Volkswagen Group plans to invest up to $5 billion in electric vehicle startup Rivian, beginning with an initial investment of $1 billion.
The remaining $4 billion will be invested by 2026, with $1 billion each in 2025 and 2026, followed by $2 billion in 2026 for a joint venture focused on electrical architecture and software technology, as announced by the automakers on Tuesday.
Rivian’s Share Price Surge
Shares of Rivian surged over 50% during after-hours trading on Tuesday, ahead of an investor event for the company, which has been under pressure from Wall Street due to its high cash burn and significant losses. Rivian’s stock closed at $11.96 per share on Tuesday, down roughly 49% in 2024.
The initial $1 billion investment from Volkswagen will be in the form of a convertible note, which can be converted to Rivian shares on or after December 1, according to the release.
CEO Comments on Deal
Rivian CEO and founder RJ Scaringe commented on the deal during an investor call, stating that the investment will aid Rivian in becoming cash flow-positive.
He highlighted that the capital is expected to support the production ramp-up of Rivian’s smaller R2 SUVs at its Normal, Illinois, plant starting in 2026, as well as the midsize EV platform at a plant in Georgia, where Rivian had paused construction earlier this year.
Scaringe said, “We believe the opportunity ahead is significant. This deal is possible because we’re focused on vertically integrating our network architecture, topology, V-CPUs, and associated software platforms. I’ve spoken about the importance of these platforms in the past, and how difficult it is to replicate them.”
Volkswagen is set to use Rivian’s electrical architecture and software stack for vehicles starting in the second half of the decade. However, the joint venture does not include battery technologies, vehicle propulsion platforms, high voltage systems, or autonomy and electrical hardware.
Scaringe explained that the expected joint venture will be led by a “balanced” leadership group, including two co-CEOs, with Rivian appointing the technical leadership and Volkswagen appointing a 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.
Volkswagen’s Strategic Partnership
Volkswagen will be the second legacy automaker to invest in the California-based company. Previously, Ford Motor was among Rivian’s largest stakeholders, holding roughly 12%, alongside Amazon when Rivian went public in 2021. Ford exited Rivian in 2023 after abandoning plans to co-develop EVs with the company.
The Volkswagen-Rivian partnership highlights a strategic shift as automakers adapt to the slower-than-expected adoption of EVs. Pietro Zollino, head of VW corporate communications, clarified that the deal with Rivian does not alter Volkswagen’s plans to build a $2 billion EV plant for its Scout Motors trucks and SUVs in South Carolina. “Our commitment towards Scout has not changed at all,” he stated.
Rivian has been implementing cost-cutting measures for months. The company has trimmed staff, retooled its Illinois plant to increase efficiencies, and paused construction of a new multibillion-dollar factory in Georgia, which is expected to save over $2.25 billion in capital spending.
This includes the impact of starting production of Rivian’s less expensive R2 vehicles in Illinois instead of Georgia in the first half of 2026.
McDonough stated that Volkswagen’s investment is anticipated to support Rivian through the ramp-up of its new R2 vehicles in Illinois and the midsize EV platform at its Georgia plant.
Financial Performance and Outlook
In the first quarter of this year, Rivian reported a loss of $1.45 billion as it retooled its Normal, Illinois, plant to launch updated versions of its R1T pickup and R1S SUV EVs ahead of its next-generation vehicles in 2026.
As of the end of March, Rivian had $7.86 billion in cash, cash equivalents, and short-term investments, with over $9 billion in total liquidity.
The investment from Volkswagen is expected to provide a significant boost to Rivian, aiding in its efforts to become cash flow-positive and expand its production capabilities.
This strategic partnership aligns with both companies’ goals to advance electric vehicle technology and increase their market presence in the rapidly evolving EV industry.
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