Credit - Rivian
Volkswagen Group (VW) and Rivian have kicked off a joint venture, with the German carmaker investing more money into the tie-up. The two companies say the deal is now worth $5.8 billion – up from the first promise of $5 billion from VW. Shares in the US electric vehicle (EV) manufacturer rose more than 6% in after-hours trading following the news.
The Rivian-Volkswagen partnership will allow the companies to share important technologies, as global demand for electric cars is slowing and competition from Chinese companies grows.
The joint venture gives Rivian, which is losing money, an important way to get funding. That will help as it gets ready to launch its R2 model next year. The R2 is going to be a smaller and cheaper SUV than those it currently has. It also implies that VW will be allowed to make use of Rivian’s technology in its array of vehicles.
The first VW models to utilize Rivian technology are expected to be ready for customers by 2027.
“By combining their complementary expertise, the two companies aim to lower development costs and more rapidly scale new technologies,” the two companies said in a statement. Under the plan, the developers and software engineers from both companies will first work together in California, while three more locations in North America and Europe will be built.
It comes as people expect that VW, the biggest car maker in Europe, is going to announce big cost-cutting plans.
The company operates under several other marques, including Audi, Lamborghini, and Porsche, and has been facing rising costs, dwindling sales in some markets, increased competition from Chinese electric vehicle manufacturers, and a slower-than-anticipated weaning of drivers off petrol and diesel cars. Rivian has tried to cut costs as fewer folks are willing to purchase electric cars.
The company has not yet reported any profit. It has been renegotiating contracts with suppliers and optimizing its manufacturing processes. Rivian also makes electric delivery vans in addition to SUVs. It mostly delivers these vans to Amazon, which just so happens to be its largest shareholder.
