Volkswagen Announces $5 Billion Partnership with US-Based Rivian

A joint venture will be formed to develop revolutionary software for electric vehicles

Oliver Blume

German group Volkswagen has signed an investment agreement with US startup Rivian, intending to replicate Tesla’s success. The move caught Wall Street, investors, and especially Tesla boss Elon Musk by surprise. It has been announced that the German automaker will invest up to $5 billion between 2024 and 2026 in the Irvine, California-based company, primarily in a joint venture (50/50) to develop electric vehicle platforms.

As industry experts point out, “the operation following a similar deal with Xpeng in the Chinese market is extremely complex. It includes several intermediate stages, each of which is conditioned on the achievement of certain financial and technological goals.” First, Volkswagen will set aside a billion dollars for the second half of this year to buy bonds that can be converted into Rivian stock once all regulatory approvals are received. Another billion dollars will be invested in a joint venture with Rivian. After that, from 2025 to 2026, Volkswagen will buy two billion dollars’ worth of Rivian securities and lend the JV a billion dollars, but only if it achieves specific technological and production goals.

The key word for all the work is software developed by Rivian. “The collaboration is aimed at accelerating the software development of VW Group and Rivian. Rivian’s technology will form the basis of the next-generation software that will be used in both companies’ vehicles. The new cars should be on the market by 2030,” said Volkswagen CEO Oliver Blume.

Through the agreement, the Wolfsburg-based group will use Rivian’s current software platform (it has a “zone” configuration of microprocessors on board the car) to develop SDVs (software-defined vehicles), the first of which should appear between 2025 and 2030. In addition, Volkswagen and all of its brands will be able to immediately gain access to the internal organizational structures of the American company and thus solve one of its main problems: the difficulties of VW Cariad’s IT division and the resulting delays in the creation of innovative electric car models.