Companies announced a new, evenly controlled joint venture to exchange electric vehicle architecture and software. Rivian shares soared after Volkswagen agreed to invest up to $5 billion in the Amazon-backed electric manufacturer. Volkswagen will invest $1 billion as part of a cooperation with Rivian to create a new, equally controlled joint venture to exchange electric car architecture and software, the firms announced on Tuesday.
When trading resumed on Wall Street on Wednesday following the announcement, Rivian’s stock increased 33%. The agreement is a big victory for Rivian, which is facing high losses as it strives to increase manufacturing of its electric trucks and sport utility vehicles.
While EV companies have seen a slowdown in demand due to high borrowing rates and limited financing, major automakers have struggled to develop battery-powered vehicles and smart software. Rivian’s relationship with Volkswagen will help Volkswagen expedite its aspirations to produce software-defined vehicles (SDV), with Rivian licensing its current intellectual property rights to the joint venture.
Rivian, famed for its luxury R1S SUVs and R1T pickups, will use the financing to build its less expensive and smaller R2 SUVs, which will be available in 2026, according to RJ Scaringe, the company’s founder and CEO.
Scaringe stated that the investment was “expected to help secure our capital needs for substantial growth”.
“Since the earliest days of Rivian, we have been focused on developing highly differentiated technology, and it’s exciting that one of the world’s largest and most respected automotive companies has recognized this,” he said. According to Oliver Blume, CEO of Volkswagen Group, collaboration will enable speedier and more cost-effective car solutions. We are improving our technological profile and competitiveness.”
