Amazon’s $700 million investment in electric OEM Rivian is a potential step by the retail giant to launch a mobility service that would supplement its delivery platform, said Grayson Brulte, a consultant with Brulte & Co. “I think it’s limitless where Amazon takes it,” Brulte told Auto Finance News. “There’s a lot of money to be made in niches. Do they bundle a mobility service with [Amazon] Prime? So now they’re moving individuals and goods at the same time, and the cost of delivery rapidly plummets. And the rides for the individual go down, as well, because it’s subsidizing the ride.”
It remains unclear as to how Rivian — which declined to comment — plans to finance its new fleet of vehicles to would-be consumers. Brulte noted that Amazon’s vast reach in the global market puts the company in a good position to fill that need. “Amazon can borrow money very cheaply. [The company] has an incredible ability to underwrite, if they so choose, or to partner with a bank — a Goldman Sachs or Bank of America — to underwrite at a very low percentage,” he said.
Besides, Amazon is already making loans to small businesses. “It’s not out of their wheelhouse,” Brulte said. “If you look at Amazon’s small business program, some of those loans are $35,000, $40,000, $50,000. That’s a comparable rate to a vehicle, similar metrics.”
A question mark in the equation is whether Amazon would launch a mobility service or an autonomous mobility service, given that it invested in self-driving technology platform Aurora earlier this month. “You’re looking at a $250,000 to $400,000 underwriting,” he said. “Amazon has the balance sheet and the cash flow, which provides the company with the ability to borrow [money] to underwrite that.”
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