German car and van manufacturer Volkswagen has announced that it intends to invest up to $5 billion (£3.9bn) in US EV start-up Rivian, with the aim of sharing software and platforms.
According to reports from Reuters, the announcement saw Rivian’s share rise by almost 50%, while concerns over costs saw Volkswagen’s stock fall.
Rivian CEO and founder Robert Scaringe told Reuters that Volkswagen's investment would allow the company to develop its R2 SUVs, which are anticipated to be released in 2026 to rival the Tesla Model Y, as well as its planned R3 crossovers. Joining forces with Volkswagen will also reduce Rivian's operating costs through the shared supply of microchips and components.
Rivian, the manufacturer of the well-received R1T electric pickup truck, will license its intellectual property to the partnership, which will allow the company to become cash flow positive.
Rivian will receive an immediate injection of $1 billion (£785m) via a convertible note, subject to regulatory approval. Once the venture is launched, Volkswagen will contribute another £1 billion, likely in the final quarter of the year. There will be further investments, including $1 billion in Rivian stock in 2025 and 2026, as long as preset milestones are achieved, and a $1 billion loan in 2026.
Vitaly Golomb, managing partner at Rivian investor Mavka Capital, told Reuters: "Any cash infusion like that is huge. Getting the support of Volkswagen Group certainly really strengthens their story toward Europe and toward Asia eventually."
The electric car market has proved challenging for manufacturers recently, with demand slowing. At the same time, high interest rates and cash shortages have proved problematic for startups, while production and software development struggles have impacted legacy manufacturers.
The UK arm of electric van company Arrival entered administration earlier this year, and in recent weeks, Fisker has filed for bankruptcy protection. Rivian has been cutting costs to remain in business and has yet to post a profit.
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