Rivaans (NASDAQ: RIVN) has plenty of intriguing ambitions to keep investors hooked. The company has eyes on its product pipeline with the upcoming R2 launching in the first half of 2026, followed by the R3 and R3X – all of which will be cheaper than its R1 predecessors. Rivian also plans to sell the R2 abroad, which will fuel global growth. The electric vehicle (EV) manufacturer plans to achieve positive gross profit for the fourth quarter and for the full year of 2025.
But left unmentioned was the one decision that could prove most valuable to Rivian and its investors in the long run: the strategic decision to own the vehicle’s software, electrical architecture and other key components.
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While the vast majority of automakers, from ultra-luxury car makers to hybrid manufacturers, focus their products squarely on the end user, Rivian understood the value of the technology it is developing for its electric cars.
It’s possible that Rivian could package some of its EV software technology and electrical nervous system to sell to other automakers. This could lead to joint ventures and/or partnerships, investments in Rivian from other automakers such as Volkswagenor new revenue streams.
Speaking of Volkswagen – it’s a perfect example – Rivian and Volkswagen officially launched their joint venture at an even greater value than originally expected. Their joint venture was launched in a deal worth up to $5.8 billion to offer next-generation electrical architecture and vertically integrated software for both automakers’ EVs, based on Rivian’s existing technology.
“The partnership with Rivian is the next logical step in our software strategy,” said Oliver Blume, CEO of Volkswagen Group. Automotive News. “With its implementation, we will strengthen our global competitive and technological position.”
Rivian believes it could ultimately become the industry’s partner of choice for differentiated technologies, and the joint venture with Volkswagen essentially proves this is a valid idea. From the beginning, Rivian has focused on the vertical integration of key vehicle components and software, electrical hardware, propulsion and autonomy. The latter two areas are not part of the Volkswagen joint venture and remain fully owned by Rivian.
Here’s the kicker: Rivian’s software technology that gets this investment from Volkswagen essentially pays for the near future. In fact, Volkswagen’s expected capital in the partnership, plus Rivian’s cash and cash equivalents, is expected to provide sufficient capital to finance both operations through the launch and ramp-up of production of the R2, as well as the mid-size platform built in will start production in the coming years. Georgia factory.
More broadly, an increased focus on software development and digital automotive services will be a trend that investors continue to see. According to a report from the Oliver Wyman Forum, digital automotive services revenues are likely to grow 25% annually through 2035, from $42 billion in 2023 to $610 billion in 2035.
As vehicles gain more high-tech features, options, software, driver assistance technology and digital car services, owning more technology in a vehicle can prove to be extremely valuable.
While Rivian has ambitions in vehicle deliveries abroad, with a handful of new model launches over the next few years, it’s clear that Rivian’s most lucrative strategic decision for now has been to own the technology that made Volkswagen a success. That decision should remain part of Rivian’s investment thesis and will prove valuable as the company continues to evolve into a global EV maker.
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Daniel Miller has no position in any of the stocks mentioned. The Motley Fool recommends Volkswagen Ag. The Motley Fool has a disclosure policy.
This could be Rivian’s best decision yet, originally published by The Motley Fool
