Amazon posted a $3.9 billion loss from Rivian’s holding company in the second quarter

Amazons share in electric vehicle manufacturer Rivian Automotive was once worth $27 billion. It was in November, shortly after Rivian IPOwhich occurred shortly before the Nasdaq peak.

But as investors backed off in 2022 and sold off last year’s expensive IPOs, Amazon has now suffered paper losses on its stake in Rivian totaling $11.5 billion in the first two quarters during which Rivian lost three-quarters of its cost. .

Amazon said in its second-quarter earnings report on Thursday that it recorded a $3.9 billion loss on its Rivian holdings over the period. The report comes in a day Fordwho is also one of Rivian’s main backers, took over $2.4 billion write-offs between markets.

Amazon’s investment is now around $5 billion.

Rivian CEO RJ Scaringe and Amazon CEO Andy Jassi inspect one of the company’s electric vans.

Amazon

The markdowns do not affect Amazon’s operations or cash position, but simply reflect massive market fluctuations since the end of last year. The investment could become problematic if Rivian’s nascent business runs into difficulties or runs out of cash, preventing the company from producing delivery vehicles at the rate it promised Amazon.

Amazon said Last week, the company began rolling out some electric delivery vans co-developed with Rivian. Amazon said it plans to have thousands of Rivian vans in more than 100 cities by the end of this year, the first step towards its goal of having 100,000 electric delivery vehicles on U.S. roads by 2030.

Rivian, which reports for the quarter in August. 11 has struggled to meet the production targets of its R1T and R1S electric vehicles, which are more consumer-oriented. Company halve its production forecast for 2022 only up to 25,000 vehicles in March, including Amazon vans, as the company faces supply chain restrictions and problems with its assembly line.

However, optimism recovered somewhat in the third quarter. Shares are up about 29% since the end of June. On Wednesday, he got an extra boost after Senate Majority Leader Chuck Schumer, DN.Y., and the senator. Joe Manchin, DW.V., said they reached a deal about what would be most ambitious climate spending package in US history.

The Inflation Reduction Act of 2022 provides $369 billion for clean energy. Rivian has risen in price by about 3%, joining the broader growth of shares of solar and alternative energy.

WATCH: First look at Amazon and Rivian electric delivery vans