Ford Motor Company has invested $500 million into electric pick-up startup Rivian. What does this mean for themarket?

In news this week, there was a $500 million investment into Rivian by Ford Motor Company, with the primary deal being both companies working together to design and engineer an all-new, next-generation battery electric vehicle. The keyword there is vehicle. At this point, Ford has not confirmed that it will be assembling an electric bakkie.

“This strategic partnership marks another key milestone in our drive to accelerate the transition to sustainable mobility,” said RJ Scaringe, Rivian founder and CEO. “Ford has a long-standing commitment to sustainability, with Bill Ford being one of the industry's earliest advocates, and we are excited to use our technology to get more electric vehicles on the road.”"As we continue in our transformation of Ford with new forms of intelligent vehicles andpropulsion, this partnership with Rivian brings a fresh approach to both,” said Jim Hackett, Ford president and CEO. “At the same time, we believe Rivian can benefit from Ford’s industrial expertise and resources.”

Rivian's electric pickup platform has intrigued the motoring industry as a whole, and its launch products 5-seater R1T bakkie and 7-seater R1S SUV are looking very promising. With over 500 km of electric range, plus offroad capability, Rivian's offerings should hit the market towards the end of 2020.

It's a smart decision from Ford to partner up with Rivian. As part of its$11 billion EV investment and confirmation of 2 fully-electric vehicles, Ford can pay Rivian for access to the near-complete electric bakkie platform instead of having to develop its own, which could take between 2-5 years of research and development. Investing in a small startup has massive benefits. Not only will Rivian be agile, but they've already done the majority of the groundwork without being hamstrung by corporate management. Rivian simply does not have hurdles and hoops to jump through, and critical business decisions can be completed quickly.

Rivian will remain an independent company but will seeJoe Hinrichs, Ford’s president of Automotive, will join Rivian’s seven-member board.

Further Reading

The Problem With Building an Electric Bakkie

BMW's Electric Offensive Begins

Audi e-tron (2019) International Launch Review

Jaguar I-Pace (2019) Launch Review