US automaker Rivian could eventually outperform Tesla as a manufacturer of electric vehicles after Amazon placed an order for 100,000 electric vans to deliver goods to consumers.

The CEO of Amazon, Jeff Bezos, has previously invested in electric vehicle (EV) manufacture, in February 2019, when Rivian received $700m in a Bezos-led funding round, and in April when Ford pumped in $500m.

Amazon’s EV order will also help the online retailer become a carbon-free company by 2040.

The backing of the world’s most valuable e-commerce company gives Rivian a significantly advantageous position in the electric delivery vehicle market. Tesla, the current leading manufacturer of commercial delivery EVs, has so far relied on relatively small pre-orders of the Tesla Semi. In 2018, UPS completed the largest order of the Tesla Semi, reserving 125 trucks. Tesla recorded deliveries of 95,356 vehicles in Q2 2019, however, this includes all vehicle types.

While this bulk order puts Rivian far ahead of the competition in the delivery van market space, to remain competitive Rivian will need to attract future orders – Rivian will be hoping other buyers will be encouraged by Amazon’s endorsement. Rivian will not begin delivering vehicles until 2021 and plans to fulfil the Amazon order by 2024.

Rivian produces high-performance SUV in a direct challenge to Tesla

The R1S SUV is capable of competing with Tesla’s SUV range given its ability to cover longer distances, with a range of over 400 miles compared to 336 miles for the Tesla Model Y. The Rivian SUV also has greater acceleration, achieving 0mph to 60mph in three seconds, half a second faster than the Model Y.

The higher performance RS1 may take business away from Tesla and other EV manufacturers.

One downside to the Rivian vehicles is cost. With improved performance comes a price tag of $72,500, before the federal tax rebate for the RS1, or $69,000 before the Federal Tax rebate for Rivian’s R1T (electric pick-up truck).

The cost of EVs continues to be a major factor for why these cars have not realised their anticipated uptake, and in the case of Rivian, the price tag of its SUV is significantly more than Tesla’s Model Y.

Despite having produced a high-performance electric delivery vehicle to rival Telsa and earned a substantial order from global online retailer Amazon, Rivian may find it hard to compete in the EV market before prices are lowered through improved economies of scale.

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