The Volkswagen Group announced its intention yesterday to invest up to $5 billion in U.S. EV maker Rivian. This investment marks the start of a new joint venture equally controlled by the two automakers.
The aim is to share electric vehicle architectures and software.
Investment details
Volkswagen's initial investment will be $1 billion, followed by a further $4 billion. Both companies aim to launch vehicles benefiting from this joint venture before 2030, while continuing their production operations independently. In the short term, Volkswagen will be able to use Rivian's electric and software platforms to accelerate the development of its own all-electric products.
Rivian president RJ Scaringe expressed his enthusiasm about the partnership via a statement, which noted that “Since Rivian's earliest days, we've focused on developing highly differentiated technologies, and it's exciting that one of the world's largest and most respected automotive companies has recognized this.”
According to Scaringe, the partnership will not only extend the reach of Rivian's software and architecture through Volkswagen's global presence, but also secure Rivian's capital requirements for substantial growth.
Implications for Rivian
The partnership with Volkswagen is crucial for Rivian, which currently has two models on the market, the R1S SUV and R1T pickup truck. The investment will provide the fledgling company with the funds it needs to produce its next model. The R2 SUV will be smaller and more affordable and is set to launch for 2026.
With this partnership, meeting that timetable becomes increasingly possible and realistic.
Following the announcement of the agreement, Rivian shares jumped 30 percent on the Nasdaq Extended Market, increasing the company's capitalization by over $3 billion.
Benefits for Volkswagen
Volkswagen CEO Oliver Blum emphasized that the partnership will create a cutting-edge technology architecture. "Thanks to our cooperation, we will bring the best solutions to our vehicles faster and at lower cost."
The partnership is interesting because it really combines the strengths of both companies. New manufacturers looking to break into the electric vehicle market face difficult access to cash. The arrival of Volkswagen in the equation greatly helps Rivian's situation, and as we've seen, the German giant will benefit from the technologies developed by Rivian.
We certainly haven't heard the last of this partnership, which should result in some interesting products for both companies. And, in the end, it's the consumer who wins from enjoying more choice.