Workers assemble the second-generation R1 vehicle at electric vehicle maker Rivian’s manufacturing plant in Normal, Illinois, on June 21, 2024.
Joel Angel Juarez | Reuters
Volkswagen Group plans to invest up to $5 billion in electric vehicle startups RivianThe initial investment was $1 billion.
An additional $4 billion is expected through 2026. That includes plans for $1 billion each in 2025 and 2026, followed by $2 billion in 2026 related to a joint venture that will develop electrical architecture and software technologies, according to a statement released by the automakers on Tuesday.
Rivian shares soared more than 50% in after-hours trading on Tuesday, two days before an investor event for the company, which has come under pressure from Wall Street due to its cash burn and heavy losses.Rivian shares closed at $11.96 per share on Tuesday, down about 49% so far in 2024.
The first $1 billion from Volkswagen will come in the form of convertible bonds that could be converted into Rivian shares after December 1, according to the announcement.
Rivian CEO and founder RJ Scaringe said during an investors call Tuesday night that the deal will help Rivian on its path to cash-flow positive.
He said the funding is expected to cover ramped production of the R2 small SUV starting in 2026 at a plant in Normal, Illinois, as well as production of a mid-size EV platform at a factory in Georgia where Rivian paused construction earlier this year.
“We see great opportunity ahead, and this deal came about because we are focused on vertical integration of network architecture, topology, V-CPUs and associated software platforms,” he said. “I’ve spoken before about the importance of those platforms and how difficult it is to replicate them.”
Volkswagen plans to adopt Rivian’s vehicle electrical architecture and software stack starting in the late 2020s, according to Scaringe, who said the joint venture does not include anything in the way of battery technology, vehicle propulsion platforms, high-voltage systems, autonomy or electrical hardware.
Scaringe said the planned joint venture would be led by a “balanced” leadership group that would include two co-CEOs, with Rivian appointing a technical leader and Volkswagen appointing the chief operating officer.
The joint venture is expected to close in the fourth quarter of this year, according to Rivian Chief Financial Officer Claire McDonough.
Courtesy image of Volkswagen Group CEO Oliver Bloom and Rivian founder and CEO RJ Scaringe announcing joint venture plans on June 25, 2024.
Source: Business Wire
Volkswagen becomes the second established automaker to acquire a stake in the California-based company. Ford Motor Company It is one of Rivian’s largest shareholders, with about 12%. Amazon When Rivian went public in 2021, the Detroit automaker backed away from plans to co-develop EVs with the company and exited Rivian in 2023.
Volkswagen’s partnership with Rivian comes as automakers shift strategies amid a slower-than-expected uptake of electric vehicles.
Pietro Zorrino, Volkswagen’s corporate communications chief, said the Rivian deal doesn’t change the company’s announced plans to build a $2 billion electric vehicle factory in South Carolina for its Scout Motors trucks and SUVs.
“Our commitment to Scouting has not changed at all,” he said in an email Tuesday night.
Rivian has been working to cut costs for months, cutting jobs, upgrading its Illinois plant to make it more efficient, and pausing construction of a multi-billion-dollar new factory in Georgia. That last move is expected to save more than $2.25 billion in capital expenditures, including the impact of starting production of Rivian’s next-generation, lower-cost R2 vehicle at a factory in Illinois instead of Georgia in the first half of 2026.
McDonough said he expects Volkswagen’s investment will allow it to expand production of its new, cheaper R2 vehicle in Illinois and its mid-size EV platform at a plant in Georgia.
The electric vehicle maker, which has been revamping its Normal, Illinois, factory to launch updated versions of its R1T pickup truck and R1S SUV EV ahead of next-generation vehicles in 2026, reported a loss of $1.45 billion in the first quarter of this year.
Rivian reported that it had $7.86 billion in cash, cash equivalents and short-term investments at the end of March, and total liquidity of more than $9 billion.
