The Volkswagen Group will invest up $5 billion into US electric start-up Rivian amid the creation of a joint venture between the two companies, which is intended to design the next generation of software-defined vehicles.
The investment hands Rivian a financial lifeline to secure its mid-term future amid persistent losses, while Volkswagen gets access to Rivian’s future-positioned electrical architecture to accelerate its often cumbersome software development programme.
The resulting architecture developed between the two companies will find its way into vehicles in the second half of the decade, the two said in a joint statement.
“Through our cooperation, we will bring the best solutions to our vehicles faster and at lower cost,” VW Group CEO Oliver Blume said.
Rivian’s stock jumped on the news, which will have given investors hope that the one-time stock market darling can return to the heights of 2021 when it was worth over $120 billion based on its share price. As of Tuesday Rivian was worth $11.9 billion, having lost $1.48 billion in the first quarter alone.
The VW-Rivian tie-up will have implications for the development of future models for both companies, particularly Rivian’s recently announced R2 crossover and smaller, European-angled R3 SUV hatchback. The news could also alter the development course of Volkswagen’s revival of the Scout off-road brand as an EV company, which will compete directly with Rivian’s line-up.
VW’s investment into Rivian comes after Ford cut its 11.4% stake in Rivian to just above 1% in 2023. A plan to build Lincoln models on the Rivian platform fell through.
Rivian’s zonal electrical architecture, in which centralised computer chips control multiple functions grouped into ‘zones’, is one of the closest within the car industry in the goal to achieve the software-defined vehicle.
Start-ups like Rivian have found it much easier to create a modern software architecture without the burden of adapting electrical set-ups from legacy models, which VW in particular has found very difficult despite the creation of its own Cariad software division.
Car makers hope software defined vehicles will be much easier to update and bring additional functions throughout the car’s lifetime, potentially persuading customers to increase their spending mid-ownership.
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