SAN FRANCISCO, CA – German automaker Volkswagen Group is making a significant investment of up to $5 billion in the U.S. electric-vehicle maker Rivian. This move is part of a new joint venture that will allow the two companies to collaborate on electric vehicle architecture and software. The partnership aims to address the challenges faced by the auto industry as EV startups navigate a slowdown in demand while traditional automakers struggle with developing battery-powered vehicles and advanced software.
Rivian saw its shares surge by about 50% in extended trading following the announcement, potentially increasing the company’s market value by nearly $6 billion. The investment from Volkswagen will provide Rivian with the necessary funding to develop its upcoming R2 SUVs set to launch in early 2026, as well as its planned R3 crossovers. This collaboration will also help Rivian reduce operating costs by leveraging shared supplies such as chips and components.
CEO RJ Scaringe mentioned that the partnership with Volkswagen will not only support the development of the new R2 vehicle but will also help Rivian become cashflow positive. The company will license its existing intellectual property to the joint venture, with the R2 becoming the first vehicle to utilize software from the collaboration. Volkswagen’s brands, including Audi, Porsche, Lamborghini, and Bentley, will also benefit from this partnership in the future.
Analysts and investors view Volkswagen’s investment in Rivian as a strategic move to address the software struggles the company has faced with its software division, Cariad. Volkswagen will make an initial investment of $1 billion in Rivian, with additional investments planned in the coming years based on hitting certain milestones. Additionally, Volkswagen will provide Rivian with a $1 billion loan in 2026 as part of the agreement.
Despite experiencing losses for each vehicle delivered, Rivian has shown more stability compared to other EV startups by focusing on cost-cutting measures and renegotiating supplier contracts. The company’s cash position has decreased, but with the investment from Volkswagen, Rivian is better positioned to launch its upcoming models. Volkswagen remains committed to its plans for launching 25 EV models in North America by 2030 and sees its partnership with Rivian as an opportunity to expand its presence in the SUV and pickup segments in the United States.