On May 6, reports indicated that Apple (NASDAQ:AAPL) was exploring a potential partnership with a US electric vehicle (EV) company. With operations based solely in the United States, Rivien (NASDAQ:RIVN) naturally rose to the top of the list as a potential candidate.
Details of the collaboration remain unclear and nothing more than rumors at this point, but if it ultimately comes to fruition, it could result in significant benefits for each company. Here’s why Apple needs Rivian, Rivian needs Apple, and what a future partnership could look like.
Opportunity at your fingertips
For years, Apple has flirted with the idea of ​​building its own electric vehicle (EV). However, after investing $10 billion over the past decade and facing multiple failed attempts, it decided to abandon its plans in early 2024.
However, with the evolution of cars towards sophisticated computers on wheels, Apple sees an opportunity to diversify its ecosystem and exploit new sources of revenue. By partnering with a newcomer with a recognizable brand like Rivienit could leverage its expertise in electric vehicle technology and accelerate its entry into the automotive space.
For Rivian, a partnership with Apple could not come at a better time. The company finds itself in a precarious financial situation, losing money as it struggles to establish itself in the highly competitive electric vehicle market.
While it’s not uncommon for electric vehicle startups to face profitability issues in their early stages, Rivian’s path to profitability appears daunting. Expenses continue to rise and its cash flow has declined by 60% over the past three years. In the first quarter, the company was losing more than $38,000 per car.
With Apple, Rivian could get a boost in a number of ways. Brand recognition would be evident (Apple is one of the most recognized companies in the world), as well as expertise in developing some of the most sophisticated and popular devices on the market. Putting this technology to work in a vehicle could open up unprecedented new opportunities.
Potential partnership dynamics
There are clear benefits if these two companies join forces. But what would this look like in practice? A collaboration between Rivian and Apple could take various forms.
The most apparent possibility is a joint research and development effort to advance autonomous driving technology. Rivian has made notable progress in this area with its Driver+ software, but it still requires driver attention.
This is where Apple could step in. With its deep pockets and technological prowess, the company could pave the way for groundbreaking innovations in autonomous driving and accelerate progress toward the coveted Level 4 or 5 autonomy, at which point drivers are no longer needed .
The compatibility of the two companies is clear from the simple fact that Rivian has the hardware: the infrastructure and supply chain already in place to mass produce vehicles. In the absence of hardware, Apple would be the software developer.
This type of arrangement has proven effective for several products. For example, SamsungSmartphones are integrated with the Android operating system Alphabet.
For fun, let’s speculate on the results if this partnership comes to fruition. An electric vehicle equipped with cutting-edge technology jointly developed by Rivian and Apple would have advanced autonomous driving capabilities, powered by Rivian’s proprietary software stack that benefits from Apple’s expertise in machine learning algorithms .
Additionally, drivers would benefit from a cutting-edge infotainment system integrated with the Apple ecosystem, offering unparalleled connectivity and convenience.
Things to keep in mind
Rumors of a partnership between Rivian and Apple are intriguing, and Rivian CEO RJ Scaringe wasn’t shy about discussing its potential during the last earnings call. But it is essential to remember that these are still only rumors. Such speculation alone does not necessarily justify an investment in either company.
Investors should continue to evaluate Rivian and Apple as separate entities, considering their individual strengths, weaknesses and market dynamics. However, it is crucial to closely monitor developments related to this potential partnership, particularly for Rivian. A collaboration with Apple could represent the outlet Rivian needs to address its financial challenges and secure its position in the rapidly evolving electric vehicle market.
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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. RJ Fulton has no position in any of the stocks mentioned. The Motley Fool holds positions and recommends Alphabet and Apple. The Motley Fool has a disclosure policy.
Beyond the Road: Exploring the Impact of a Potential Rivian-Apple Collaboration was originally published by The Motley Fool
