Rivian just added almost $3 billion to its market capitalization in a day, and all it took was a fairly bare-bones deal with a potential rival.
The upstart EV pickup, SUV and van maker and Mercedes-Benz will join forces to build big electric vans in Europe "in a few years," the two revealed Thursday, sending Rivian shares soaring 11 percent, their biggest jump in four months. Thin as the announcement was on detail, it sent an obvious signal. Yes, this young plug-in hybrid pickup maker is having trouble ramping up production, but one of the most storied manufacturers in the world still sees real potential.
A friendship with a competitor is nothing new for Rivian. One of the reasons investors were so high on the company when it was preparing to go public a year ago was the way GM and Ford raced one another to strike a strategic partnership with the up-and-comer around the time it was in the process of securing major backing from Amazon. One of Ford’s senior-most executives at the time later bragged about "stealing" a promising investment from its Detroit-based nemesis at the 11th hour.
There is another "blast from the past" element to this from Mercedes' perspective, as Baird analyst Ben Kallo put it in a note to clients Friday. Daimler played a critical role in helping Tesla get off the ground by acquiring a stake during the great financial crisis and buying drivetrains from the company to power Mercedes hatchbacks. Elon Musk has described that deal as fundamental to Tesla surviving its early struggles.
There is a lot left to unpack about this new tie-up — how and why it came together, what it means and who wins and loses. Here are a few thoughts and questions to ponder: