Electric vehicle maker Rivian announced earlier this week that it will no longer pursue a deal with Mercedes-Benz to produce vans in Europe.
Upon making the announcement, Rivian’s share price dropped more than 6 per cent, adding to the company’s financial woes.
The two were destined to create a new EV facility in Central/Eastern Europe on one of Mercedes-Benz’ existing sites in order to manufacture and sell electric vans throughout the continent.
But even with Rivian out of the picture, the German carmaker still plans to manufacture the vans, according to the Associated Press.
As for Rivian’s decision to pull out of the deal, it likely lies with the newly-introduced Inflation Reduction Act in the US.
The Act is said to provide a tax credit for EVs that undergo final assembly within North America, making it a more attractive market to stay in.
That means Rivian can make more profit by staying local than if it were to manufacture and sell vehicles overseas.
However, Rivian still needs to overcome the crippling losses it has experienced this year. In the third quarter of 2022, it lost $1.7 billion ($NZ2.6 billion) and stated that it only had cash on hand for three years of operation.
Overall, Rivian’s shares have dropped by 75 per cent throughout 2022 with the latest announcement seemingly adding to the pain for the short- to long-term at least.