Jun 25, 2024 - Business

Volkswagen to invest $5B in EV startup Rivian

Nathan Bomey

A green EV parked in a parking lot — The Rivian R1S in downtown Danville, California, in June. Photo: Smith Collection/Gado/Getty Images

Volkswagen Group has agreed to invest $5 billion in EV startup Rivian in a deal that also involves the creation of a joint venture allowing VW to use Rivian's technology to accelerate its own EVs.

Why it matters: The deal represents a significant validation of Rivian's EVs and an acknowledgment by VW that it is playing catchup in the global race to electrify.

Driving the news: VW said Tuesday it will initially invest $1 billion in Rivian through an unsecured convertible note that will convert into Rivian's common stock.

The rest of the investment includes a $1 billion purchase of Rivian's common stock in 2025 and again in 2026, plus a $2 billion investment in the JV.

The impact: Rivian's stock soared 32% in after-hours trading Tuesday.

Between the lines: The JV will focus on the development of "next-generation electrical architecture and best-in-class software technology" that both companies will use to produce their own vehicles separately.

"Rivian plans to contribute its electrical architecture expertise and is expected to license existing intellectual property rights to the joint venture," the companies said in a statement.

Context: Rivian has been selling two EVs for several years — the R1T pickup and the R1S SUV — while VW has the ID.4 electric SUV, with the ID.Buzz electric van coming soon.

Initially backed by Amazon and Ford, Rivian delivered about 50,000 vehicles in 2023 and earlier this year unveiled three upcoming buzzy models.
VW in 2022 announced plans to roll out electric trucks and SUVs under the Scout brand, but those vehicles have not yet materialized.

What we're watching: Is Volkswagen targeting an acquisition of Rivian?

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Volkswagen to invest $5B in EV startup Rivian

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