VW, Rivian Launch Joint Venture, As Investment Rises To $5.8 Billion

Volkswagen and Rivian Automotive have officially launched their joint venture this week, after the German car giant increased its investment in the electric vehicle (EV) manufacturer.

Volkswagen announced the new joint venture (JV) with a total deal size of up to $5.8 billion, saying it “combines the strength of both partners to create cutting-edge software and electronics architectures and scale the electric vehicle platforms and architectures.”

Rivian had entered into a joint venture with Volkswagen back in June 2024, which saw Rivian receive $1 billion, and which would eventually total $5 billion based on certain conditions.

Rivian, Volkswagen JV

Now on 13 November 2024 the two firms entered into a transaction agreement to create their new joint venture (JV) – known as Rivian and Volkswagen Group Technologies – with a total deal size of up to $5.8 billion.

Through this JV, the companies plan to combine electrical architecture and software technology for both companies’ future electric vehicles, covering all relevant vehicle segments, including subcompact cars.

The joint venture will be headed by Wassym Bensaid (Rivian) and Carsten Helbing (Volkswagen Group). Developers and software engineers from both companies will join the joint venture.

Teams will be based in Palo Alto, California initially, and three other sites are in development in North America and Europe.

The two firms said that by combining their complementary expertise, they plan to reduce development costs and scale new technologies more quickly.

“The partnership with Rivian is the next logical step in our software strategy,” said Oliver Blume, CEO of Volkswagen Group. “With its implementation, we will strengthen our global competitive and technological position.”

“The launch of the joint venture demonstrates the potential we want to leverage together in the coming years,” said Blume. “We have a clear plan to offer our customers the best products and digital experiences at attractive prices through state-of-the-art development processes, innovative technological approaches, and a competitive cost base driven by synergies.”

“Today’s finalisation of our joint venture with Volkswagen Group marks an important step forward in helping transition the world to electric vehicles,” added RJ Scaringe, Founder and CEO of Rivian.

“We’re thrilled to see our technology being integrated in vehicles outside of Rivian, and we’re excited for the future,” said Scaringe. “Rivian will continue to stay focused on creating best in class products and services that benefit our customers, helping to drive EV adoption.”

Milestone targets

The two firms said the JV will aim to use the existing Rivian electrical architecture and software technology stack, enabling the launch of Rivian’s R2 in the first half of 2026 and support the expected launch of the first models from the Volkswagen Group as early as 2027.

Volkswagen Group plans to invest up to $5.8 billion in Rivian and the joint venture by 2027. An initial investment of $1 billion in the form of a convertible note has already been made.

At closing of the Joint Venture, Volkswagen Group will invest about $1.3 billion as consideration for background IP licenses and a 50 percent equity stake in the joint venture.

The remaining investment of up to $3.5 billion is expected to come in the form of equity, a convertible note, and debt at future dates and based on clearly defined milestones.

Further investments are tied to clear operational, technical, and financial milestones.

The joint venture will operate as an independent company, with roughly 1,000 people expected to work for the joint venture.

Volkswagen is currently going through a restructuring (including layoffs and the closure of three of its factories in Germany) that could impact the car giant’s future plans, amid falling sales and profits.

Troubled times

There is no getting around the fact that the EV sector is facing a troubling period, with EV makers struggling with a slowdown in demand, coupled with high interest rates and a spending squeeze around the world.

Indeed, Rivian was hit particularly hard, and in an effort to keep going it slashed costs, and laid off  6 percent of its workforce in early 2023.

Rivian also renegotiated supplier contracts and opted to build some parts in-house.