability to maintain prices as inflation moderates and to gain market share.

Gap (GPS), Tapestry (TPR), Levi Strauss (LEVI) – Goldman Sachs upgraded Gap and Tapestry to “buy” from “neutral” while downgraded Levi Strauss to “neutral” from “buy.” Goldman said its moves were based on which companies can thrive in an atmosphere that will see consumers become more discerning with their apparel spending. Gap added 2.7% in the premarket, with Tapestry up 2% and Levi Strauss losing 1.2%.

Brinker International (EAT) – The restaurant operator’s stock slid 3.7% after Goldman downgraded it to “sell” from “neutral.” Goldman said it was cautiously optimistic about the long-term results of the company’s effort to turn around its Chili’s chain, but thinks 2023 will be choppy in terms of sales and profit margins.

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Tapestry, WeWork, Rivian and others

Check out the companies making headlines before the bell:

Tapestry (TPR) – The company behind the Coach and Kate Spade brands beat top and bottom line estimates for its latest quarter, but cut its full-year forecast for the impact of the strong U.S. dollar and China’s Covid-19 restrictions. Tapestry slid 2% in premarket trading.

Nio (NIO) – The China-based electric car maker posted a wider-than-expected quarterly loss, but said it expected deliveries to nearly double in the current quarter from a year ago. Nio shares jumped 5.5% in premarket trading.

WeWork (WE) – The office-sharing company’s stock fell 1.7% in the premarket after it reported a wider-than-expected quarterly loss. WeWork also plans to exit about 40 underperforming locations this month.

Six Flags (SIX) – The theme park operator’s stock initially dipped in premarket trading after it missed top and bottom line estimates for its latest quarter. However, it rebounded to a 2.9% gain after announcing an agreement with investment firm H Partners that raised the cap on H Partners’ stake in the company to 19.9% from 14.9%.

Rivian (RIVN) – Rivian rallied 8.2% in off-hours trading after the electric vehicle maker reported a narrower-than-expected quarterly loss and kept its production schedule intact, even in the face of supply chain issues.

Dutch Bros (BROS) – Dutch Bros stock jumped 3.8% in the premarket after the operator of hand-crafted beverage shops reported better-than-expected profit and revenue for its latest quarter. The company also raised its full-year revenue outlook.

AstraZeneca (AZN) – AstraZeneca gained 4.8% in premarket trading after the drug maker reported upbeat quarterly results and raised its full-year profit forecast. AstraZeneca’s results got a boost from strong sales of its cancer drugs.

Bumble (BMBL) – Bumble slumped 14% in premarket action after issuing a weak current-quarter revenue forecast. The dating service operator said its users are renewing subscriptions at a slower rate as consumers cut back on discretionary spending in the face of inflation.

Fair Isaac (FICO) – Fair Isaac staged a 10.4% rally in the premarket after its quarterly earnings beat analyst estimates and revenue grew in both its credit score and software units. The company, known for FICO credit scores, also gave an upbeat full-year forecast.

ZipRecruiter (ZIP) – ZipRecruiter surged 12.6% in premarket trading after the online jobs site operator posted better-than-expected quarterly results and raised its full-year forecast. ZipRecruiter also announced a $200 million increase in its share repurchase program.

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EV makers face cash squeeze amid soaring battery, production costs

Production of electric Rivian R1T pickup trucks on April 11, 2022 at the company’s plant in Normal, Ill.

Michael Wayland / CNBC

In the transition from gas-powered vehicles to electric, the fuel every automaker is after these days is cold hard cash.

Established automakers and startups alike are rolling out new battery-powered models in an effort to meet growing demand. Ramping up production of a new model was already a fraught and expensive process, but rising material costs and tricky regulations for federal incentives are squeezing coffers even further.

Prices of the raw materials used in many electric-vehicle batteries — lithium, nickel and cobalt — have soared over the last two years as demand has skyrocketed, and it may be several years before miners are able to meaningfully increase supply.

Complicating the situation further, new U.S. rules governing EV buyer incentives will require automakers to source more of those materials in North America over time if they want their vehicles to qualify.

The result: new cost pressures for what was already an expensive process.

Automakers routinely spend hundreds of millions of dollars designing and installing tooling to build new high-volume vehicles — before a single new car is shipped. Nearly all global automakers now maintain hefty cash reserves of $20 billion or more. Those reserves exist to ensure that the companies can continue work on their next new models if and when a recession (or a pandemic) takes a bite out of their sales and profits for a few quarters.

All that money and time can be a risky bet: If the new model doesn’t resonate with customers, or if manufacturing problems delay its introduction or compromise quality, the automaker might not make enough to cover what it spent.

For newer automakers, the financial risks to designing a new electric vehicle can be existential.

Take Tesla. When the automaker began preparations to launch its Model 3, CEO Elon Musk and his team planned a highly automated production line for the Model 3, with robots and specialized machines that reportedly cost well over a billion dollars. But some of that automation didn’t work as expected, and Tesla moved some final-assembly tasks to a tent outside its factory.

Tesla learned a lot of expensive lessons in the process. Musk said later called the experience of launching the Model 3 “production hell” and said it nearly brought Tesla to the brink of bankruptcy.

As newer EV startups ramp up production, more investors are learning that taking a car from design to production is capital-intensive. And in the current environment, where deflated stock prices and rising interest rates have made it harder to raise money than it was just a year or two ago, EV startups’ cash balances are getting close attention from Wall Street.

Here’s where some of the most prominent American EV startups of the last few years stand when it comes to cash on hand:

Rivian

Production of electric Rivian R1T pickup trucks on April 11, 2022 at the company’s plant in Normal, Ill.

Michael Wayland / CNBC

Rivian is by far the best-positioned of the new EV startups, with over $15 billion on hand as of the end of June. That should be enough to fund the company’s operations and expansion through the planned launch of its smaller “R2” vehicle platform in 2025, CFO Claire McDonough said during the company’s earnings call on Aug. 11.

Rivian has struggled to ramp up production of its R1-series pickup and SUV amid supply chain snags and early manufacturing challenges. The company burned about $1.5 billion in the second quarter, but it also said it plans to reduce its near-term capital expenditures to about $2 billion this year from $2.5 billion in its earlier plan to ensure it can meet its longer-term goals.

At least one analyst thinks Rivian will need to raise cash well before 2025: In a note following Rivian’s earnings report, Morgan Stanley analyst Adam Jonas said that his bank’s model assumes Rivian will raise $3 billion via a secondary stock offering before the end of next year and another $3 billion via additional raises in 2024 and 2025.

Jonas currently has an “overweight” rating on Rivian’s stock, with a $60 price target. Rivian ended trading Friday at roughly $32 per share.

Lucid

People test drive Dream Edition P and Dream Edition R electric vehicles at the Lucid Motors plant in Casa Grande, Arizona, September 28, 2021.

Caitlin O’Hara | Reuters

Luxury EV maker Lucid Group doesn’t have quite as much cash in reserve as Rivian, but it’s not badly positioned. It ended the second quarter with $4.6 billion in cash, down from $5.4 billion at the end of March. That’s enough to last “well into 2023,” CFO Sherry House said earlier this month.

Like Rivian, Lucid has struggled to ramp up production since launching its Air luxury sedan last fall. It’s planning big capital expenditures to expand its Arizona factory and build a second plant in Saudi Arabia. But unlike Rivian, Lucid has a deep-pocketed patron — Saudi Arabia’s public wealth fund, which owns about 61% of the California-based EV maker and would almost certainly step in to help if the company runs short of cash.

For the most part, Wall Street analysts were unconcerned about Lucid’s second-quarter cash burn. Bank of America’s John Murphy wrote that Lucid still has “runway into 2023, especially considering the company’s recently secured revolver [$1 billion credit line] and incremental funding from various entities in Saudi Arabia earlier this year.”

Murphy has a “buy” rating on Lucid’s stock and a price target of $30. He’s compared the startup’s potential future profitability to that of luxury sports-car maker Ferrari. Lucid currently trades for about $16 per share.

Fisker

People gather and take pictures after the Fisker Ocean all-electric SUV was revealed at Manhattan Beach Pier on November 16, 2021 in Manhattan Beach, California.

Mario Tama | Getty Images

Unlike Rivian and Lucid, Fisker isn’t planning to build its own factory to construct its electric vehicles. Instead, the company founded by former Aston Martin designer Henrik Fisker will use contract manufacturers — global auto-industry supplier Magna International and Taiwan’s Foxconn — to build its cars.

That represents something of a cash tradeoff: Fisker won’t have to spend nearly as much money up front to get its upcoming Ocean SUV into production, but it will almost certainly give up some profit to pay the manufacturers later on. 

Production of the Ocean is scheduled to begin in November at an Austrian factory owned by Magna. Fisker will have considerable expenses in the interim — money for prototypes and final engineering, as well as payments to Magna — but with $852 million on hand at the end of June, it should have no trouble covering those costs.

RBC analyst Joseph Spak said following Fisker’s second-quarter report that the company will likely need more cash, despite its contract-manufacturing model — what he estimated to be about $1.25 billion over “the coming years.”

Spak has an “outperform” rating on Fisker’s stock and a price target of $13. The stock closed Friday at $9 per share.

Nikola

Nikola Motor Company

Source: Nikola Motor Company

Nikola was one of the first EV makers to go public via a merger with a special-purpose acquisition company, or SPAC. The company has begun shipping its battery-electric Tre semitruck in small numbers, and plans to ramp up production and add a long-range hydrogen fuel-cell version of the Tre in 2023.

But as of right now, it probably doesn’t have the cash to get there. The company has had a tougher time raising funds, following allegations from a short-seller, a stock price plunge and the ouster of its outspoken founder Trevor Milton, who is now facing federal fraud charges for statements made to investors.

Nikola had $529 million on hand as of the end of June, plus another $312 million available via an equity line from Tumim Stone Capital. That’s enough, CFO Kim Brady said during Nikola’s second-quarter earnings call, to fund operations for another 12 months — but more money will be needed before long.

“Given our target of keeping 12 months of liquidity on hand at the end of each quarter, we will continue to seek the right opportunities to replenish our liquidity on an ongoing basis while trying to minimize dilution to our shareholders,” Brady said. “We are carefully considering how we can potentially spend less without compromising our critical programs and reduce cash requirements for 2023.”

Deutsche Bank analyst Emmanuel Rosner estimates Nikola will need to raise between $550 million and $650 million before the end of the year, and more later on. He has a “hold” rating on Nikola with a price target of $8. The stock trades for $6 as of Friday’s close.

Lordstown

Lordstown Motors gave rides in prototypes of its upcoming electric Endurance pickup truck on June 21, 2021 as part of its “Lordstown Week” event.

Michael Wayland / CNBC

Lordstown Motors is in perhaps the most precarious position of the lot, with just $236 million on hand as of the end of June.

Like Nikola, Lordstown saw its stock price collapse after its founder was forced out following a short-seller’s allegations of fraud. The company shifted away from a factory model to a contract-manufacturing arrangement like Fisker’s, and it completed a deal in May to sell its Ohio factory, a former General Motors plant, to Foxconn for a total of about $258 million.

Foxconn plans to use the factory to manufacture EVs for other companies, including Lordstown’s Endurance pickup and an upcoming small Fisker EV called the Pear.

Despite the considerable challenges ahead for Lordstown, Deutsche Bank’s Rosner still has a “hold” rating on the stock. But he’s not sanguine. He thinks the company will need to raise $50 million to $75 million to fund operations through the end of this year, despite its decision to limit the first production batch of the Endurance to just 500 units.

“More importantly, to complete the production of this first batch, management will have to raise more substantial capital in 2023,” Rosner wrote after Lordstown’s second-quarter earnings report. And given the company’s difficulties to date, that won’t be easy.

“Lordstown would have to demonstrate considerable traction and positive reception for the Endurance with its initial customers in order to raise capital,” he wrote.

Rosner rates Lordstown’s stock a “hold” with a price target of $2. The stock closed Friday at $2.06.

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Automakers investing in the South as EVs change the auto industry

Jack Weaver, an 82-year-old retired dairy farmer whose house sits on a Civil War battlefield, lives near General Motors’ Spring Hill plant in Tennessee.

Michael Wayland / CNBC

SPRING HILL, Tenn. – Jack Weaver can point to a cannon on a Civil War battlefield from the comfort of a shaded bench in his backyard — a visible marker of his land’s rich past. As he speaks about his small town, it’s over the loud rumble of cars and trucks at the intersection in front of his farmhouse red home.

The 82-year-old retired dairy farmer has lived in Spring Hill nearly his entire life. He’s watched the once-quiet town in middle Tennessee grow into a burgeoning Nashville suburb. The evolution of Spring Hill has come in conjunction with a population boom in the state as well as the introduction of new industries — in particular, auto companies — that have poured billions of dollars in new investments into the state.

“It’s good and it’s bad,” says Weaver, who complains about cars hitting his fence and the traffic General Motors’ Spring Hill plant has brought since it opened in 1990. “I’m not against development at all. I’m not. I think a man outta do what he wants with his own land.”

Detroit is the city that “put the world on wheels,” but it’s towns like Spring Hill and others in neighboring states that are attracting the most investments from automakers in recent years, as production priorities shift to a battery-powered future with electric vehicles.

Companies more than ever want to build EVs where they sell them, because the vehicles are far heavier and more cumbersome to ship than traditional models with internal combustion engines. They also want facilities for battery production to be close by to avoid supply chain and logistics problems.

Among the first to invest in southern states was Ford Motor in the 1950s and 1960s in Kentucky, followed by foreign-based, or transplant, automakers starting with Nissan Motor, which established a plant in Smyrna, Tennessee, in 1983. Others such as General Motors, Subaru, Toyota Motor and BMW followed suit through the 1990s. More have followed since then, including recent announcements by Hyundai Motor and Rivian Automotive to build multibillion-dollar plants in Georgia.

As more companies look to the American South, the investments are changing the landscape of towns across the region and of the automotive industry’s workforce, supply chain and logistics. Companies first to set up shop in the South earn early advantages over their northern competitors, and future newcomers, according to officials.

Auto executives say they’re investing in the South for a combination of reasons: lower energy costs, available workforce and livability among them. Many southern states also come with other benefits, potentially controversial, such as all-in lower pay for workers, millions in tax breaks and a largely non-unionized workforce in many of the Republican-controlled, right-to-work states.

But the shift brings unique challenges, too. As the Motor City moves and expands south, it has to grapple with preservation of historic plantation farms, unearthing of slave burial grounds and pushback from citizens and local politicians who aren’t used to the traffic or industries.

Investments shifting

Automakers have announced $45.9 billion of investments in southern states since 2017, according to The Center for Automotive Research, a nonprofit think tank based in Ann Arbor, Michigan. That’s the first year the South outpaced the Midwest, or Great Lakes region, for announced investments since at least 2010.

Midwest states such as Michigan, Ohio and Indiana saw $39.9 billion in announced investments in that same timeframe.

Most of the money heading south – $34.2 billion, or 74% – has come in since last year from traditional automakers such as GM, Hyundai and Ford Motor as well as EV startup Rivian. Others such as Volkswagen and Nissan continue to invest and expand their operations in the South, largely for new electric vehicles.

“We are basically undergoing the single biggest industrial transformation, I would say, not to understate it, in the history of America,” Scott Keogh, CEO at Volkswagen of America, told CNBC in June at the automaker’s new battery lab in Chattanooga, Tennessee. “It’s happening right now in this area.”

Scott Keogh of Volkswagen of America at the VW plant in Chattanooga, TN, June 8, 2022.

Michael Wayland | CNBC

Keogh singled out energy capacity and costs as the top priority for the company’s investments in Tennessee, including the potential for new assembly and battery facilities that the company is “actively” scouting locations for. He and other executives have also cited incentives, tax support, labor and workforce training as other key elements.

Ford CEO Jim Farley put a similar emphasis on the cost and availability of energy in September, announcing an $11.4 billion investment in new vehicle and battery plants in Tennessee and Kentucky.

“We want to work with states who are really excited about doing that training and giving you access to that low energy cost,” Farley told the Associated Press then.

Tennessee has among the lowest electricity prices in the country, according to the most recent data from the U.S. Energy Information Administration. The state’s average industrial price of electricity per kilowatt-hour was 6.31 cents as of May. Michigan’s industrial energy cost was 8.72 cents per kilowatt-hour, and the national average was 8.35 cents.

Mississippi and South Carolina were under 7 cents, while Georgia was 9.05 cents – among the highest in area, according to the U.S. Energy Information Administration.

While those cost differences seem minimal, they add up quickly. Ford’s new battery plants will have an annual capacity for 43 megawatt-hours of production. There are 1,000 kilowatt-hours of electricity in a megawatt-hour, meaning tens of thousands of dollars in savings per year.

The expansion south is expected to continue for years to come, according to AlixPartners. The global consulting firm expects investments from automakers and suppliers in southern states such as Alabama, Georgia and Kentucky to total $58 billion for electric vehicles between 2022 and 2026. That’s nearly four times the $15 billion that’s expected in Midwest states, and $20 billion elsewhere in the country.

“It definitely will change but right now there’s a lot more interest and activity happening in the Southern states, particularly with all these automakers making investments on the EV front,” said Arun Kumar, a managing director in the automotive and industrial practice at AlixPartners.

Southern hospitality

State economic development officials from Tennessee and Georgia say their states have made the automotive industry a priority because of the supply chain jobs that typically follow. They also say electric vehicles have helped to level the playing field for new investments.

“This is almost like a seed field of opportunity, as this industry changes because we’re building the supply chain in the United States for electrification from scratch,” said Pat Wilson, commissioner of Georgia’s economic development unit. “There’s a huge amount of opportunity.”

As of July, EV-related projects contributed more than $12.6 billion in investments and more than 17,800 new jobs in Georgia since 2020, officials said.

Tennessee reports automotive companies have added more than 43,800 new jobs and invested $16.5 billion in private capital in the state since 2012, representing nearly 30% of private capital investments during that time.

Nissan’s Smyrna Vehicle Assembly Plant opened in 1983, marking Tennessee’s first major auto facility. The plant employs more than 7,000 people are produces a variety of vehicles, including the Leaf EV and Rogue crossover.

Michael Wayland / CNBC

With billions of dollars on the line and tens of thousands of new jobs, states have offered enormous incentive packages for the companies in the forms of land, tax abatements/incentives and other support such as installation of utilities and roadways.

For example, Tennessee approved an $884 million incentive package for Ford’s plans to spend $5.6 billion in the state, as well as in-kind services and a $2 million grant for training services. Ford’s investment includes a new electric truck plant and battery facility with supplier South Korea-based SK Innovation.

Bob Rolfe, who oversees The Volunteer State’s economic development, said such actions are needed to compete with others. He said to attract Ford last year the state spent years accumulating enough land for an “electric vehicle mega site” ahead of securing the automaker’s commitment.

“We tell our team every day to continue to recruit. Is enough, enough?” Lewis said ahead of a trip to Japan for automotive recruitment in June. “The more great companies that call Tennessee home, the softer the landing when we do hit the next wind shear that’s going to be developed around the next recession.”

Unique issues

But not all agree that the automotive industry should be expanding South into rural areas. Rivian has faced notable pushback since announcing plans last year to build a $5 billion plant about 45 miles east of Atlanta, Georgia.

While hailed by many politicians, including Gov. Brian Kemp, local news outlets report residents of the rural area are concerned with how it will impact their community. Others, including politicians, oppose a $1.5 billion in tax breaks and other incentives that state and local officials have offered Rivian.

Haynes Haven is a historic landmark in Spring Hill, Tennessee that has been maintained by GM since the automaker built an assembly plant near the site in the 1980s.

“[Union Army General] Sherman and his troops destroyed our community. Now this supposedly green company is coming to destroy it again,” JoEllen Artz told NBC News in May. Artz is president of the grassroots No2Rivian group, which says it has raised over $250,000 and hired Atlanta lawyers to fight the plant. “We want to keep it just like it is.”

Building massive assembly plants in traditionally rural areas can also involve a unique set of challenges.

Decades ago, when GM was building its Spring Hill plant, the company unearthed an unmarked slave graveyard. GM paid for the remains to be moved to a nearby burial site.

“When we invest in properties, we’re also investing in communities, their history and culture,” GM said in an emailed statement to CNBC. “With any building or renovation project, we expect to encounter the unexpected, and we try to work with community members to find solutions to fit the unique needs of each situation. In many cases, like in Spring Hill, the unexpected finds become intertwined in our own history, as well.”

It wasn’t the first time GM has operated around such a site. On the property of its Detroit-Hamtramck plant, there’s an active Jewish graveyard that the company agreed to build around when it built the plant in the 1980s.

And, Nissan is reported to have similarly moved a graveyard in Smyrna, Tennessee – located about 28 miles northeast of Spring Hill – when the automaker built its plant and railroads were installed there in the early 1980s. Nissan did not return request for comment.

GM maintained and updated a historic plantation in Spring Hill, Tenn. called Rippavilla as part of a deal for land to build an assembly plant in the city in the 1980s.

Michael Wayland / CNBC

Since GM’s Spring Hill Assembly plant was built, the company also has maintained two historic plantations as part of land deals struck during the construction. It still maintains one called Haynes Haven, whose historic horse stables were turned into a welcome center and used for other events. The surrounding area is currently being used for employee parking during construction of the company’s new $2.3 billion battery plant, next to the original plant.

The other site, called Rippavilla, sits across the street from the plant and was donated by the company to the city in 2016. It is now being run by a nonprofit organization, The Battle of Franklin Trust, committed to Civil War preservation and education.

“The last people that owned Rippavilla were pretty insistent that they wanted it to be a historic site. They did not want to happen to what happened to Haynes Haven, which Haven is owned by GM and able to use however they see fit,” said Eric Jacobson, CEO of the organization.

Jacobson credits GM with saving and maintaining the site in the form of $100,000 a year up until 2016, when a 10-year deal to maintain the property ended. GM said it continues to support the site.

Battling the union

While the automakers may have to navigate battlefields of the South, they don’t have to worry as much about battling unions.

The United Auto Workers has failed to successfully organize a non-Detroit automaker plant in the South, despite decades of attempts. The prominent union also now faces challenges of organizing joint venture battery plants from GM and Ford in the South.

“It’s a very critical time for the UAW,” Ray Curry, president of the union, told CNBC. “This transformation piece is about our future. It’s about 86-plus years of longstanding history.”

Ford’s more than $11.4 billion investment to build new U.S. facilities in Tennessee and Kentucky is expected to create nearly 11,000 jobs to produce electric vehicles and batteries.

Both GM and Ford officials have said the decision of whether to unionize at their U.S. battery plants, which are joint ventures, will be left to the workers.

While the labor cost gap has narrowed between the Detroit automakers and other non-unionized automotive plants, organized labor costs are higher for the companies.

At the end of a current four-year contract between the Detroit automakers and UAW in 2023, the Center for Automotive Research estimates average hourly labor costs per worker will be $71 for GM; $69 for Ford; and $66 for Stellantis, formerly Fiat Chrysler.

“There’s quite a bit of anti-union attitude that prevails in the international carmakers,” said James Rubenstein, a professor emeritus at the University of Miami Ohio, who specializes in the automotive industry. “It’s a little bit easier to do that down South, to keep the union out.”

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Lordstown Motors (RIDE) Q2 2022 earnings and production

Workers install door hinges to the body shell of a prototype Endurance electric pickup truck on June 21, 2021 at Lordstown Motors assembly plant in Ohio.

Michael Wayland | CNBC

Embattled electric truck startup Lordstown Motors on Thursday reaffirmed plans to begin commercial production of its first vehicle this quarter and roll out the first customer deliveries by the end of the year.

Lordstown CEO Edward Hightower said production of the Endurance pickup will be slow and largely reliant on capital availability. He said the company only expects to produce about 500 vehicles through early 2023 — an extremely slow production ramp-up by industry standards.

CFO Adam Kroll said the company will need to raise “substantially more capital” to produce the initial 500 Endurance electric pickups, though the company projects it will need less money than previously thought.

Lordstown’s stock jumped as much as 27% during trading Thursday morning to $3.73 a share. The stock is down about 15% this year and off 58% from its 52-week high of $8.93 a share. The company’s market cap is roughly $740 million.

The company said it will need to raise between $50 million and $75 million this year, down from previous expectations of $150 million. Lordstown will need additional capital in 2023, Kroll said.

Lordstown, alongside its second-quarter results, said its cash balance of $236 million at the end of the first half of the year was above internal expectations and extends the cash-strapped company’s runway — but isn’t enough to fund production.

The company reported its first quarterly operating profit of $61.3 million for the period ended June 30, despite not delivering any vehicles, on gains related to the sale of its Ohio factory to contract manufacturer Foxconn. The profit included a $101.7 million gain from the sale as well as an $18.4 million reimbursement of operating expenses from Foxconn.

Lordstown and Foxconn announced in November plans for the Taiwan-based company to purchase the facility and an agreement for the company to manufacturer the struggling startup’s Endurance pickup. The deal was announced as Lordstown was in need of cash, delaying production of its pickup and engulfed in controversy after the resignation of its CEO and founder Steve Burns earlier in the year.

Lordstown, which went public in October 2020, was among a group of electric vehicle startups to go public through special purpose acquisition companies, or SPACs, since the beginning of the decade. The deals were initially hailed by Wall Street and investors but controversies, product delays, lack of financing and executive shakeups have sent shares of most of the companies plummeting.

Lordstown was initially expected to be among the first, if not the first, company to release an electric pickup truck, with initial estimates as early as 2020. However, General Motors, Rivian Automotive and Ford Motor have all beat the company to market following internal problems and delays with the Endurance.

Ford’s electric F-150 is squarely positioned to compete against the Endurance for the commercial pickup truck market. Ford’s electric F-150 pickup starts at about $23,000 less than the Endurance, plus, it carries a first-mover advantage and the backing of a well-funded company.

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Amazon (AMZN) Q2 2022 earnings

Amazon shares climbed more than 11% in extended trading on Thursday after the company reported better-than-expected second-quarter revenue and gave an optimistic outlook.

  • EPS: Loss of 20 cents
  • Revenue: $121.23 billion vs. $119.09 billion expected, according to Refinitiv

Here’s how other key Amazon segments did during the quarter:

  • Amazon Web Services: $19.7 billion vs. $19.56 billion expected, according to StreetAccount
  • Advertising: $8.76 billion vs. $8.65 billion expected, according to StreetAccount

Revenue growth of 7% in the second quarter topped estimates, bucking the trend among its tech peers, which have all reported disappointing results.

Amazon said it expects to post third-quarter revenue between $125 billion and $130 billion, representing growth of 13% to 17%. Analysts were expecting sales of $126.4 billion, according to Refinitiv.

Amazon recorded a $3.9 billion loss on its Rivian investment after shares of the electric vehicle maker plunged 49% in the second quarter ended June 30. That resulted in a total net loss of $2 billion, and brings its loss for the year to $11.5 billion on the Rivian investment.

Because of the Rivian writedown, analyst estimates varied dramatically, making it difficult to compare actual results to a consensus number.

Amazon’s ad business is a bright spot in an otherwise gloomy quarter for online advertising, and shows the company is picking up share in one of its fastest-growing businesses.

Ad revenue climbed 18% in the period. Facebook, meanwhile, recorded its first ever drop in revenue this week, and forecast another decline for the third quarter. At Alphabet, advertising growth slowed to 12%, and YouTube showed a dramatic deceleration to 4.8% from 84% a year earlier.

This story is developing. Check back for updates.

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Uber, DoorDash, Coinbase and more

Uber Eats delivery

Jonathan Raa | NurPhoto via Getty Images

Check out the companies making headlines in midday trading.

Uber, DoorDash – Shares of Uber slumped 4.6% and DoorDash fell 9% on news that Amazon agreed to take a stake in Grubhub in a deal that will give Prime subscribers a one-year membership to the food delivery service.

Coinbase – Coinbase slipped 3.1% after Atlantic Equities downgraded the crypto exchange to neutral and slashed its price target, citing increased volatility in the industry.

Netflix – Netflix dropped 2.1% after Barclays slashed its price target for the streaming service to $170 from $275, anticipating a subscriber loss in the second quarter amid increased competition.

Rocket Companies – Shares of the consumer fintech company jumped 5.5% after Wells Fargo upgraded it to an overweight rating and said Rocket’s set up for a big comeback after tumbling more than 42% this year. Despite a “tough mortgage backdrop,” Rocket will “continue to take market share from its peers,” Wells Fargo said.

Rivian — The electric vehicle maker surged more than 10% after saying it’s on track to deliver 25,000 vehicles this year. In its most recent quarter, Rivian said it produced 4,401 vehicles, and delivered 4,467, in line with the company’s expectations.

Energy stocks – Energy stocks slid Wednesday as oil continued its slump from Tuesday, slipping to about $95 a barrel. The S&P 500 Energy sector fell 4% with shares of Marathon Oil, Conocophillips and Halliburton falling 5.1%, 3.9% and 4.1%, respectively. Occidental Petroleum weakened 2.5%, while Exxon Mobil fell 3.8%.

Cruise stocks – Norwegian Cruise Line Holdings slumped 9.6%, Royal Caribbean fell 5.9%, and Carnival eased 6.7% on concern about second-half cruise ship demand. Norwegian said it would no longer require guests to test for Covid-19 before joining a cruise, unless required by local regulations.

— CNBC’s Tanaya Macheel, Samantha Subin and Sarah Min contributed reporting.

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