Upstart electric vehicle maker Rivian has secured a significant investment from Volkswagen, with the German automaker committing up to $5 billion to the partnership. This collaboration will also involve the formation of a joint venture to develop an automotive software platform based on Rivian technology. The move is expected to help Rivian reduce component and material costs, while also positioning the company to better compete with industry leader Tesla.
Following the announcement, Rivian’s shares surged by more than 50% in after-hours trading on the Nasdaq. Volkswagen Group CEO Oliver Blume revealed that the initial investment in Rivian is $1 billion, with the potential for further investments of up to $4 billion through 2026. The partnership between the two companies aims to achieve specific technical milestones, which could lead to additional investments in the future.
The backing from Volkswagen, along with support from Amazon – Rivian’s biggest investor and top buyer of its electric delivery trucks – is expected to help ensure the timely launch of Rivian’s upcoming products. This includes the midsize R2 electric SUV and compact R3 crossover. The new funds could also enable Rivian to resume construction of its Georgia plant, which was put on hold earlier this year as a cost-saving measure.
The 50-50 tech venture between Rivian and Volkswagen will focus on integrating infotainment, wireless connectivity, and autonomous driving functions. Rivian’s innovative hardware design and technology platform will serve as the foundation for the new software platform that the companies will develop together. Rivian’s founder and CEO, RJ Scaringe, emphasized the mutual benefits of the collaboration, highlighting the potential for cost savings and technology acceleration on both sides.
Volkswagen’s $1 billion investment in Rivian is being made through a convertible note offering. Additional investments of up to $2 billion in Rivian’s stock are planned for 2025 and 2026. The remaining $2 billion will come in the form of a cash payment when the joint venture company becomes operational, along with a loan in 2026. This significant partnership represents a major milestone for Rivian and positions the company for continued growth in the competitive electric vehicle market.
Overall, the collaboration between Rivian and Volkswagen is expected to drive innovation in the electric vehicle space and facilitate the development of advanced automotive software technology. By leveraging each other’s strengths and resources, both companies aim to achieve cost savings, accelerate technology development, and enhance their competitive position in the evolving automotive industry. The substantial investments from Volkswagen further validate Rivian’s potential as a key player in the electric vehicle market and highlight the increasing interest and support for sustainable transportation solutions.
