According to recent Bloomberg and Businesswire publications, Volkswagen will be investing $5 billion USD to form a joint venture with Rivian. Rivian stock has also rallied an astounding 50% in the hours since the announcement.
$5 Billion Stake
Of the $5 billion being invested, $1 billion will be invested immediately in Rivian, and the remaining $4 billion will be invested over time. That initial $1 billion will be invested in the company by the end of 2024, pending regulatory approval. The remaining $4 billion could be a fair while out, pending the formation of the joint venture in the fourth financial quarter of 2024.
The new joint venture will be “equally controlled and owned”. This is at a critical juncture for Rivian, who has recently debuted their R2 and R3 platforms, as well as bringing a much-appreciated revamp for the R1 platform.
CEO of Volkswagen, Oliver Blume:
“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. We are also acting in the best interest of our strong brands, which will inspire with their iconic products. The partnership fits seamlessly with our existing software strategy, our products, and partnerships. We are strengthening our technology profile and our competitiveness.”
Joint Venture
Part of the joint venture will be to help Rivian lower the cost per vehicle, while Rivian helps provide Volkswagen with its new Zonal control technology, which optimizes and shortens the circuit paths in a vehicle.
The Rivian platforms are also expected to serve as the foundation for future EV vehicles from Volkswagen. Rivian will be maintaining its intellectual property rights throughout the joint venture, which will provide an ongoing revenue stream for the company, as it settles into a new and faster production rhythm.
Rivian CEO, RJ Scaringe, said:
“We’re very excited to be partnering with Volkswagen Group. Since the earliest days of Rivian, we have been focused on developing highly differentiated technology, and it’s exciting that one of the world’s largest and most respected automotive companies has recognized this. Not only is this partnership expected to bring our software and associated zonal architecture to an even broader market through Volkswagen Group’s global reach, but this partnership also is expected to help secure our capital needs for substantial growth. Rivian was created to help the world to transition away from fossil fuels through compelling products and services, and this partnership is beautifully aligned with that mission.”
Battery Venture Speculation
There is another opportunity for both companies, as Volkswagen moves to establish a 370-acre battery “giga factory” in Ontario, Canada. This could be an opportunity for Rivian and Volkswagen to continue their cooperation on battery technology, as Volkswagen intends to use the Rivian platforms for their vehicles.
Volkswagen has only recently broken ground at the site and expects the factory to produce about 90 GWh of batteries per year – or enough for roughly 1 million EVs a year. Volkswagen and the Ontario government expect that the factory should be fully functional by 2027. We could expect batteries from this Ontario factory to end up in Rivian vehicles in the future!
