Volkswagen and Rivian announced a joint venture that will bring Rivian’s EV software expertise to Volkswagen’s product lineup. The $5 billion deal is a lifeline for Rivian, which has faced major financial difficulties this year.
Electrek Reports The VW-Rivian partnership marks a major step in the industry’s transition to EVs: VW has committed an initial investment of $1 billion in Rivian, which could grow to $5 billion by 2026. The strategic alliance aims to combine Rivian’s software prowess with VW’s manufacturing scale and global reach to create a formidable force in the EV market.
The deal comes at a critical time for the struggling electric-vehicle maker, which is scrambling to cut costs and ensure profitability and recently announced it would delay construction of a Georgia factory to save more than $2 billion in the short term. The infusion of capital from VW will give Rivian much-needed financial stability as it moves forward with development and production of its upcoming R2 vehicle.
Meanwhile, VW stands to benefit greatly from Rivian’s software expertise, an area where the German automaker has faced challenges. By partnering with Rivian, VW aims to strengthen its technology profile and competitiveness in the rapidly evolving EV market. Of course, following the infamous “Dieselgate” scandal, a foray into the supposedly green EV market would also be good PR for VW.
Rivian faced major financial problems earlier this year, Breitbart News reported in February.
… Shares of electric-vehicle makers Rivian and Lucid plunged on Thursday after they reported disappointing fourth-quarter earnings after the market closed Wednesday. Rivian shares fell about 25%, while Lucid shares fell nearly 17%.
Both companies cited stagnant production volumes and “existing economic and geopolitical uncertainties” as factors impacting their results. Rivian forecasts production of 57,000 vehicles in 2024, roughly the same as the 57,232 built in 2023. Meanwhile, Lucid expects production to be 9,000 this year, up just 7% from 2022.
Additionally, Breitbart News reported that Rivian is losing $33,000 on every electric pickup truck it sells.
Volkswagen Group CEO Oliver Blum highlighted the benefits of the collaboration, saying, “Our customers benefit from a targeted partnership with Rivian to create cutting-edge technology architectures. Through this cooperation, we will be able to deliver the best solutions for our vehicles faster and at lower cost.”
The partnership will begin with VW providing Rivian with $1 billion in convertible notes, which will convert into an equity stake later this year. In addition, the two companies will create a 50/50 joint venture focused on developing next-generation electric and electronic architectures. The arrangement gives VW immediate access to Rivian’s advanced electronic architecture, which is widely seen as one of the company’s key strengths.
Rivian founder and CEO RJ Scaringe expressed his enthusiasm about the partnership: “This partnership is expected to not only bring our software and associated zone architecture to an even broader market through the Volkswagen Group’s global reach, but also help secure the capital needed for significant growth.”
The announcement has already had a major impact on Rivian’s stock price, with RIVN up more than 40% in after-hours trading. This surge follows an 8% increase during the trading session following an analyst upgrade.
As part of the agreement, VW has committed to investing an additional $4 billion in Rivian, in two phases of $1 billion in 2025 and 2026, contingent on Rivian hitting certain milestones. This phased investment approach demonstrates VW’s confidence in Rivian’s potential while also ensuring the emerging EV maker continues to meet key performance indicators.
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Lucas Nolan is a reporter for Breitbart News covering free speech and online censorship.
