Crucial intervention? Volkswagen to form joint venture with Rivian to share electric vehicle software and architecture
Rivian has entered into a joint venture with Volkswagen, which will see the German car giant invest billions of dollars into the electric vehicle firm.
In the equally controlled and owned joint venture (JV), Volkswagen will invest an initial $1 billion in Rivian, with up to $4 billion in planned additional investment (for a total of $5 billion).
The creation of the joint venture between the two is in order “to create next-generation electrical architecture and best-in-class software technology.”
Rivian’s R1S electric SUV. Image credit: Rivian
Joint venture
The joint venture will help both firms to “combine their complementary strengths and lower cost per vehicle by increasing scale and speeding up innovation globally.”
Essentially, Rivian’s hardware design and integrated technology platform is expected to serve as the foundation for future SDV development in the JV that will be applied to both companies’ vehicles.
Rivian also plans to contribute its electrical architecture expertise and is expected to license existing intellectual property rights to the joint venture.
Rivian’s R1S electric SUV. Image credit: Rivian
Both companies aim to launch vehicles benefiting from the technology created within the joint venture in the second half of the decade, the two firms stated.
In the short term, the joint venture is expected to enable Volkswagen to utilise Rivian’s existing electrical architecture and software platform, effectively accelerating the German car maker’s “plans and transition to a pure zonal architecture. Each company will continue to separately operate their respective vehicle businesses.”
“Our customers benefit from the targeted partnership with Rivian to create a leading technology architecture,” said Oliver Blume, CEO of Volkswagen Group. “Through our co-operation, we will bring the best solutions to our vehicles faster and at lower cost.”
Oliver Blume, CEO of Volkswagen Group, and RJ Scaringe, founder and CEO of Rivian. Image credit Rivian
“We are also acting in the best interest of our strong brands, which will inspire with their iconic products,” Blume added. “The partnership fits seamlessly with our existing software strategy, our products, and partnerships. We are strengthening our technology profile and our competitiveness.”
Zonal architecture
“We’re very excited to be partnering with Volkswagen Group,” added RJ Scaringe, founder and CEO of Rivian. “Since the earliest days of Rivian, we have been focused on developing highly differentiated technology, and it’s exciting that one of the world’s largest and most respected automotive companies has recognised this.”
“Not only is this partnership expected to bring our software and associated zonal architecture to an even broader market through Volkswagen Group’s global reach, but this partnership also is expected to help secure our capital needs for substantial growth,” said Scaringe.
Initially Volkswagen Group will invest $1 billion in Rivian through an unsecured convertible note that will convert into Rivian’s common stock.
Volkswagen Group is expected to invest a further $4 billion as part of the transaction.
Who benefits?
The investment will provide Rivian the funding necessary to develop its less expensive and smaller R2 SUVs that are set to roll out in early 2026 and its planned R3 crossovers, CEO RJ Scaringe was quoted as telling Reuters.
Moreover, the partnership will enable Rivian to cut operating costs by utilising volumes of supplies including chips and components, he reportedly said.
It will also reportedly help Rivian turn cashflow positive.
The company will license its existing intellectual property to the JV, and the R2 will be the first vehicle using software from the JV. Volkswagen vehicles, including its Audi, Porsche, Lamborghini and Bentley brands, will follow, Reuters reported.
Volkswagen said on Tuesday the Rivian software will also be used by the German carmaker’s off-road EV brand Scout.
Volkswagen is also expected to benefit, after Reuters reported analysts and investors as viewing the investment as a move to solve the company’s software struggles.
VW’s software division, Cariad has reportedly exceeded its budget and failed to meet goals.
Troubled times
Shares of Rivian surged about 50 percent in extended trade after the announcement, potentially boosting the company’s market value by nearly $6 billion, if gains hold on Wednesday.
It has also reportedly overhauled its manufacturing process, which has led to a significant reduction in cost of materials, Scaringe told Reuters last week.
