“The best solutions faster”
VW invests five billion in US electric car manufacturer Rivian
26.06.2024, 06:41 a.m.
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VW’s software subsidiary Cariad is constantly experiencing difficulties. The Wolfsburg-based car company is therefore now taking a different path. Up to five billion dollars are to be invested in the US company Rivian and a joint venture over the next few years.
Volkswagen is seeking help from the struggling US electric vehicle manufacturer Rivian to develop the next generation of car software and is investing up to five billion US dollars in the process. The Wolfsburg-based carmaker and Rivian want to set up a joint venture that will be owned equally by both companies.
The aim of the partnership is to accelerate Volkswagen’s software plans, the company said. In the future, development for the software-defined vehicle will be bundled in the new joint venture with Rivian, said a VW spokesman. This means that the project is no longer solely in the hands of the software subsidiary Cariad, which has recently attracted attention with delays and is being restructured.
Rivian’s technology will form the basis for the software of future electric car models, it said. “This will be used in vehicles from both companies,” which are due to be launched before 2030, VW explained. “Through our collaboration, we will bring the best solutions into our vehicles faster and at lower cost,” said Volkswagen CEO Oliver Blume. The software will be used in future for vehicles from Rivian and the entire VW Group, including the new electric car brand Scout in the USA. But it does not mean the end of Cariad, emphasized Blume.
This is the Wolfsburg-based company’s response to ongoing difficulties at its software subsidiary Cariad. Former VW boss Herbert Diess had big software plans for Cariad, but the project attracted attention primarily due to problems and delays.
Because the software for the luxury platform PPE was not ready in time, the subsidiaries Audi and Porsche had to postpone the launch of new models by several years. The Wolfsburg-based company’s complicated software architecture is cited as one problem. The joint venture with Rivian is now supposed to provide a solution for the software for the new electric cars on the SSP platform.
Rivian needs money
The Wolfsburg-based car company is investing up to three billion euros in Rivian. This is a much-needed cash injection for the electric car manufacturer: Like other startups, the company is suffering from the current weakness in the electric car market, with Rivian losing almost 40,000 US dollars for every car sold. The company recently reduced production in order to save money.
Rivian plans to use VW’s money to finance the development of the cheaper and smaller R2 SUV, which is due to hit the market in 2026, CEO RJ Scaringe said. The news was received positively on the stock market. Rivian shares jumped by about 50 percent in after-hours trading, increasing the market value by almost six billion US dollars. “Any infusion of money like this is huge,” said Vitaly Golomb, partner at Rivian investor Mavka Capital. “If they get the support of the Volkswagen Group, it will strengthen their story towards Europe and ultimately towards Asia.”
As a first step, VW is issuing a convertible bond for one billion US dollars, which is to be exchanged for Rivian shares in December at the earliest. In 2025 and 2026, Volkswagen plans to invest another billion US dollars in Rivian shares. Volkswagen is spending up to two billion US dollars on the joint venture itself, part of which will be due for the licensing of the Rivian software when it is founded, which is planned for the end of 2024.