Electric Vehicle Manufacturer Expects Recurring Revenue From Connected Services

Electric vehicle manufacturer Rivian says its vehicles will come with connected services that address the entire lifecycle of the vehicle, deepen its customer relationships and provide recurring monthly subscription revenues.

These services will include a fleet management platform for commercial vehicles and a suite of membership services for consumer vehicles, the company said Dec. 16 during its first earnings call as a public company.

“Both our consumer and commercial products are supported by a full suite of value-added services that address the entire vehicle life cycle and deepen our customer relationships,” Rivian CEO RJ Scaringe said during the call. “Starting with a clean sheet, we built a vertically integrated ecosystem comprised of our vehicle technology platform, cloud architecture, product development and operational capabilities, products and services.”

Designing Commercial Vehicles With Amazon 

Rivian raised $13.7 billion of gross proceeds with its initial public offering (IPO) in November. The company delivered its first pickup truck in September and its first sport utility vehicle in December. It will soon deliver its first commercial delivery van, the EDV, which was designed and engineered in collaboration with Amazon.

Amazon has ordered an initial volume of 100,000 EDVs globally, subject to modification. Every commercial vehicle sold to Amazon is complemented by FleetOS, Rivian’s proprietary fleet management platform that has a recurring monthly subscription fee.

“FleetOS, this fleet management platform that we are launching with the first vehicles that will be delivered with Amazon, and it’s going to be present with every vehicle that we sell, as a monthly recurring fee, it also applies to other use cases,” Jiten Behl, chief growth officer at Rivian, said during the call.

Rivian FleetOS is a proprietary management platform that helps optimize and automate fleet operations to help managers improve their total cost of ownership and maximize uptime. It features cloud-based tools that are accessible on multiple devices. The platform facilitates comprehensive oversight for routing, remote diagnostics, collision reports and helping to improve driver safety and coaching. It features tools and dashboards that offer insights about the health, performance, service, charging and utilization of fleets at any scale.

“The scalability of this fleet management platform, the flexibility, the modularity of this, provides us a lot of opportunities to grow the services side of the business on the commercial side,” Behl said. “So, that’s another unlock of value, long-term value that we’ve launched.”

Delivering a Basket of Features for Consumers 

A software and services offering for consumers called Rivian Membership comes with each of Rivian’s consumer vehicles. It is complimentary for the first year and has a monthly fee after that.

“That would represent a basket of features which will include but not be limited to charging, roadside and connectivity,” Behl said. “There will be other elements into that Membership offering that we are working on and curating and designing it diligently.”

There will also be other flavors of software subscription offered individually or in bundles, he added.

“We have seen strong uptakes in regards to our insurance and financing for the vehicle as well,” Chief Financial Officer Claire Rauh McDonough said during the call. “Given the really seamless experience — you can go through our transactions to delivery process in a matter of minutes — the ease of use and simplification of that process has really shown through from a take rate perspective, especially on those two leading edge features that are part of that initial transaction as well.”