Bloomberg – Automotive firms Mercedes-Benz AG (MBG) and Rivian Automotive Inc. (RIVN) announced on Thursday that they Plans to jointly build electric vans in Europe to share rising production costs of battery-powered vehicles,
Mercedes and Rivian aim to invest in and operate a new assembly plant at an existing Mercedes facility in Central or Eastern Europe.companies said.
“We will benefit greatly from this joint venture,” Mathias Geisen, Mercedes’ van business head, told reporters.
Given the restructuring of factories and the revision of model lines to catch up, automakers are increasingly looking to share the cost of developing and manufacturing electric vehicles. With Tesla Inc. (TSLA). The alliance unites Rivian, one of the world’s most experienced automakers, with Amazon.com Inc. (AMZN) and Ford Motor Co. (F) is counted among its largest shareholders.
Rivian shares rose 15% to $38.30 before regular trading resumes, Mercedes is down 3.2% in Frankfurt.
The Mercedes plant in Kekskemet, Hungary is likely to be on the list of candidates for the joint factory., The plant, which opened in 2012, currently manufactures entry-level Mercedes-Benz vehicles such as the A-Class, B-Class and C-Class models. The manufacturer plans to reduce production of this type of vehicle as part of its strategy to switch to higher-end models.,
After its successful debut in late 2021, Rivian has had production problems, high costs and economic instability., The company briefly halted work at its Normal, Illinois, plant at the beginning of the year to make improvements and process improvements to help ramp up production.
Persistent supply chain issues and high raw material expenses have disrupted operations, causing Rivian to cut its full-year earnings expectations recently. Last month it said increasing production remains its main goal, although supply chain constraints would be a limiting factor., Rivian shares have fallen 68 per cent this year.
Although the companies say the association will create significant cost synergies, they did not disclose investment figures or detailed timelines, except that the factory will produce the trucks “for a few years.” According to a Bloomberg report, Rivian has been studying alternatives to manufacturing hubs in Europe since early last year.,
Mercedes delivered just 334,000 vans in 2021. Rivian, which makes R1T pickups and R1S sport utility vehicles with electric delivery vans, expects to make 25,000 electric vehicles this year.,
Mercedes has also said it plans to optimize its European production network of large trucks as cost pressures from building battery-powered vehicles undermine competitiveness., In this way, an established plant in the Mercedes production network in Eastern Europe (where production costs are low) will become part of the van manufacturing operations. According to a separate statement, the plan will be discussed soon between management and employee representatives in Germany.
In the middle of this decade, all The new Mercedes van models, including the mid-sized and small ones, will be exclusively electricDepends on the company.
With the assistance of Richard Clough.
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