Volkswagen to Invest Up to $5 Billion in Rivian for Software Deal

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Volkswagen Group has announced a significant investment in electric vehicle (EV) startup Rivian, with a deal worth up to $5 billion. The partnership will focus on software development, with Volkswagen planning to use Rivian's existing electrical architecture and software platform.

Under the agreement, Volkswagen will invest $1 billion into Rivian through an unsecured convertible note, which will convert into Rivian's common stock once regulatory approvals are received. The German automaker will also buy an additional $1 billion of Rivian's common stock in each of 2025 and 2026. The remaining $2 billion will be invested in a joint venture, split between an initial investment and a loan in 2026.

Rivian's founder and CEO, RJ Scaringe, stated that the partnership will enable the company to accelerate the development of its products and expand its portfolio. The joint venture will be a 50-50 partnership, with co-CEOs reporting to both Rivian and Volkswagen Group.

The deal is a significant boost for Rivian, which has been working to develop its mass-market R2 SUV. The startup's shares surged more than 36% in after-hours trading following the announcement.

Image Credits: Rivian

Rivian has been developing a new electrical architecture and compute platform, which has reduced the number of electronic control units (ECUs) used to control its vehicles from 17 to seven. This new zonal architecture allows Rivian to reduce wiring by 1.6 miles and build its vehicles faster.

The partnership is expected to bring Rivian's technology to other Volkswagen Group brands, including Porsche and Audi. The deal also opens up the possibility of selling the joint venture's technology to other companies in the future.

"This is a great opportunity for us to work together and leverage each other's strengths," said Volkswagen Group CEO Oliver Blume. "We have a strong foundation for a successful partnership, and we're excited to see what the future holds."