Delhi Delhi. Shares of electric vehicle maker Rivian jumped more than 15 percent on Wednesday after the company announced a $5.8 billion investment from German automaker Volkswagen as part of its joint venture. The launch of its smaller, more affordable R2 SUV comes at a crucial time, as it aims to cut costs, achieve profitability and attract budget-conscious consumers.
The joint venture, Rivian and VW Group Technology LLC, will integrate advanced electrical infrastructure and Rivian's software technology for both companies' future electric vehicles. “This (investment) is a vote of confidence in the EV maker's prospects, as Trump's White House “Support for EVs in the US faces a more uncertain future,” said Susannah Streeter, head of wealth and markets at Hargreaves Lansdowne. “Tesla's Elon Musk has been given a seat at Trump's top table,” Streeter said, which could potentially put EV rivals like Rivian in a less favorable position in future policy decisions.
After Trump's victory was announced last week, shares of Rivian and other electric vehicle makers fell, with Tesla being the only exception. Last week, Rivian fell short of third-quarter revenue estimates. The Amazon-backed company has been struggling with a parts shortage, leading to a reduction in its annual production forecast in October. Garrett Nelson, senior equity analyst at CFRA Research, said Rivian still faces tough challenges such as lack of scale, increasing competition, higher capital costs and the “anticipated elimination” of EV tax credits. Canaccord Genuity analysts said in a note that the joint venture helps alleviate “a significant amount of the capital concern” and potentially establish the Rivian and Volkswagen venture as the preferred platforms in the Western world besides Tesla. Rivian shares have fallen about 55 percent this year, underperforming rivals. If the gains continue, the company is set to add more than $1.6 billion to its current market value of $10.8 billion.
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