Amazon disclosed on Friday that it owns a 20% stake in Rivian, and the electric car manufacturer applied for an IPO earlier this month. According to the document,As of September 30, the e-commerce giant held equity investments, including Rivian’s preferred stock, which together accounted for approximately 20% of the ownership. The “book value” of the investment was US$3.8 billion, higher than the US$2.7 billion as of December 31, 2020.
This disclosure in the regulatory document provides new insights into how close Rivian’s future relationship with Amazon is. According to the electric vehicle manufacturer’s initial public offering, Amazon has invested $1.345 billion in Rivian. Amazon also recently purchased Rivian’s convertible notes worth $490 million. According to certain pricing regulations, these notes will be converted into Class A shares after listing.
Amazon is not only an investor in Rivian, it is also a customer. In September 2019, Rivian signed an agreement with Amazon to produce 100,000 electric delivery vehicles. Rivian disclosed earlier this month that it expects to deliver at least 10 vehicles in December 2021. All trucks (the remaining 99,990) will be delivered by 2025.
When Rivian’s IPO documents were first published, it was clear that Amazon was an important part of the “Rivian Universe.” For example, in Rivian’s S-1 document, Amazon is mentioned in as many as 81 places. Because of Amazon’s dual identity as an investor and customer, this number is not particularly surprising. At the time, Amazon seemed to have at least 5% of Rivian’s shares, and now Amazon’s disclosure of information shows that its share of shares is much larger.
The company’s close connection with Amazon is both a benefit and a risk. Because the risk factors section of S-1 in the latest document disclosed by Rivian has the following description:
We expect that a large part of our initial revenue will come from a customer who is an affiliate of one of our major shareholders. If we cannot maintain this relationship, or if this customer purchases far fewer vehicles than we currently anticipate, or none at all, our business, prospects, financial condition, operating results and cash flow may be materially and adversely affected.