An image of Oliver Blume, CEO of Volkswagen Group, and RJ Scaringe, founder and CEO of Rivian, as the companies announce joint venture plans on June 25, 2024.
Courtesy: Business Wire
Volkswagen Group has increased its planned investment in an announced joint venture with the electric vehicle manufacturer Rivian automotive industry ahead of operations that start on Wednesday.
The companies said in a joint press release on Tuesday that the size of the deal now amounts to $5.8 billion – an increase from an initial investment of up to $5 billion – with the first VW models using the software and electrical architecture from Rivian could arrive as early as 2027. .
Rivian shares rose more than 6% in after-hours trading.
The increase in investments was the result of the companies attracting potential future capital from Volkswagen, as well as changes in the structure of the deal, including the equity investments, officials said on an investor call on Tuesday.
VW Group CEO Oliver Blume said at a press conference on Tuesday that the German automaker expects to use Rivian’s technologies across a wide range of price ranges, international markets and brands.
Integration of Rivian’s software is expected to start with the Volkswagen brand, followed by Audi and VW’s upcoming Scout brand, Blume said. He also mentioned that “sports cars” could be included, but did not specify which brand. VW’s brands include Bentley, Porsche and Lamborghini.
“We are thrilled to see our technology being integrated into vehicles beyond Rivian, and we look forward to the future,” Rivian CEO RJ Scaringe said in a statement.
Both Scaringe and Blume said any further plans, such as battery modules, joint production of vehicles or sharing other hardware components, should be in addition to the announced joint venture agreement.
The name of the joint venture, expected to close in the fourth quarter, is Rivian and VW Group Technology, LLC.
Shares of Rivian Automotive and Volkswagen Group
VW has already made an initial investment of $1 billion in the form of a convertible bond, the companies said. Upon closing of the joint venture, VW will invest approximately $1.3 billion “in consideration for background IP licenses and a 50% equity stake in the joint venture.”
The remaining investment of up to $3.5 billion is expected to take place in 2027 “in the form of equity, convertible bonds and debt at future dates and based on clearly defined milestones,” the companies said.
The joint venture deal was initially announced in June and came as Rivian sought to raise additional capital as it launches its redesigned models and prepares to produce new “R2” vehicles in early 2026.
Scaringe previously said VW’s capital is expected to help the company ramp up production of its smaller R2 SUVs at its Normal, Illinois, plant starting in 2026, and produce a mid-size EV platform in a factory in Georgia. , where Rivian paused construction earlier this year.
The joint venture will be led by Rivian Chief Software Officer Wassym Bensaid and VW Group Chief Technical Engineer Carsten Helbing.
The companies said developers and software engineers from both companies will join the joint venture. The teams will initially be based in Palo Alto, California, with three additional locations in development in North America and Europe.
