Rivian stock surges 36% after announcing $5 billion joint venture with Volkswagen
This partnership, which could see investments reaching $5 billion by 2026, aims to form a joint venture for sharing knowledge on EV architecture and software.The collaboration is expected to fast-track Volkswagen's plans to create software-defined vehicles, with Rivian providing its existing intellectual property rights to the joint venture.
The automotive industry is currently navigating through unique challenges. While EV startups are dealing with reduced demand due to high-interest rates and limited funds, traditional carmakers are trying to master the production of battery-powered vehicles and advanced software. Besides the direct investment, Volkswagen and Rivian plan to form a joint venture to develop next-generation electric vehicle architecture. Both companies will equally control the joint venture, each holding a 50% stake.
Volkswagen would also provide a payment of $1 billion upon the joint venture's foundation in 2024, followed by a loan of $1 billion in 2026. If the joint venture is successfully implemented and further milestones are achieved, Volkswagen's total investment in Rivian and the joint venture could amount to $5 billion by 2026.The proposed transaction could lead to an unexpected cash outflow of up to 2 billion EUR in the current fiscal year.
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