Rivian's van strategy is flawed says Ford CEO Jim Farley

[SANZC02]

Ford has been doing delivery vans for almost a century. Farley isn't totally off base. The thing here is that Amazon didn't just commit to buying vans but became a major investor. Rivian has recently seen that the 10000 van committment has some downsides so they're looking to renegotiate the deal with Amazon. I haven't heard if there were any changes there.

The size of the vans could be an issue (they're huge) but I think the R2 Platform offers opportunities for smaller sized vans.

Anyways, opinions are like (you know what) everyone has one. That said, Farley does have a cousin that lived in a van down by the river. So maybe he knows a thing or two.

I think the EDV500 is a good size step in van for trades, pretty close to the Sprinter and the Ram vans. I think there will be a decent market for these outside of last mile deliveries.

What better way to get these designed and built is there than partnering with a deep pocket and a confirmed volume.

Not saying Farley does not know what he is talking about but sometimes people have a hard time understanding there are many possible ways to accomplish a goal.

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[SANZC02]

With the limited range of EV vans (150 miles or so), they're better suited to fixed route delivery than anything else. I'm sure that some small businesses can make it work, but it's not as easy. Whereas Amazon has plenty of space in it's warehouses to install banks of chargers

I suspect it would not be hard to increase the range for these vans that is the number Amazon called out. Using LFP they can charge to 100% daily and have more duty cycles so well suited for commercial use. Then you have to figure a lot of trades do not want to be on the road more than 150 miles a day as it is lost production for them.

 

[iansriv]

Love it when one CEO tells another that he's got it all wrong. I focus on what I can do better so should he.

 

[foxerson]

Sounds like an experienced CEO throwing shade at the upstart and deflecting attention from their own problems. Farley has to do all he can to cut down Rivian before it generates enough momentum to become a serious threat.

 

[Zorg]

I suspect it would not be hard to increase the range for these vans that is the number Amazon called out. Using LFP they can charge to 100% daily and have more duty cycles so well suited for commercial use. Then you have to figure a lot of trades do not want to be on the road more than 150 miles a day as it is lost production for them.

Let's just say that it limits the addressable market somewhat. I have no idea by how much though.

 

[SeaGeo]

I think Farley is doing an overall excellent job, and I get his point. At the same time, as others have noted, Amazon is also an actual partner for Rivian and a relative source of certainty with what I suspect is less overall customer overhead than thousands of small business customers. I'm sure Rivian will love selling to those additional customers in the future.

However (time for some shade) Ford's inability to recognize untapped demand for the a small pickup (the Maverick), and more specifically the Mach e and Lightning doesn't give me warm and fuzzies for their assessment of the markets.

 

[kizamybute']

No brainer. One customer, regardless of how large of a company they are, guarantees 100,000 orders over 10 years or open market to any and all customers that could result in millions upon millions of sales. Duh. I think it was Amazon that told Rivian this what they're going to do rather than Rivian having a choice regarding what they're going to do. I know a few months ago, Rivian tried to make an agreement to get out of the exclusivity portion of the agreement with Amazon, but haven't heard whatever came of that? Amazon saved Rivian, so I guess that's something. Hopefully there's an end date to the contract that some day, they can start to sell vans elsewhere. Huge money making potential.

 

[av8or]

I didn’t read through the whole thread, but this sounds like Farley is just puffing out his chest. So he thinks that the Joe plumbers of the country are going to be better customers? I have a guy in my kitchen painting cabinets as I type this, he’s driving a 20 year old van! Fleets turnover vehicles on a regular and prescribed basis, and mom and pops run them until they’re useless. Then often they buy another used one from fleets. Not sure how they’re doing it now, but when I was there FedEx had it down to a science. Often vehicles were sold still in warranty.

Another thing, Having new and interesting Amazon vans running around every neighborhood is going to create a lot more buzz and interest than a plumber showing up in just another econoline van.

I wish Ford and Farley the best…..they have a huge hill to climb, and I definitely don’t want to lose any more American car companies.

 

[Operator]

I dunno, selling to plumbers could be risky. Truck could end up in ISIS hands in Syria. Happened to Ford and mark-1 plumbing.

 

[Donald Stanfield]

Sounds like an experienced CEO throwing shade at the upstart and deflecting attention from their own problems. Farley has to do all he can to cut down Rivian before it generates enough momentum to become a serious threat.

I think he's probably too late. Rivian has an interesting product and it's for sure a viable truck that can be used effectively by many Ford customers. Not everyone who buys a truck uses it to its fullest working capacity and most are mall crawlers with the occasional trip to Home Depot. Rivian works great for that and as a short range toy hauler as well.

 

[tylerdurden03]

He's not wrong necessarily. It is higher risk to have 1 huge customer vs thousands of smaller customers. Still I highly doubt Farley would turn down a deal with UPS/ FedEx/ Amazon. So Ford started with the smaller vans and moved up. Rivian is doing it in the opposite direction. No difference if you sell a bunch of vans.

Ford’s strategy is less risky than Rivian. It’s simply a higher risk strategy betting it all on one customer. Maybe it will turn out for Rivian but the Ford CEO is undeniably right from a risk/reward point of view.

 

[Longreach]

I dunno, selling to plumbers could be risky. Truck could end up in ISIS hands in Syria. Happened to Ford and mark-1 plumbing.

And that is why one should always remove your company livery before selling a vehicle! Just like the police remove their decals before selling cruisers so people don’t pretend to be cops (well, some nutters probably still try, but at least they're forced to make fake decals).

 

[Count Orlok]

Or you could live in the parking lot of the body shop while waiting for repairs.

too soon man... too soon.

 

[clcbjc123]

but RJ already knows that.

Sums it up.

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