German automotive major Volkswagen Group has unveiled plans to invest as much as $5bn (€4.7bn) in US-based electric vehicle (EV) manufacturer Rivian.
This investment marks the beginning of a new equally owned joint venture (JV) that will develop software-defined vehicle (SDV) architecture.
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The partnership is anticipated to expedite the development of advanced software for Rivian and Volkswagen.
It will leverage the strengths of both companies, enhance global innovation, and look to reduce the cost per vehicle by increasing scale.
Rivian’s current zonal hardware design and integrated technology platform will serve as the cornerstone for the JV’s future SDV development.
This technology is anticipated to be incorporated into the EVs of both Rivian and Volkswagen, with
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By GlobalDatathe launch of vehicles equipped with the JV’s technology in the latter half of the decade.
In the interim, Volkswagen will utilise Rivian’s existing electrical architecture and software platform to advance its own SDV initiatives and transition to a pure zonal architecture.
Speaking to Reuters, Rivian CEO RJ Scaringe highlighted that the investment will support the development of Rivian’s R2 SUVs, expected in early 2026, and the planned R3 crossovers.
He also noted that the partnership would enable Rivian to reduce operating costs by leveraging supply volumes, including chips and components, which is crucial for the company to achieve positive cash flow.
Volkswagen will make an initial investment of $1bn in Rivian through an unsecured convertible note, which will later convert into common stock, contingent on regulatory approvals or by 1 December 2024.
Volkswagen Group CEO Oliver Blume said: “Our customers benefit from the targeted partnership with Rivian to create a leading technology architecture. Through our cooperation, we will bring the best solutions to our vehicles faster and at lower cost.
“We are also acting in the best interest of our strong brands, which will inspire with their iconic products. The partnership fits seamlessly with our existing software strategy, our products, and partnerships. We are strengthening our technology profile and our competitiveness.”
Scaringe added: “We are very excited to be partnering with Volkswagen Group. Since the earliest days of Rivian, we have been focused on developing highly differentiated technology, and it is exciting that one of the world’s largest and most respected automotive companies has recognised this.
“Not only is this partnership expected to bring our software and associated zonal architecture to an even broader market through Volkswagen Group’s global reach, but this partnership also is expected to help secure our capital needs for substantial growth.”
Earlier this year, Volkswagen established AI Lab, a new entity focused on incubating artificial intelligence-based digital products and fostering global collaboration.
