Just three months after it was launched, Rivian Automotive (Rivian stock) has decided to stop its joint venture with Mercedes-Benz Group to construct commercial vans in Europe. It’s possible that the manufacturer of electric vehicles, whose stock has plummeted this year, will take another look at how it’s spending its cash.
Rivian ( NASDAQ:RIVN ) and Mercedes-Benz (MBG.Germany) agreed in September to form a joint venture in which they will develop substantial electric vans for both the American manufacturer of electric vehicles and the German multinational automotive corporation. It constituted an effort to scale production by utilizing pooled investments and expenditures as leverage. The companies announced on Monday that the transaction had been put on hold for the time being.
The commercial van that Rivian is currently selling to Amazon.com was not going to be similar to the vehicle that was going to be developed (AMZN).
The Chief Executive Officer of Rivian, R.J. Scaringe, stated in a statement that the company has “chosen to stop conversations with Mercedes-Benz Vans.” “When we are looking at potential expansion prospects, one of our primary goals is to get the highest possible risk-adjusted returns on our capital investments. At this point in time, we think that focusing on both our existing commercial business as well as our consumer company represents the most appealing prospects to maximize value for Rivian in the short term.
The balance sheet for Rivian is not capable of handling everything. At the close of the third quarter, Rivian’s cash on hand amounted to around $14 billion. During the first three quarters of this year, the corporation burned through about $5 billion in cash reserves. Another cash outflow of $2.1 billion is anticipated for the fourth quarter, followed by cash outflows of $6.1 billion in 2023 and $4.1 billion in 2024, respectively, according to projections made by Wall Street. Starting fr...
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