VW and Rivian officially launch their $5.8 billion joint venture and present their management team.
Subcompact cars will also be part of the agreement.
Volkswagen and Rivian have formalized their new collaboration, which will involve an investment of $5.8 billion and will officially commence on November 13th. This project was announced last June when Volkswagen expressed its intention to invest $5 billion in Rivian to develop new electric architecture and vehicle software, including subcompact models, with a planned launch in 2027. The total investment has increased to $5.8 billion.
The new joint venture, called “Rivian and VW Group Technology, LLC,” will be led by Wassym Bensaid, head of software at Rivian, and Carsten Helbing, chief technology engineer at Volkswagen. Initially, the teams will be based in Palo Alto, California, with plans for three additional locations in North America and Europe. In this collaboration, engineers and developers from both companies will join forces to work on technology development.
Rivian showcased a prototype to a select group of journalists at its Palo Alto office; it was a Volkswagen test vehicle equipped with Rivian software, developed by the joint venture's engineering team over a twelve-week period. With the agreement finalized, Rivian will receive an initial loan of $1 billion from Volkswagen, followed by $1.3 billion in Rivian stock and another $3.5 billion in the coming years, as communicated by Oliver Blume, CEO of VW Group, during a media call.
The technology arising from this collaboration will serve as the foundation for vehicles from both brands. This includes Rivian's R2 model, which is set to go into production in 2026, as well as various models from the Volkswagen group, covering brands such as Audi, Porsche, Scout, and VW. Blume highlighted the scalability of the new electronic architecture, which can be adapted to a wide range of vehicles, from compact models to luxury cars.
The creation of this joint venture represents a significant victory for Rivian, which has faced substantial losses in the past year, accumulating over $1 billion in quarterly losses. The company anticipates adjusted losses of up to $2.88 billion for the year, a figure higher than the previous estimate of $2.7 billion. Additionally, it has undergone several rounds of layoffs over the past two years. On the other hand, Volkswagen has also faced challenges in the electric vehicle sector, experiencing a contraction in its market share in North America despite strong sales of its hybrid models. This new venture offers an opportunity for Volkswagen to access Rivian's software-centric methodology, as well as for Rivian, which needs this financial support in an uncertain economic environment.
RJ Scaringe, CEO of Rivian, stated that the secured funds will be crucial for increasing production of the R2 model at its Normal, Illinois plant and for developing a mid-size electric vehicle platform at its factory in Georgia, where construction had been paused. Although Scaringe did not specify when work would resume in Georgia, he emphasized that it is a vital component of Rivian's long-term production strategy.
Moreover, it has been suggested that the new collaboration will include Scout Motors, VW's adventure brand, which recently launched a new electric truck and SUV. Bensaid mentioned that Scout's software would be a product of this alliance with Rivian, and both groups confirmed that Scout will benefit from the new technology. Scott Keogh, CEO of Scout, stated that combining American manufacturing and technology will allow them to deliver vehicles that their customers want and appreciate, highlighting the importance of a software-defined vehicle architecture to meet consumer needs.
