Rivian to Help Volkswagen Produce Electric Cars for $5 Billion

At certain points in its history, the German automaker Volkswagen was the largest automaker in the world, but as the electric vehicle market developed, it began to realize that it had to cooperate with specialized startups. One of them will be the Californian company Rivian, with which Volkswagen will create a joint venture to produce electric vehicles.

Image source: Rivian

In the near future, as reported by The Verge, the still-loss-making American startup Rivian will receive its first billion US dollars from Volkswagen in the form of unsecured convertible bonds, which, after regulatory approval, will allow the German automaker to receive some common shares of Rivian. Next year, another $1 billion will be invested in the joint venture, as in 2026, and the total investment will reach $5 billion.

The joint venture with Rivian will allow Volkswagen to use elements of the startup’s platform and software to produce electric vehicles, including its Scout subsidiary brand, which was recently revived specifically for the American market. Rivian founder RJ Scaringe admits that he was prompted to create a joint venture with Volkswagen by a commonality of views with the concern’s management, although in his youth he was also fond of restoring classic Porsche sports cars, and therefore was partial to the products of the Volkswagen subsidiary brand.

In essence, the joint venture between Rivian and Volkswagen will be able to use the so-called “zoned” platform of the former company, which formed the basis of the restyled R1S crossovers and R1T pickups, and allows for a reduction in the number of components used in the production of electric vehicles. At the same time, Scaringe avoided a direct answer to the question about the specifics of the partners’ rights in the new joint venture. In particular, it is difficult to understand whether Rivian will retain the opportunity to collaborate in this area with other companies. The head of the startup simply explained that in the near future the partners will focus on developing their own models.

This is not the first time Rivian has collaborated with other companies. Amazon has remained a shareholder and major customer of Rivian in the commercial vehicle segment since the IPO, but its partnership with Ford Motor ultimately fell apart during the pandemic. Volkswagen is also using other opportunities to develop its product line. In China, it is investing in a local startup XPeng, which will help it create a couple of electric vehicle models for the Celestial Empire market, and the company is planning to conquer North America with the help of the Scout brand, which produced SUVs on this continent several decades ago. Cooperation with Rivian will definitely help the German auto giant in the latter initiative.