Volkswagen to Invest $5 Billion in Rivian for Next-Gen EV Tech and Software

Joint Venture Formation

Volkswagen is set to invest approximately $5 billion in Rivian and establish a joint venture with the American electric vehicle startup. The purpose of this collaboration is to develop cutting-edge electrical architecture and software technologies that will be utilized in future models from both companies.

Rivian’s Role

Rivian will use the funding to support the production of their R2 and R3 electric vehicles. The joint venture will leverage Rivian’s existing integrated technology platform to create software-defined vehicle (SDV) platforms for future EVs.

Financial Commitment

The Volkswagen Group plans to initially commit $1 billion to Rivian through an unsecured convertible note, which will convert into common stock by December. Additional investments of $2 billion in two tranches will follow in 2025, with another $2 billion injection directly into the joint venture in 2026.

Benefits of the Partnership

RJ Scaringe, CEO of Rivian, expressed excitement about the partnership with Volkswagen, highlighting the alignment of their missions to transition away from fossil fuels. The collaboration is expected to bring Rivian’s technology to a broader market through VW’s global reach and secure capital for future growth.

Future Outlook

While specific VW models that will incorporate Rivian software have not been disclosed, the joint venture aims to integrate Rivian’s electrical architecture and software with existing VW Group vehicles. The partnership is anticipated to be finalized by the fourth quarter of 2024.

CEO Statements

Scaringe emphasized that the investment from VW will make Rivian’s R1S and R1T models cash flow-positive and enable the development of new models like the R2 and R3. VW Group CEO Oliver Blume highlighted the benefits of the partnership in advancing technology solutions for their vehicles at a faster pace and lower cost.