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Oct 3, 2019

Did Amazon just kick electric vehicle production into a higher gear?

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Electric vehicle maker Rivian hasn't produced a commercial vehicle yet. Now it's tasked with making 100,000.

The electric car revolution seems to finally be happening, and it’s not just going to be in personal cars. Last month, Amazon announced that it would order 100,000 electric delivery trucks from Rivian, an electric vehicle company. Amazon is an investor in Rivian, but, we should say, the company has produced exactly zero commercial electric vehicles to date.

Rivian has some time: Amazon said the first 10,000 vans would be on the road by 2022, the remainder by 2030. But the order would basically double the number of electric delivery vehicles in the world.

Stephanie Brinley, an automotive analyst at IHS Markit, said most people who’ve heard of Rivian are into electric luxury SUVs. The following is an edited transcript of our conversation.

Stephanie Brinley: Rivian has been around for about six years, give or take. They first introduced or revealed their pickup truck and SUV products at the Los Angeles Auto Show this last November, and they’re expecting to come to market in the next year or so. They’re looking to compete in sort of the high-end space — they want to take on the efforts from Range Rover and see that brand as a competitor for the utility vehicle, people who want to go a little bit off the beaten path.

Molly Wood: As you look ahead a decade or two or three, how much of this market could be filled by automakers that maybe didn’t exist a decade or two ago?

Brinley: It’s still a challenge to break in. Our forecast for electric vehicles in the United States in 2025, 2026, is still 7.6% of the market, which is an important improvement from just under 2% last year. But it’s still a small percentage of the market. I think consumers aren’t quite coming along as far. Because traditional automakers have come to bear on the segment pretty heavily, it will be difficult for a brand that consumers aren’t aware of to break through.

Wood: Does Amazon’s investment suggest that delivery fleets might actually be a new source of growth for EVs?

Brinley: I think the delivery fleets have been, for several years, a target in the commercial space. Amazon’s making a little bit of an interesting play here in tying it to their sustainability goals. So they may be willing to spend a little bit more on it. I don’t know the size of Amazon’s fleet at all, but I’m pretty sure it’s a lot bigger than 100,000 vehicles. So it’s still only a portion of their fleet overall. But I still think there’s a lot of opportunity in the commercial EV space. If you’re running an EV for a local delivery van, you’re usually not putting a ton of miles onto it in a day. If it’s a fleet you own and it’s going back at the end of the day to your own silos, you have the ability to have the charging infrastructure that you need and keep it off of fossil fuels. So that can be a benefit in a lot of different ways. Commercial vehicles, especially in those short city spaces, can be good opportunities for electric vehicles.

Related links: More insight from Molly Wood

There’s a good piece in Forbes on the size of Amazon’s investment in Rivian and one from Quartz about the impact on commercial EV fleets worldwide.

But there is an interesting subplot to the ramp-up in electric vehicles of all kinds: the grid. Greentech Media has a piece from last week about some key takeaways from this electric delivery van order. And one is that electric utilities really need to start preparing to deal with the increased load that’s coming from EVs. Because of different charging times and locations, it’s not like Amazon’s new vans are going to take down the grid or anything. But individual locations might run into capacity problems and the grid needs some improvements long term.

There’s good reading in Wired from last year about how what it calls the “Pluggening” is actually an opportunity to upgrade and strengthen our electrical infrastructure because we have plenty of time to see the revolution coming. Then again, infrastructure and planning: Are these really strong suits here in America? Well, let’s think positive.

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