Volkswagen has increased its planned investment in the electric automaker Rivian through a joint venture that officially launches Wednesday. The first Volkswagen models made with Rivian’s technology are expected to launch in 2027.
The Rivian and Volkswagen joint venture was announced in June, at $5 billion. That’s now grown to a planned $5.8 billion deal size, the companies said in a statement Tuesday. Rivian gets an infusion of cash while Volkswagen gets access to what it calls Rivian’s “industry-leading software and electrical hardware technology.” Both companies say they’ll be able to “reduce development costs and scale new technologies more quickly.”
“Today’s finalization of our joint venture with Volkswagen Group marks an important step forward in helping transition the world to electric vehicles,” Rivian founder and CEO RJ Scaringe said in the statement. “We’re thrilled to see our technology being integrated in vehicles outside of Rivian, and we’re excited for the future. Rivian will continue to stay focused on creating best in class products and services that benefit our customers, helping to drive EV adoption.”
In a quarterly earnings call with investors last week, Rivian chief financial officer Claire McDonough said the joint venture will help Rivian launch its R2 vehicle and build a plant in Georgia.
"The proceeds we anticipate receiving following the formation of the joint venture and certain milestones, together with our $6.7 billion of cash, cash equivalents, and short-term investments, are expected to fund Rivian's capital roadmap for growth," said McDonough.
The joint venture is also aimed at reducing development costs for both companies. Volkswagen recently announced plans to lay off tens of thousands of workers and close three plants in Germany to gain efficiencies.
"Just as it is within Rivian, this is going to drive structural cost advantages into the business. This is a core reason as to why this partnership and this deal are happening," Scaringe said last week on the investors call.
Rivian’s technology will be used, in part, for its “advanced automated driving functions and can integrate over-the-air updates and upgrades.” The Rivian-Volkswagen team has already developed an “initial drivable demonstrator vehicle.”
The name of the new joint venture will be Rivian and VW Group Technology, LLC. It’ll be led by Wassym Bensaid (Rivian) and Carsten Helbing (Volkswagen Group).
“We’re excited to have entered into this joint venture, and welcome colleagues from both Rivian and Volkswagen Group to our new venture,” Bensaid said. “The aim of the joint venture is to speed up innovation, increase scale and lower the cost of owning an EV for millions of people around the world. I’m hugely impressed by the work done already. While the demonstrator vehicle only scratches the surface of what is possible, it’s incredibly exciting to see what is possible when a new OEM and a legacy automaker work closely together.”
The joint venture’s teams will be based in California initially, and three other sites are in development in North America and Europe.
Rivian makes its electric vehicles in Normal, where it employs around 8,000 people.
