Volkswagen to Invest $5 Billion in Rivian for Technology Collaboration
- Volkswagen plans to invest up to $5 billion in Rivian, an electric vehicle startup.
- The collaboration will focus on software and other technologies.
- The partnership aims to boost Rivian's sales and profitability.
In a significant move, Volkswagen, the German automaker, has announced plans to invest up to $5 billion in Rivian, a struggling maker of electric trucks. This partnership aims to address weaknesses at both companies, with Rivian set to benefit from Volkswagen's manufacturing expertise, positioning it just behind Toyota Motor in the global auto industry. The initial investment of $1 billion is expected to increase over time, pending regulatory approval, potentially making Volkswagen a significant shareholder in Rivian. The additional $4 billion investment is anticipated to follow the establishment of a joint venture between the two automakers, with plans for significant investments in 2025 and 2026. Rivian's shares surged more than 50% in after-hours trading following the announcement, as the company has faced pressure from Wall Street due to cash burn and losses. Volkswagen plans to utilize Rivian's electrical architecture and software stack for its vehicles starting in the second half of the decade. The joint venture, expected to be led by a balanced leadership group, including two co-CEOs, aims to create electrical architecture and software technology. The closing of the joint venture is projected for the fourth quarter of the year, with Volkswagen becoming the second legacy automaker to invest in Rivian. Despite this partnership, Volkswagen remains committed to its plans to build a $2 billion EV plant for its Scout Motors trucks and SUVs in South Carolina. Volkswagen's investment is seen as crucial for Rivian's future, as the electric vehicle maker reported a significant loss in the first quarter of the year. The investment is expected to support the ramp-up of Rivian's new, more affordable R2 vehicles in Illinois, as well as the midsize EV platform at its plant in Georgia. This strategic partnership between Volkswagen and Rivian marks a significant development in the electric vehicle industry, with both companies aiming to leverage each other's strengths for mutual benefit.