• Volkswagen has announced it will invest up to $5 billion in Rivian, the electric automaker that builds the R1S SUV and R1T pickup truck.
  • The two automakers will create a joint venture focused on the development of a new electrical architecture and vehicle software for future models.
  • The partnership will help Volkswagen move closer to developing software-defined vehicles and give Rivian a much-needed influx of cash.
Volkswagen announced on Tuesday that it would invest up to $5 billion in the fledgling electric manufacturer Rivian as part of a new equally controlled and owned joint venture to develop a next-gen EV architecture. 
  • The partnership aims to strengthen areas of weakness in both companies, with Volkswagen looking for software expertise and Rivan in need of both manufacturing knowledge and an influx of cash.
Volkswagen said it would invest an initial $1 billion in Rivian, with an additional $4 billion expected to be funded through 2026. 
  • If regulators approve the transaction, it would mean Volkswagen, alongside Amazon, becomes a significant shareholder in Rivian.
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RIVIAN
The approval of the joint venture would also give VW immediate access to Rivian's current electronic architecture for use in its own vehicles. According to Rivian, significant work has been done over the past several months to confirm compatibility between Rivian's architecture and Volkswagen's vehicles.

Cash Influx

Despite earning high praise for its current lineup from industry reviewers (Car and Driver included), Rivian has struggled to ramp up production and turn a profit from its sales. As recently as March, Rivian paused construction on a roughly $5 billion factory in Georgia in a bid to save money. According to R.J. Scaringe, Rivian's founder and chief executive, the influx of cash from Volkswagen will help Rivian launch the upcoming R2 SUV with its targeted $45,000 starting price.

"This is important for us financially," Scaringe said of the Volkswagen partnership on a conference call with reporters on Tuesday.

In addition to funding, the partnership may also help Rivian with manufacturing expertise, something VW, as the second-largest automaker in the world, has in droves. 
  • Rivian announced in April that it expects to sell roughly 57,000 vehicles this year, which is roughly one-third the number of vehicles the Volkswagen group sold each week in 2023.