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Amazon makes the largest purchase of electric vehicles ever

Amazon's Jeff Bezos is investing heavily in the startup Rivian Automotive by placing the largest ever purchase order for electric vehicles in vehicle history.

The Michigan-based startup will build and deliver 100,000 electric vans to Amazon over the next decade. The first 10,000 start hitting roads in 2021 and complete delivery next year, with all 100,000 EVs operating in Amazon's 2030 fleet.

Bezos announced the Rivian deal at an event Thursday at the National Press Club in Washington, DC, with a speech focused on climate change. The 100,000-unit fleet will eliminate 4 million tonnes of carbon dioxide emissions when fully operational, he said.

It also fits nicely into Amazon's movement to become the leading urban delivery company in the market ̵

1; hitting UPS and Fedex for mail and product deliveries overnight – with much of it coming from Amazon's growing inventory network. Amazon is researching drone delivery along with EVs to help seal its dominant delivery presence and image as a global leader.

Amazon expects that electrified transportation will eventually become significant as the government's emissions mandate increases. It also makes sense for Amazon to consider integrating EVs and its autonomous vehicles – which experts predict will be an inevitable merger for best-serving urban markets and meeting mandates.

The vehicle purchase price and total expenses were not disclosed, but the deal will be separated from the $ 700 million loan Amazon made in February. Related: Oilfield Services More Bullish After the Oil Price Jump

Amazon said it was inspired to make $ 700 million investment from the electric pickup and SUV that the company unveiled in November at the Los Angeles Auto Show. Rivian had no customers then, but impressed visitors with elegant prototypes of the electric seven-passenger RS1 SUV and four-passenger RT1 pickup – with what the company claims will be a 400-mile-plus range.

Investors have been impressed by their robust, longer-range EVs that can go off-road, carry cargo and withstand wear and tear. Another competitive advantage has turned Tesla to the commercial side of the business.

Rivian had originally looked like a losing cause as General Motors withdrew from its mission to beat Tesla into the commercial EV market. Then came Ford's $ 500 million stake and Amazon's support.

Earlier this month, the company received a $ 350 million investment from Atlanta-based Cox Automotive. A division of cable TV giant Cox Enterprises, the automotive division in recent years has secured its dominant position in automotive services through the acquisition of Kelley Blue Book, Autotrader.com and NextGear Capital. The division had already owned Manheim Auctions, the largest car auction chain in the US.

Investing significantly in Rivian shows that the Cox conglomerate has a lot of confidence that their commercial EVs are starting to launch.

Investors expect Rivian to learn from Tesla's mistakes, which have been hit by the fact that the three Tesla models do not share many common parts. Rivian's vehicle lineup will share the most expensive parts and components, including the battery pack and powertrain.

Opening a facility that can produce several EV models in the company's early phase will offer the startup the capital it needs, says Sam Abuelsamid, principal analyst at Ann Arbor, Mich-based Navigant Research. Amazon's EVs will share many of these parts in battery, powertrains, electrical components and connectivity – but some of the interior and exterior are designed specifically for Amazon. Related: Saudi Aramco: We Never Asked Iraq for Extra Oil

"It's a real vote of confidence from Amazon," Abuelsamid said. "Buying early vehicles would be an indicator for other companies considering electrifying their fleet that Rivian is a company they need to take a look at if they will do so. Amazon does not make such a decision." [19659002] The vans will be manufactured at Rivian's production facility in Normal, Ill. They will be built alongside the Rivian SUVs and pickups the company plans to build in a former Mitsubishi facility.

Mitsubishi was able to produce up to 250,000 vehicles annually from its factory. Rivian is expected to reach 100,000 units per year between Amazon, and its pickups and SUVs, during the early marketing years.

Rivian and Ford are planning on an unnamed EV that the companies will partner with, which can also be built at the Illinois plant.

Ford intends to develop a new EV with Rivian's flexible "skateboard" platform. The chassis has a thin, flat battery that forms a tire and motor for each wheel. It is also connected to the suspension, brakes and a cooling system.

Rivian will be part of Ford's $ 11 billion EV investment. Two of these other all-electric vehicles have been confirmed: a Mustang-inspired crossover coming in 2020 and a zero-emission version of the top-selling F-150 pickup.

By John LeSage for Oilprice.com

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