Volkswagen Group and US-based Rivian announced on June 25 that the former will invest up to US$5 billion in the emerging EV maker. The pair will also establish a joint venture focusing on software-defined vehicle (SDV) platforms.
The partnership is expected to be a win-win situation for both companies. Volkswagen needs a software boost as its software arm, Cariad, fails to provide the technologies the group demands on time. Rivian also requires more capital to scale in the competitive EV segment.
According to a joint announcement, the two carmakers will form an equally owned JV to develop next-generation electrical architecture and software technology based on Rivian's zonal hardware design and integrated technology platform. Rivian also plans to license its intellectual property rights to the new company.
Volkswagen and Rivian will adopt the SDV platform developed by the JV in EVs slated for the second half of the decade. Once the JV is established, the European carmaker will be able to use its US partner's existing electrical architecture and software platform.
Volkswagen will initially invest US$1 billion in Rivian and inject the rest of the money into the US startup over the next two years. The duo expects to complete the JV formation in the fourth quarter of 2024.
Automakers are facing challenges as the industry evolves toward SDVs and demand for battery EVs remains slow in some major markets. Rivian said the collaboration with Volkswagen will help the two companies reduce cost per vehicle by increasing scale and accelerating innovation globally.
In the statement, RJ Scaringe, Founder and CEO of Rivian, said the partnership will bring the company's software and associated zonal architecture to a broader market and secure the capital it needs.
He told Reuters that Volkswagen's investment will help Rivian proceed with the more affordable and smaller R2 SUVs, which are slated to hit the market in early 2026, and planned R3 crossovers. The fund is also expected to turn Rivian's cash flow positive.
