Rivian & Volkswagen Plan Joint Venture for Vehicle Software
Rivian Automotive and Volkswagen Group intend to form an equally controlled and owned joint venture (JV) to create next-generation electrical architecture and best-in-class software technology.
The partnership aims to accelerate software development for Rivian and Volkswagen Group.
Both companies will combine their complementary strengths and lower cost per vehicle by increasing scale and speeding up innovation globally.
Rivian's proven in-market zonal hardware design and integrated technology platform is expected to serve as the foundation for future SDV development in the JV, that will apply to both companies' vehicles.
Rivian plans to contribute its electrical architecture expertise and is expected to license existing intellectual property rights to the JV.
Insight into Rivian
Rivian, an American EV manufacturer, was founded in 2009 by its current CEO RJ Scaringe.
The company is headquartered in Irvine, California, and has gained significant attention for its creation of adventure-oriented electric vehicles.
Rivian's flagship models include the R1T pickup truck and the R1S SUV, built on the company's innovative skateboard platform, which feature enhanced off-road capabilities and substantial battery ranges of up to 400 miles.
In addition to its consumer vehicles, Rivian has secured a major deal with Amazon to produce 100,000 electric delivery vans, marking a significant step in commercial electric transportation.
These vans are part of Amazon's initiative to achieve net-zero carbon emissions by 2040.
Despite facing challenges such as production delays and supply chain issues, Rivian has successfully launched its R1T and R1S models to positive reviews, due to their innovative design, performance, and eco-friendly technologies.
With significant backing from investors like Ford and Amazon, Rivian remains a prominent player in the rapidly evolving EV market.
"We're very excited to be partnering with Volkswagen Group. Since the earliest days of Rivian, we have been focused on developing highly differentiated technology, and it's exciting that one of the world's largest and most respected automotive companies has recognised this." asserts RJ Scaringe.
"Not only is this partnership expected to bring our software and associated zonal architecture to an even broader market through Volkswagen Group's global reach, but this partnership is also expected to help secure our capital needs for substantial growth.
"Rivian was created to help the transition from fossil fuels through compelling products and services, and this partnership beautifully aligns with that mission."
Investment and growth
Underpinned by the vision of the strategic partnership, Volkswagen Group plans to make a US$5bn investment into Rivian.
Initially, Volkswagen Group will invest US$1bn in Rivian through an unsecured convertible note that will convert into Rivian's common stock.
This is subject to certain conditions upon the later receipt of regulatory approvals on December 1, 2024¹.
Volkswagen Group expects to invest a further US$4bn as part of the transaction².
Over the past months, significant effort has been undertaken to validate that Rivian's electrical architecture and software is compatible with Volkswagen Group's vehicles.
All parties currently anticipate the completion of the JV in the fourth quarter of 2024.
All transactions described in this release are subject to the completion of definitive agreements, the conditions included in those agreements, and the receipt of required regulatory approvals.
"Our customers benefit from the targeted partnership with Rivian to create a leading technology architecture." highlights Oliver Blume, CEO of Volkswagen Group.
"Our cooperation will bring the best solutions to our vehicles faster and at a lower cost.
"We are also acting in the best interest of our strong brands, which will inspire them with their iconic products.
The partnership fits seamlessly with our existing software strategy, products, and partnerships. We are strengthening our technology profile and our competitiveness."
JV moving forward
Both companies aim to launch vehicles benefiting from the technology created within the JV in the second half of the decade.
In the short term, the JV will enable Volkswagen Group to utilise Rivian's existing electrical architecture and software platform.
The partnership's ambition is to accelerate Volkswagen Group's SDV plans and transition to a pure zonal architecture.
Each company will continue to separately operate their respective vehicle businesses.
References
¹ The conversion price of half of the outstanding amount under the note will be calculated based on a particular daily volume-weighted average price (VWAP) before this announcement, and the conversion price for the remaining half will be calculated based on a specific daily VWAP before the conversion date.
² The additional investment of up to US$2B in Rivian's common stock is expected to take place through two tranches of US$1B each in 2025 and 2026, with pricing based on a specific daily VWAP of Rivian's common stock before each respective purchase. The investment of US$2B related to the JV is expected to be split between a payment at the inception of the JV and a loan available in 2026.
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