Volkswagen and Rivian have crossed all their T’s and dotted all their I’s in their new $5.8 billion joint venture, which officially kicks off its work on November 13th, the companies announced today.
Last June, VW said it would invest $5 billion in Rivian as part of a new joint venture that’s focused on developing a new electrical architecture and vehicle software for future models, including subcompact cars, with the first planned for 2027. Now that investment has grown to $5.8 billion.
“Rivian and VW Group Technology, LLC”
The new joint venture, dryly named “Rivian and VW Group Technology, LLC,” will be led by Rivian software chief Wassym Bensaid and VW Group chief technology engineer Carsten Helbing. Teams will be based in Palo Alto, California, initially, and three other sites are in development in North America and Europe. Developers and engineers from both companies will fill out the ranks of the new venture.
Rivian also showed off a prototype vehicle to a small group of reporters at its Palo Alto office. According to Bloomberg, the vehicle was a VW test vehicle with Rivian software that was created by the joint venture’s engineering team over a 12-week period.
With the deal now closed, Rivian will receive an initial $1 billion loan from VW, followed by $1.3 billion in shares in Rivian, and an additional $3.5 billion over the next few years, VW Group CEO Oliver Blume said in a call with reporters Tuesday.
The technology that emerges from the joint venture will underpin vehicles from both companies, from Rivian’s more affordable R2 vehicle, which is set to go into production in 2026, to a variety of models from the VW Group, including Audi, Porsche, Scout, and VW.
“The positive aspect is that we will be scalable, from the very small segment up to luxury cars, [and] sports cars,” said Blume. “The electronic architecture… will be scalable and will be usable for a great volume of cars.”
At the time, the new venture was seen as a big win for Rivian, which has lost over $1 billion each quarter for the past year and is still struggling to find its financial footing since its public offering in 2021. The company recently said it expected to lose up to $2.88 billion in adjusted earnings for the year, up from the previous guidance of $2.7 billion in losses. And it has gone through several rounds of layoffs over the past two years.
Meanwhile, VW has been going through its own struggles around EVs. The company’s plug-in models are selling well, but its market share in North America is shrinking. Its financial struggles began to peak this year, forcing it to close at least three of its German factories and downsize its remaining plants. And its software has been plagued by bugs and customer complaints.
The new venture holds promise for both companies: VW gets access to Rivian’s software-first approach to auto manufacturing, which should help it compete better in the race to develop more software-defined vehicles that can receive updates over the air; and Rivian receives a much needed financial lifeline that will help it survive a more uncertain economic climate ahead.
“The positive aspect is that we will be scalable”
Rivian CEO RJ Scaringe has said that the capital will help carry the company through the production ramp up of the R2 at its existing plant in Normal, Ill., as well as a midsized EV platform at a factory in Georgia, where Rivian paused construction earlier this year.
Scaringe wouldn’t say when construction on the Georgia facility would start, but affirmed that it was a “core part of Rivian’s long-term production topology and long-term production strategy.”
“This partnership and this deal secures the capital for us to ensure that we can not only take Rivian through the launch of R2 in Normal, but secures the launch of and growth of R2 in our Georgia facility and through free cashflow positive for us as a business,” Scaringe added.
There was also hints that the new partnership would include Scout Motors, the VW-owned adventure brand that recently launched a new electric truck and SUV. Bensaid had said that Scout’s software would be a product of the VW-Rivian joint venture. And today, the companies confirmed that Scout would be among the brands that would benefit from the new technology.
“Great vehicles require great software,” Scout CEO Scott Keogh said in a statement after the conclusion of the media call with Rivian and VW. “It makes total sense to combine American manufacturing and technology to deliver Scout vehicles that customers want to own and love. This next-generation software-defined vehicle architecture will beautifully complement our Scout Community UX, enabling us to provide our customers with the tactile controls and connection they desire with the responsiveness and easy-to-use interface they demand.”
