Rivian Secures Up to $5 Billion Investment from Volkswagen

Rivian volkswagen

Rivian Automotive and Volkswagen Group have announced plans to form a joint venture to develop next-generation software-defined vehicle (SDV) platforms. The partnership aims to enhance the software technology in both companies’ future electric vehicles.

Volkswagen will make an initial investment of $1 billion in Rivian, with up to $4 billion in additional funding, bringing the total expected investment to $5 billion. The joint venture will leverage Rivian’s industry-leading software and electrical architecture to create a best-in-class SDV technology platform.

“Our customers benefit from the targeted partnership with Rivian to create a leading technology architecture. Through our cooperation, we will bring the best solutions to our vehicles faster and at lower cost,” said Oliver Blume, CEO of Volkswagen Group.

RJ Scaringe, Founder and CEO of Rivian, added, “This partnership will bring our software and zonal architecture to a broader market through Volkswagen Group’s global reach and help secure our capital needs for substantial growth.”

The collaboration will allow both companies to combine their strengths, reduce costs per vehicle, and accelerate innovation. Rivian’s proven zonal hardware design and integrated technology platform will serve as the foundation for the new SDV development, applicable to vehicles from both companies.

The companies aim to launch vehicles utilizing the joint venture’s technology in the latter half of the decade. In the short term, Volkswagen will use Rivian’s existing electrical architecture and software platform to advance its SDV plans. The joint venture formation is expected to be completed by the fourth quarter of 2024, pending regulatory approvals.

For EV startup Rivian, the investment gives the company some breathing room as it continues to lose money and still is struggling to scale up mass production of its R1S and R1T.

Rivian has been actively pursuing cost-cutting strategies over recent months. The company has reduced its workforce, revamped its Illinois plant to boost efficiency, and halted the construction of a new multibillion-dollar factory in Georgia. This latter decision is projected to save more than $2.25 billion in capital expenditures. Consequently, Rivian plans to start production of its forthcoming, more affordable R2 vehicles at the Illinois facility rather than the Georgia plant, with production expected to begin in the first half of 2026.

The announcement on Tuesday has sent Rivian’s stock price surging 50% in after-hours trading to $17.93 per share, up from $11.96 at close.