Volkswagen and Rivian have announced a joint venture that will bring Rivian’s EV software expertise to VW’s product lineup. The $5 billion deal has provided a lifeline to Rivian, which has faced major financial problems this year.
Electrek reports that the partnership between VW and Rivian marks a significant move in the industry’s attempted transition to EVs. VW has committed to an initial investment of $1 billion in Rivian, with the potential to increase this figure to $5 billion by 2026. This strategic alliance aims to combine Rivian’s software prowess with VW’s manufacturing scale and global reach, creating a formidable force in the EV market.
For Rivian, a troubled electric vehicle manufacturer, this partnership comes at a crucial time. The company has been desperately attempting to reduce costs and achieve profitability, recently announcing the delay of its Georgia plant construction to save over $2 billion in the short term. The influx of capital from VW will provide Rivian with much-needed financial stability as it pushes forward with the development and production of its upcoming R2 vehicle.
VW, on the other hand, stands to gain significantly from Rivian’s software expertise, an area the German automaker has faced challenges in. By partnering with Rivian, VW aims to enhance its technological profile and competitiveness in the rapidly evolving EV market. Of course, making moves in the allegedly green EV market is also good PR for VW in the wake of the infamous “Dieselgate” scandal.
Rivian faced major financial issues earlier this year, Breitbart News reported in February:
…shares of electric vehicle makers Rivian and Lucid plunged on Thursday following disappointing fourth-quarter earnings reports released after markets closed on Wednesday. Rivian stock sank around 25 percent, while Lucid shares dropped nearly 17 percent.
Both companies cited stagnant production numbers and “existing economic and geopolitical uncertainties” as factors impacting results. Rivian forecasts production of 57,000 vehicles in 2024 — about the same as the 57,232 vehicles manufactured in 2023. Meanwhile, Lucid predicts production of 9,000 vehicles this year, a mere seven percent increase over 2022 levels.
Additionally, Breitbart News reported that Rivian lost $33,000 for every electric pickup truck it sold.
Oliver Blume, CEO of Volkswagen Group, emphasized the benefits of this collaboration, stating, “Our customers benefit from the targeted partnership with Rivian to create a leading technology architecture. Through our cooperation, we will bring the best solutions to our vehicles faster and at lower cost.”
The partnership will begin with VW offering a $1 billion convertible note to Rivian, which will convert into an equity holding around the end of this year. Additionally, the two companies will establish a 50/50 joint venture focused on developing next-generation electrical and electronic architecture. This arrangement will give VW immediate access to Rivian’s advanced electronics architecture, widely regarded as one of the company’s major strengths.
RJ Scaringe, Founder and CEO of Rivian, expressed enthusiasm about the partnership, saying, “Not only is this partnership expected to bring our software and associated zonal architecture to an even broader market through Volkswagen Group’s global reach, but this partnership also is expected to help secure our capital needs for substantial growth.”
The announcement has already had a significant impact on Rivian’s stock, with RIVN trading up more than 40 percent in after-hours trading. This surge follows an eight percent rise during the day’s trading session, prompted by an analyst upgrade.
As part of the agreement, VW has committed to investing an additional $4 billion into Rivian, to be delivered in $1 billion tranches in 2025 and 2026, contingent on Rivian meeting certain milestones. This phased investment approach demonstrates VW’s confidence in Rivian’s potential while also ensuring that the young EV maker continues to meet key performance indicators.
Read more at Electrek here.
Lucas Nolan is a reporter for Breitbart News covering issues of free speech and online censorship.
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