On November 13, Rivian Automotive, an electric vehicle maker formed a joint venture with Volkswagen and plans to invest $5.9 billion. In a joint press release, the companies stated that the deal has expanded to $5.8 billion, which was intended to be $5 billion. The first VW models featuring Rivian’s software and electrical architecture could arrive as soon as 2027.
Rivian shares rose by 6% during after-hours trading. There is an increase in investment because the companies brought forward future funding from VW, leading to changes in the deal, including adjustments to the equity investment.
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The new joint venture, called “Rivian and VW Group Technology, LLC,” will be led by Rivian’s software chief Wassym Bensaid, and VW Group’s chief technology engineer Carsten Helbing. The team will be formed including the engineers and developers from both the company to work on the project. This team will start work in Palo Alto, California, which is expected to be extended to three more locations in North America and Europe.
The prototype vehicle was also revealed to a few reporters in the Palo Alto office by the Rivian. As per the Bloomberg reports, the prototype was a VW vehicle with a fusion of Rivian software, which was created in just 12 weeks by the employees.
Oliver Blume, Group CEO of VW said, With the deal now finalized, Rivian will get an initial $1 billion loan from VW, plus $1.3 billion in shares of Rivian, and another $3.5 billion over the next few years.
The technology developed through the joint venture will be used by both companies in their vehicles and future programs, including Rivian’s more affordable R2 model, set to begin production in 2026, as well as a range of vehicles from the VW Group, such as Audi, Porsche, Scout, and VW.
Oliver Blume said, “The positive aspect is that we will be scalable, from the very small segment up to luxury cars, [and] sports cars. The electronic architecture will be scalable and will be usable for a great volume of cars.”
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The new venture is a win for both companies: VW gains access to Rivian’s software-focused approach to car manufacturing, helping it stay competitive in the growing market for vehicles that can receive over-the-air updates. Meanwhile, Rivian gets a crucial financial boost that will help it navigate the uncertain economic challenges ahead.
RJ Scaringe, Rivian CEO said, “The capital will support Rivian as it ramps up production of the R2 at its existing plant in Normal, Illinois, and works on a midsized EV platform at a factory in Georgia, where construction was temporarily halted earlier this year.”
