Amazon’s $21 billion Rivian stake is a bet that innovation can help solve climate change

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  • Amazon’s big bet on Rivian paid off this week when the electric vehicle start-up made an explosive debut in the public markets.
  • Beyond Rivian, Amazon has invested in other start-ups developing technologies that can help advance its goals of decarbonization.

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Amazon’s big bet on Rivian Automotive paid off this week when the electric vehicle start-up made an explosive debut in the public markets.

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Rivian raised about $12 billion in the giant offering and has a higher valuation of over $110 billion than auto giants GM and Ford. The IPO resulted in a massive windfall for Amazon, which invested more than $1.3 billion in Rivian. Amazon’s 20% stake in the business is now worth more than $21 billion.

Rivian’s IPO was a huge success for Amazon financially. It’s also key to one of the company’s most challenging mandates – to cut the amount of damage it causes to the environment.

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Amazon has long been criticized for not moving fast enough to address its environmental footprint. More than 1,000 Amazon employees walked out in 2019 to urge them to do more to tackle climate change, after thousands of employees submitted a shareholder resolution signed by them.

In 2019, Amazon founder and executive chairman Jeff Bezos took the stage to unveil a comprehensive plan to change the company’s climate policies and vowed that Amazon would be carbon neutral by 2040. He also announced that Amazon is placing orders for 100,000 electric last-miles. Delivery vans will be delivered from Rivian by 2030. Amazon expects 10,000 of them to be on the road early next year.

Those goals are largely at odds with the current reality of Amazon. As the country’s largest online retailer, Amazon distributes over 10 billion Items annually around the world using an extensive network of gas-guzzling planes, vans, trucks and ships. It has brought much of its transportation operations in-house and is dotted with warehouses in the country to expedite delivery from two days to a day and, in some cases, within hours of the order being placed.

Bezos has previously said that same-day or one-day deliveries could reduce emissions by reducing reliance on planes, while locating warehouses closer to customers means delivery vans can make shorter trips when dropping packages. Washington Post,

Transportation remains the largest source of climate pollution in the US, accounting for 29% of the nation’s total greenhouse gas emissions. Environmental Protection Agency,

Last year, as the e-commerce giant’s business suffered a pandemic-fueled blow, so did its carbon emissions, which climbed 19%. In 2020, emissions per dollar of goods fell by 16%.

For Amazon to make progress on its decarbonization efforts, it must continue to invest in and implement new transportation technologies. One way it’s already doing this is through the $2 billion Climate Pledge Fund, which the Amazon start-up uses to invest in developing technology that can help advance its climate goals.

Amazon’s acquisition of Zoox last year represents another bet on electrification, worth more than $1 billion. Zoox has created a fully electric, fully autonomous vehicle designed for ride hailing.

The company has been testing prototypes of its self-driving vehicle in San Francisco and California, Foster City in Las Vegas and last month in Seattle. The company has also set up an office in Seattle, although Zoox and Amazon still continue to operate separately.

In the future, both Rivian Vans and Zoox’s self-driving vehicles could fit into Amazon’s vast logistics network, making the process of delivering and delivering goods cheaper, faster, and more environmentally friendly.

But Zoox doesn’t necessarily have to be powered by electricity, said Bilal Zuberi, partner at Lux Capital.

“They may have a vehicle with a combustible engine or it may even be an electric vehicle,” Juberi said. He said Amazon’s primary strategy behind investing in Rivian was to “stay ahead and have a piece” of the oncoming wave of electric vehicles.

It is not clear whether autonomous vehicles have a meaningful environmental impact. Proponents of the technology say self-driving cars will ease traffic congestion and facilitate the development of ride-sharing services, which could mean fewer trips in their cars. Others have argued that self-driving cars could lead to more people using automobiles, creating more pollution.

Amazon has made other weighty bets in autonomous vehicles. In 2019 the company invested in self-driving car start-up Aurora as part of a $530 million funding round.

Earlier this year, Amazon placed an order For 1,000 autonomous driving systems from self-driving truck start-up Plus, it was given the option to buy a 20% stake in Plus, as part of the deal. It has also carried out trials on self-driving trucks made by Embark.

,[Amazon] “It’s looking like we’re in the early innings of a multi-decade transformation in mobility and autonomy is going to be a big part of that, as is electric,” said Asad Hussain, senior mobility analyst at financial data company PitchBook. So I think Amazon is hedging their bets on all this innovation and making sure they’re getting exposure in areas where they can, maybe in the future, that will help their core businesses.

Amazon has also developed its Scout delivery robot, a small six-wheeled electric vehicle. And it’s adding more micro-mobility delivery options like electric cargo delivery bikes in increasingly dense, urban areas.

Amazon’s interest in decarbonization isn’t limited to its transportation systems on the ground.

In May, Amazon’s Climate Pledge Fund invested in Beta Technologies, which is building an electric plane, as part of a $368 million funding round. Amazon has also supported the growth of start-ups. hydrogen powered aircraft And net-zero carbon diesel and jet fuel,

Amazon, which has a massive ocean shipping operation, last month agreed to switch to a zero-carbon fuel for sea freight by 2040.


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