Volkswagen increases investment in Rivian to $5.8 billion
Delhi Delhi: Volkswagen Group has raised its investment in Rivian by 16 per cent to $5.8 billion, the two automakers said on Tuesday, as the companies launch their planned joint venture to develop electric vehicle architecture and software.
Shares of the US EV maker, valued at more than $11 billion, rose nearly 9 per cent in extended trading on Tuesday.The companies said in June that VW would invest $5 billion in Rivian – a lifeline for the loss-making EV startup that is set to roll out a small, affordable SUV called the R2 amid high borrowing costs and slowing EV demand.
“This partnership and this deal secures capital for us to ensure that we can not only take Rivian through the launch of the R2 in Normal, but secure the launch and development of the R2 at our Georgia facility and make it cash flow positive for us as a business,” Rivian CEO RJ Scaringe told reporters.
The R2, the first vehicle to use the new architecture, will be built at its factory in Normal, Illinois. The company has delayed construction of its plant in Georgia, applying for federal loans last month to begin building the factory.New vehicles from VW unit Scout Motors will also be among the first to use the new architecture.The joint venture, called Rivian and VW Group Technology LLC, aims to integrate advanced electrical infrastructure and Rivian’s software technology for both companies’ future EVs across all relevant vehicle segments, including subcompact cars, the firms said.
Volkswagen plans to invest $5.8 billion in Rivian and the joint venture by 2027, including an initial $1 billion convertible note.The Audi-parent will invest $1.3 billion for intellectual property licenses and an equity stake, and up to $3.5 billion in future equity, notes and debt, all tied to specific milestones. Analysts said the joint venture could help ease the German automaker’s problems with its software unit, Cariad, which has been plagued by delays and losses since its inception.
The German automaker recently asked its workers to take a 10 percent pay cut, saying it was the only way the company could save jobs and remain competitive, as profits declined and union bosses threatened a strike. Rivian Chief Software Officer Wassim Bensaid and VW Group Chief Technical Engineer Karsten Helbing will lead the joint venture.
