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EV Shocker! Ford, Not GM Invests in Rivian

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RJ Scaringe and Bill Ford

RJ Scaringe, Rivian founder and CEO, and Ford Executive Chairman Bill Ford announced a $500 million Ford investment in Rivian. Through a strategic partnership, Ford will develop an all-new, next-generation battery electric vehicle for Ford’s growing EV portfolio using Rivian’s skateboard platform.

Upstart Rivian, a future manufacturer of electric vehicles, announced today a $500 million minority investment by the Ford Motor Company. Ford’s backing follows a $700 million investment by Amazon. Together, the two companies give Rivian the confidence and support it needs to launch their new products.

The Ford investment is stunning as it follows on the heels of a rumored stake sought by GM, but later canceled. Ford kept its negotiation with Rivian under wraps, which made today’s announcement all the more stunning.

A Board Seat and a Skateboard Platform

Ford’s stake will not only give it a voice in how Rivian is run — Executive Vice President and President of Global Operations Joe Hinrichs will join Rivian’s board of directors — the company will also receive access to Rivian’s proprietary skateboard platform.

That platform is already designed to uphold an SUV and pickup truck, two models that’ll underpin this emerging automaker. The first of the two is expected late next year. Other models may follow.

Some have speculated the skateboard platform will underpin an electric F-150, but that doesn’t seem at all likely. Notably, Ford is developing its own electrified truck based on its existing platform. Instead, we’re likely to see an all-new model, a dedicated electric vehicle for either the Ford or Lincoln brands. Perhaps both.

If the model is a Ford, an SUV is a logical approach. If Lincoln is selected, it might see a pickup truck, but we’re thinking an SUV designed to compete with the Tesla Model X or perhaps the upcoming Model Y, a small crossover is a more sensible approach.

Ford and Volkswagen

Ford’s Rivian connection won’t have any bearing on its burgeoning relationship with Volkswagen. Indeed, Ford CEO Jim Hackette told Automotive News today that “…the Rivian investment “does not interfere” with any potential deal with VW. ” The two automakers are collaborating on a few products, including a shared EV platform.

The Rivian stake is in addition to Ford’s $11 billion monetary contribution to its own electric vehicle quest. Ford has two electric models in the planning stages, including a Mustang-inspired crossover. The other model is the electrified F-150.

Rivian Independence

Neither Amazon nor Ford will have a controlling interest in Rivian, which will remain an independent company. Rivian already has the backing of two global investment firms: Saudi Arabia’s Abdul Latif Jameel Ltd. and Japan’s Sumitomo Corp.

As for GM, the news that Ford took its place in backing Rivian must be sending shockwaves through the Renaissance Center. To its credit, GM is ahead of Ford in all things electric, but having its chief rival jump in is not something the company’s executives can easily dismiss.

See Also — Rivian Automotive Draws Interest From GM, Amazon

Photo courtesy of the Ford Motor Company.

Emerging Alliances Point to Further Auto Industry Consolidation

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What a month! March 2019 may go down as a pivotal time in automotive history as auto industry consolidation talk strengthens anew.

The news is coming from all corners of the globe as multiple players talk, while others forge alliances. Consolidation certainly isn’t anything new, but the future absolutely points to a host of mergers and alliances taking shape.

2019 Ford Ranger
Volkswagen and Ford are forging a pact that might lead to a Ranger-based pickup truck for VW.

Ford, Volkswagen Tie One On

Heading the alliance news this month is a not-yet-signed agreement between Ford and Volkswagen. According to Reuters, the two automotive giants have been in talks for months and appear ready to sign a pact.

That agreement may involve Volkswagen purchasing a stake in Argo AI, which is Ford’s artificial intelligence company. Argo AI represents the blue oval’s autonomous vehicle and artificial intelligence aspirations, a company launched in 2016. Volkswagen doesn’t have an equivalent business, thus investing in Ford’s venture would give it instant access to AI.

At the same time, Ford appears ready to supply Volkswagen with a pickup truck. The German automaker doesn’t have a model for the American market, though its car-based Amarok is sold in multiple markets. Although the type of truck has not yet been identified, we believe a model closely based on the midsize Ford Ranger pickup truck seems likely.

See Also — Key Facts Surrounding the Nissan-Mitsubishi Alliance

Daimler, Geely Go Beyond Ride-Hailing

Daimler and Geely are expected to soon sign an agreement which would allow the Chinese automaker to purchase a 50-percent stake in Daimler’s Smart small-car brand. Smart has been languishing for years and talk of the brand’s demise emerged just this week.

But Smart may find new life yet as an electric car manufacturer with the Chinese market its main source. The Financial Times reports that an announcement will be confirmed at the Shanghai Auto Show in April.

The two manufacturers are no strangers, although Daimler’s Mercedes-Benz and Geely’s Volvo brands are direct competitors. In 2018, the two companies joined forces to form a China-based ride-hailing company reports CNN.

A Suitor for FCA

The late Fiat Chrysler executive Sergio Marchionne fashioned one of the most unlikely alliances earlier this decade as he married a pair of Italian and American automakers, but he was never satisfied that it would last apart from further consolidation.

Indeed, Marchionne was one of the earlier proponents of global consolidation, noting as far back as in 2009 that there would be “six survivors in the global volume sector.” Marchionne stated his viewpoint during the midst of a worldwide downturn in auto sales that nearly sunk Chrysler and GM and put other manufacturers in jeopardy.

See Also — Auto Industry Buzzword: Collaboration

Marchionne passed away in 2018, but the spirit of FCA consolidation lives on. Notably, in the past few weeks, we have heard that both France’s PSA Groupe (Peugeot, Citroën, Opel, et al) and the Renault-Nissan-Mitsubishi alliance seems interested in acquiring FCA. Jeep and Ram are FCA’s two strongest and most profitable brands and are the top prizes here. At the same time, a merger or an alliance might help FCA improve its performance in Asia, especially in China where it is particularly weak.

But these two possible companies/alliances aren’t the only ones interested in FCA. Several years back the Volkswagen Group targeted Fiat Chrysler, but its overtures were rebuffed. More recently, Hyundai expressed its own interest in the company, but it wasn’t planning to make a move until after FCA’s share values fell.

Limited Agreement Auto Trends

While further consolidation seems likely, more limited agreements between competing manufacturers will continue to emerge.

One of the results of this kind of agreement brought the Toyota Supra back to the market. The Supra’s return comes thanks to an agreement between Toyota and BMW, as the former used the latter’s Z4 platform to build its sports car. Toyota has also worked with Subaru to produce its 86 sports car, and may continue that pact for a new generation model.

Toyota, thanks to its size and deep pockets, may yet avoid the entire alliance and consolidation trend. With stakes in Daihatsu, Suzuki, Subaru, and Mazda, the company can turn to its partners to supply vehicles it doesn’t have. Further, it may work with its associated companies to spread development costs as needed without ceding control.

See Also — 5 Reasons Why Volkswagen Fiat Chrysler Makes Sense