The multi-billion dollar joint venture between Volkswagen Group and Rivian may ultimately lead to advanced technology vehicles hitting the global marketplace at a rapid pace.
It’s the hope of the JV that by pairing Rivian’s technical know-how with Volkswagen’s financial resources, ideas will become reality faster, giving access to the latest innovations to both automakers.
“The partnership fits seamlessly with our existing software strategy, our products, and partnerships, said Oliver Blume, CEO of Volkswagen Group, in a Nov. 12 press release. “We are strengthening our technology profile and our competitiveness.”
Under the JV, the two automakers will incorporate Rivian’s electrical architecture and software to develop electric vehicle platforms for global markets at different price points. Rivian is also expected to license its existing intellectual property to the JV, according to the release.
Reducing development costs is among the benefits of the collaboration, which could give Rivian and VW a more competitive edge in the growing EV segment.
Since the JV plans were announced in June, significant work has been done to validate that Rivian’s proprietary electrical architecture and software is compatible with Volkswagen vehicles, the press release said.
During a presentation announcing the official launch of the JV, Volkswagen Group CFO and COO Arno Antlitz said that Rivian’s software and electrical architecture is well suited to be incorporated into its future EVs. “Volkswagen Group and Rivian are a great fit,” he said.
The various EV platforms will also incorporate Rivian’s electrical architecture and software to develop new vehicles for global markets at different price points that each automaker can utilize. Rivian expects to license some of its existing intellectual property to the JV.
One of the primary goals of the JV is to reduce the manufacturing costs of EVs and scale new technologies more quickly, which could give Rivian and VW a more competitive edge in the growing EV segment.
Using Rivian's technology stack
Initially, the JV will utilize Rivian's existing electrical architecture and software technology stack to underpin its forthcoming R2 platform vehicle that’s due to launch in the first half of 2026. This platform will then be used on Volkswagen EV models as early as 2027.
“We’re thrilled to see our technology being integrated in vehicles outside of Rivian, and we’re excited for the future,” said Rivian CEO RJ Scaringe in the release.
The platform will also support advanced automated driving functions and be capable of receiving regular over-the-air software updates to increase the added value to customers for the vehicle’s entire service life. It will also be modular, allowing each automaker the flexibility to configure the platform as needed for different models and powertrain configurations.
“The partnership fits seamlessly with our existing software strategy, our products, and partnerships, said Oliver Blume, CEO of Volkswagen Group, in the release. “We are strengthening our technology profile and our competitiveness."
A zonal hardware design
The JV will utilize Rivian's recently upgraded zonal hardware design, which reduces the number of ECUs and the wiring needed to connect them together. The platform updates were announced in June and currently underpin Rivian’s R1T pickup and R1S SUV.
Rivian said the platform was completely reengineered with hundreds of hardware improvements and performance upgrades, including updated software, in-house developed electric motors, as well as new compute and autonomy platforms. The zonal architecture reduces the number of vehicle ECUs needed from 17 to seven and eliminates 1.6 miles of wiring from each vehicle, according to Rivian.
The zonal architecture uses more powerful central processors that serve as the brains of the entire vehicle. Since Rivian and VW also plan to develop advanced automated driving capabilities for future vehicles, the new platform will support the compute power needed for the AI-powered systems. Rivian’s automated driving system, for example, uses 11 cameras, five radars, and AI prediction technology, which Rivian says is 10 times more powerful than its previous system.
Over-the-air software updates
Before the JV offically launched, VW and Rivian built a drivable demonstration vehicle highlighting the two companies’ hardware and software integration capabilities, including the addition of Rivian’s infotainment system and the delivery of over-the-air software updates.
However, Volkswagen's software unit Caraid will continue to develop application layers for VW-branded vehicles that support the addition of advanced driver assist systems, infotainment and connectivity features, Antlitz said in the presentation.
A multi-billion dollar investment in Rivian
Like many automakers, Rivian has struggled with profitability. The company lost about $43,000 per vehicle in 2023 and reported a net loss of $5.4 billion, according to its Q4 2023 securities filing. But Rivian is set to receive billions in additional investments from Volkswagen if certain JV milestones are met.
Volkswagen has already invested $1 billion in Rivian in the form of a convertible note and plans to invest up to $5.8 billion in the company and joint venture by 2027.
One of the milestones will unlock an additional $1 billion in funding from Volkswagen in 2025. It requires Rivian to achieve two consecutive quarters of gross profit exceeding $50 million, or two consecutive quarters of positive growth profit. In 2026, Volkswagen will invest another $1 billion in Rivian upon the testing of the JV’s vehicle platform in cold weather environments, which can degrade an EV’s performance.
“This stage-gated investment approach is aligned with the rollout of the JV’s technology development and delivery on financial targets of Rivian to ensure focused investments with a tangible return profile,” Antlitz said in a presentation.
Other industry partnerships on EVs
The Volkswagen Rivian JV follows other recent technology partnerships announced by automakers.
In June 2023, Lucid Group announced a license deal with Aston Martin valued at $450 million. The deal includes Aston Martin paying Lucid access fees to incorporate its proprietary powertrain technology in a future EV. The fees will be in the form of stock and phased cash payments resulting in Lucid becoming a shareholder in Aston Martin.
In February, Honda Motor Co. announced the production start of the electric Prologue SUV in North America, which was jointly developed with General Motors.
In August, Nissan Motor Co. and Honda announced a joint research agreement to explore the development of a platform and technologies for next-generation software-defined vehicles. It includes the possibility of mass producing an EV that will be sold globally under both brands.
In October, Toyota Motor Co. and Suzuki Motor Corp. announced plans to collaborate on a new electric SUV that will be sold in global markets. The vehicle’s platform was jointly developed by Suzuki, Toyota and Daihatsu Motor Co.
