Ford ditches the plans to jointly develop electric vehicles with Rivian, and both companies will focus on their own EV projects.
Ford invested some $500 million in Rivian in 2019 (later increasing the amount to $1.2 billion), but in the end they will not introduce a jointly developed EV.
By the way, shortly after the IPO, Rivian had a market cap almost 50% higher than Ford.
First, the companies decided in April 2020 that the Rivian-based Lincoln was canceled. And now, it's official that Ford will not use Rivian's EV tech either.
According to Automotive News, Ford CEO Jim Farley set a new direction to make the company a high-volume BEV manufacturer (600,000 per year globally and #2 in the U.S. by the end of 2023) and does not need Rivian to achieve that.
""Right now, we have growing confidence in our ability to win in the electric space," Farley said in an interview Thursday. "When you compare today with when we originally made that investment, so much has changed: about our ability, about the brand's direction in both cases, and now it's more certain to us what we have to do. We want to invest in Rivian — we love their future as a company — but at this point we're going to develop our own vehicles.""
Well, it sounds totally rational if the company is going all-electric to focus on its own vehicles, architectures and solutions. Outsourcing is usually a cost-reduction approach when a company is not going full-scale (EVs as a side project). The complexity of using an external platform/architecture is too high compared to in-house solutions for the mass market.
Electrification is a big change for Ford - maybe the biggest since the Model T. And who knows, maybe we will even see an all-electric Model T?
"As a leader of Ford I get really excited, because there hasn't been a chance to transform Ford and create this much value since we scaled the Model T. The chance to emerge out of this transition to a digital product with a much higher valuation is now much clearer."
Ford is expected to stay a shareholder of Rivian though, and reports outstanding relationships.
""Rivian's a special case for us; it's kind of like a brother or a sister, since we're an investor," Farley said. "We know [CEO RJ Scaringe] and the company really well.""
""We have slightly different business models," he said. "We like what they're doing, but we're going to go our separate ways.""
Ford now must focus on manufacturing, supply chains and significant new investments as it's already clear - Jim Farley said - that the announced new battery plants in Tennessee and Kentucky (129 GWh per year total) will not be enough.
Already we need more than we planned. I'm not going to give you a number, but it's very clear we'll have to move soon, and it will be more."
Jim Farley adds that Ford has three hits on its hands - Ford Mustang Mach-E, Ford E-Transit and Ford F-150 Lightning. The main objective is to scale-up to #2 in the U.S. and "make money on those products." Then the company will proceed forward.
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