Volkswagen Group, a German car company, will spend up to £ 5 billion (£4bn) on Rivian, an American company that makes electric cars, as part of a joint venture to share EV software and architecture.
Rivian has been losing a lot of money lately, but this big investment will help them get back on their feet financially and pay for the development of new models.
The deal also gives VW access to the start-up’s more advanced software for its upcoming electric vehicles. This could mean that users get new models faster and for less money.
They said in a joint statement that new models with new designs would hit the market in the second half of the decade.
The money has been a great help to Rivian.
It had to put on hold plans to build a new factory in Georgia in March to save money because it was losing so much money—nearly $40,000 for every car it made in the previous quarter.
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US EV Startups Face Slowdown
Along with the rest of the auto industry, the US start-up is having trouble selling as many electric cars as it used to. Drivers worry about price, charging infrastructure, range concerns, and rising living costs.
Volkswagen and other experienced automakers are also struggling with battery vehicles and their sophisticated software.
Rivian will be able to use the money from the investment to make its smaller and cheaper R2 SUVs, which will be available in the US in early 2026 and in Europe and the UK a year later.
Rivian’s CEO, RJ Scaringe, told Reuters that the partnership will also help the company save money on costs by letting it use larger quantities of goods like chips and parts.
As Rivian tries to deliver its EVs on time and keep its head above water, it has been cutting costs. It has also been trying to get better deals from its suppliers and making some parts itself.
Scaringe told Reuters last week that the company has changed the way it makes things, which has made the cost of materials go down by a lot.
Analysts and investors think that Volkswagen’s spending is a way for the company to fix its software problems.
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VW’s Software Struggles
Cariad, VW’s software business, was created by Herbert Diess, who used to be CEO of the VW Group. It has gone over budget and missed its goals. That was one reason Diess left in September 2022.
“The partnership should speed up the process of making software for Rivian and Volkswagen Group.”
According to a joint statement, the deal will allow both companies to use their strengths that complement each other to lower the cost per car by increasing scale and speeding up innovation around the world.
“By the end of the decade, both companies hope to have cars on the market that use the technology they developed together.”
“In the short term, the joint venture should allow Volkswagen Group to use Rivian’s current software platform and electrical architecture,” the statement said.
Both companies stated that they would continue to run their vehicle businesses separately.
Volkswagen Group CEO Oliver Blume said that customers would gain from the partnership because new EVs would come out “faster and at lower cost.”
FAQs
Gain access to Rivian’s advanced EV software for faster, cheaper development of VW’s electric vehicles.
Up to £4bn investment by VW, split between direct investment in Rivian and a joint venture for software development. Access to Rivian’s existing software platform for VW in the short term.
