Volkswagen is set to invest up to $5 billion in Rivian, the electric vehicle (EV) company known for its R1S SUV and R1T pickup truck. The two companies will form a joint venture to develop new electrical architectures and vehicle software for future models. This partnership aims to help Volkswagen advance in creating software-defined vehicles while providing Rivian with crucial financial support.
On Tuesday, Volkswagen revealed its plan to invest up to $5 billion in Rivian through a joint venture equally controlled by both companies. This collaboration is designed to address weaknesses in both firms: Volkswagen seeks software expertise, while Rivian needs manufacturing knowledge and additional capital.
Initially, Volkswagen will invest $1 billion in Rivian, with the remaining $4 billion expected to be provided by 2026.
If regulatory approval is granted, Volkswagen will become a major shareholder in Rivian, alongside Amazon. This partnership would also allow Volkswagen to immediately utilize Rivian’s existing electronic architecture in its own vehicles. According to Rivian, extensive work has been done to ensure compatibility between their systems and Volkswagen’s vehicles.
Rivian has received positive reviews for its current models, but the company has struggled to scale up production and achieve profitability. In March, Rivian halted construction on a $5 billion factory in Georgia to cut costs. R.J. Scaringe, Rivian’s founder and CEO, stated that the financial support from Volkswagen will aid in the launch of the upcoming R2 SUV, which is expected to start at $45,000.
“This partnership with Volkswagen is crucial for us financially,” Scaringe said during a press call on Tuesday.
In addition to the financial boost, Volkswagen’s manufacturing expertise could significantly benefit Rivian. As the second-largest automaker globally, Volkswagen has extensive experience in vehicle production. Rivian projected in April that it would sell around 57,000 vehicles this year, a figure that pales in comparison to the number of vehicles Volkswagen sells in just one week.
This joint venture between Volkswagen and Rivian is expected to accelerate the development of next-generation EVs and strengthen both companies’ positions in the competitive electric vehicle market