Dive Brief:
- Volkswagen will invest $1 billion in electric vehicle maker Rivian Automotive, according to a Tuesday press release.
- The two automakers also plan to establish a joint venture and create next-generation electrical/electronic architecture for EVs. As part of the deal, Volkswagen would receive immediate access to Rivian’s current E/E-architecture technology for use in its own EVs.
- Volkswagen’s total investment in Rivian and the joint venture could reach $5 billion by 2026, the release said, and $2 billion in 2024 alone.
Dive Insight:
This isn’t the first time Rivian’s landed funding from a major automaker. Ford Motor Co. invested $500 million in the EV startup in 2019, but has since sold off much of its minority stake, TechCrunch reported in February.
Volkswagen’s investment provides needed capital for Rivian, which has been losing money on every vehicle it produces. The company recently retooled its manufacturing plant in Normal, Illinois, and initiated two rounds of layoffs this spring to drive down costs.
Under the terms of the agreement, Volkswagen will grant a convertible note in the amount of $1 billion, which will ultimately make Volkswagen a direct shareholder upon the receipt of the necessary regulatory approvals, but not before Dec. 1.
The automakers would each hold a 50% stake in the E/E-architecture joint venture, and it will be equally controlled, the release continued.
The actual establishment of the joint venture depends on a series of different parameters, Volkswagen said, specifically the final results of the further review of the technical feasibility of the integration of the E/E-architecture in VW vehicles, further negotiations between the parties, as well as regulatory approvals.
“This is exciting! Volkswagen Group CEO Oliver Blume and I are thrilled to announce the formation of a joint venture between our two companies,” Rivian CEO and founder RJ Scaringe said in a post on X. “This partnership brings Rivian’s software and zonal electronics platform to a broader market through Volkswagen Group’s global reach and scale, while providing an expected $5B of capital to @Rivian as we bring R2 and our next generation of vehicles to market!”
Rivian introduced the second generation of its flagship vehicles on June 6. The new R1 vehicles feature a new electrical architecture and compute platform that reduces 17 ECUs found in first generation vehicles down to seven, according to a press release.
