Volkswagen to Invest $1 Billion in Electric Vehicle Startup Rivian
In a massive development deal worth up to $5 billion, Volkswagen is set to invest $1 billion in Rivian, a startup specializing in electric vehicles. This win-win partnership will enable Rivian to accelerate the development of its R2 SUV for the mass market, while Volkswagen gains access to advanced software capabilities, a crucial aspect of its transition to electric vehicles.
Joint Venture to Drive Innovation
As part of the agreement, the two companies will establish a 50-50 joint venture to develop and evolve technology. The partnership will be led by co-CEOs who will report to both Rivian and Volkswagen. Rivian will share its expertise in electric architecture with the German giant, and will grant intellectual property rights to the joint venture.
Access to Rivian's Electric Architecture and Software Platform
This deal will grant Volkswagen access to Rivian's existing electric architecture and software platform. All Volkswagen group subsidiaries, including prestigious brands like Porsche and Audi, will benefit from Rivian's DNA. Like Tesla, Rivian uses a zonal architecture, considered the foundation of software-defined vehicles. This technology enables car manufacturers to generate additional revenue streams through embedded services and entertainment.
Investment Breakdown
Volkswagen will initially invest $1 billion through a convertible, non-guaranteed bond, which will be converted into Rivian's ordinary shares once regulatory approvals are obtained, expected in Q4 2024. The group will then purchase $1 billion worth of Rivian's ordinary shares in 2025 and 2026. The remaining $2 billion will be invested in the joint venture, split between an initial investment and a loan in 2026.
A Strategic Move for Volkswagen
This significant investment marks a strategic move for Volkswagen, the world's second-largest car manufacturer, which sold 9.032 million vehicles in 2023. By partnering with Rivian, Volkswagen strengthens its position in the electric vehicle market, further solidifying its commitment to a sustainable future.