VW Group invest $1 billion into EV startup Rivian as part of a software development deal that could expand to as much as $5 billion.
The deal, which was announced Tuesday afternoon, sent Rivian’s shares up more than 36% in after-hours trading.
The two companies will create a joint venture focused on next-generation electrical architecture and software technology. Under the deal, VW Group will use Rivian’s existing electrical architecture and software platform. Initially, VW will invest $1 billion into Rivian via an unsecured convertible note that will convert into Rivian’s common stock subject to certain conditions upon the later of receipt of regulatory approvals and December 1, 2024.
VW Group is expected to invest a further $4B as part of the transaction, the companies said.
The deal is designed to benefit both companies, according to the companies. Rivian has a deep need to lower the cost of its manufacturing its vehicles and to pad its balance sheet as it tries to scale production of its existing EVs and develop and bring its next-generation R2 line to market. VW Group, meanwhile, has struggled with its software development and plans to bring so-called software-defined vehicles to market.
The news comes just weeks after Rivian started producing the next-generation of its R1T pickup truck and R1S SUV, an upgrade that reworking the guts of its vehicles, changing everything from the battery pack and suspension system to the electrical architecture, interior seats and sensor stack.
This story is developing …