Volkswagen Group has announced a significant investment in the EV startup Rivian. The deal, which could amount to as much as $5 billion, is part of a broad software development agreement. The initial investment will be $1 billion, with the potential for further investments in 2025 and 2026.
This partnership is a major boost for Rivian, which is currently working on the development of its mass-market R2 SUV. The company’s shares saw a significant increase in after-hours trading following the announcement.
The deal also benefits Volkswagen, which has faced challenges in advancing its software capabilities during the transition to electric vehicles. The joint venture will allow Volkswagen to leverage Rivian’s existing electrical architecture and software platform. This arrangement could potentially bring Rivian’s technology to Volkswagen Group’s various brands, including Porsche and Audi, as well as its own EV startup, Scout Motors.
The partnership will begin with Volkswagen investing $1 billion into Rivian via an unsecured convertible note. This will convert into Rivian’s common stock once certain regulatory approvals are received, which is expected to happen in the fourth quarter of this year. Volkswagen will then purchase another $1 billion of Rivian’s common stock in 2025 and 2026. The remaining $2 billion will be invested into the joint venture, split between an initial investment and a loan in 2026.
The collaboration between the two companies began when Rivian founder and CEO RJ Scaringe met with Volkswagen Group CEO Oliver Blume. The partnership is expected to bring Rivian’s software and associated zonal architecture to a broader market through Volkswagen Group’s global reach. It also provides Rivian with the capital needed for substantial growth.
Read more: techcrunch.com