Delhi: Volkswagen Group has increased its investment in Rivian by 16 percent to $5.8 billion, both automakers said on Tuesday, as the companies launched their planned joint venture to develop electric vehicle architecture and software.Tuesday Shares of the U.S. EV maker, worth more than $11 billion, rose nearly 9 percent in extended trading. The companies said in June that VW would invest $5 billion in Rivian — a lifeline for loss-making EV startups that is set to roll out a small, affordable SUV called R2 amid high borrowing costs and slow EV demand.
“This partnership and this deal secures capital for us to ensure that we can not only carry Rivian through the launch of R2 in Normal, but also secure the launch and development of R2 in our Georgia facility And be cash flow positive for us as a business,” Rivian CEO RJ Scaringe told reporters. The R2, the first vehicle to use the new architecture, will be built at its factory in Normal, Illinois. The company, which has delayed construction of its plant in Georgia, applied for a federal loan last month to start construction of the factory.
New vehicles from VW unit Scout Motors will also be among the first to use the new architecture. The joint venture between Rivian and VW Group Technology LLC aims to provide an advanced electrical infrastructure for both companies' future EVs across all relevant vehicle segments, including subcompact cars. and to integrate Rivian's software technology, the firms said. Volkswagen plans to invest $5.8 billion in Rivian and the joint venture through 2027, including an initial $1 billion convertible note. $1.3 billion and future equity for the Audi-parent intellectual property license and equity stake, notes and It will invest up to $3.5 billion in loans, all tied to specific milestones.
Analysts said the joint venture could help ease the German automaker's problems with its software unit, Cariad, which has been plagued by delays and losses since its inception. The German automaker recently laid off 10 percent of its workforce. Had asked to take pay cuts, saying it was the only way the company could save jobs and remain competitive as profits declined and union bosses threatened to strike. Bensaid and Carsten Helbing, Chief Technical Engineer of the VW Group, will lead the joint venture. Developers and engineers in the joint venture will initially be based in Palo Alto, California, while three additional sites will be under development.
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