Mercedes, Rivian partner on electric vans in cost-saving bid

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Mercedes-Benz AG and Rivian Automotive Inc. plan to jointly manufacture electric vans in Europe as both companies try to share the rising costs of churning out battery-powered vehicles.

Mercedes and Rivian aim to invest in and operate a new assembly plant at an existing Mercedes facility in central or eastern Europe, the companies said Thursday.

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“We will both benefit significantly from this joint venture,” Mathias Geisen, who heads Mercedes’s Vans business, told reporters, adding the move would help the automakers share the multibillion-euro cost of scaling up electric-van manufacturing.

Automakers are increasingly looking to share the bill of developing and manufacturing EVs as they retool factories and overhaul model lineups to catch up with Tesla Inc.

The partnership pairs Rivian, which counts Amazon.com Inc. and Ford Motor Co. among its largest shareholders, with one of the world’s most experienced vehicle makers.

Rivian shares surged as much as 15 percent to $38.30 before the start of regular trading. Mercedes pared a decline of as much as 3.2 percent in Frankfurt.

The Mercedes plant in Kecskemet, Hungary, is likely to be on the shortlist for the joint factory. The plant, opened in 2012, currently makes entry Mercedes-Benz cars such as A-Class, B-Class and C-Class models.

The manufacturer plans to lower the production of such vehicles as part of its strategy of shifting to higher-end models.

After its blockbuster debut in late 2021, Rivian has struggled with production woes, high costs and economic volatility. The company briefly halted work at its Normal, Illinois, plant at the beginning of the year for fixes and process improvements aimed at helping increase output.

Lingering supply-chain issues and elevated raw-material expenses have disrupted operations, leading Rivian recently to trim its full-year earnings expectations. It said last month that boosting production remains its primary focus, though supply-chain constraints would be the limiting factor. Rivian shares have dropped some 68 percent this year.

While the companies argue the partnership will result in major cost synergies, they didn’t release investment figures or detailed timelines other than that the factory would produce vans “starting in a few years.” Rivian has been looking at options for a manufacturing site in Europe since early last year, Bloomberg has reported.

Mercedes delivered just over 334,000 vans in 2021. Rivian, which makes the R1T pickup and R1S sport utility vehicle along with electric delivery vans, expects to manufacture 25,000 EVs this year.

Mercedes also said that it plans to adapt its European production network for large vans as the cost pressures from making battery vehicles undermine competitiveness.

This will see an established plant from the Mercedes production network in eastern Europe -- where production costs are lower -- become part of van-making operations. Discussions on the plan between management and employee representatives in Germany will start shortly, according to a separate statement.

By the middle of this decade, all new Mercedes van models, including mid-size and small vans, will be electric-only, the company said.

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