Rivian stock surged yesterday after the EV maker announced a joint venture deal with Volkswagen Group, crucially bringing fresh capital into Rivian’s coffers.
Volkswagen announced it intends to work with Rivian to create “next generation software-defined vehicle (SDV) architectures” to be used in both companies’ future EVs. The joint venture will use Rivian’s “zonal hardware design” and platform as the foundation of future vehicles, as well as Rivian’s electrical architecture expertise for the vehicles. Rivian will license its existing IP rights to the joint venture.
In exchange, Volkswagen will invest an initial $1 billion in Rivian through an “unsecured convertible note that will convert into Rivian’s common stock,” with up to $4 billion in additional investment staged through 2026 for a total infusion of $5 billion.
Shares of Rivian soared more than 50% during after-hours trading Tuesday, two days ahead of an investor event for Rivian, which has been under pressure from Wall Street due to its cash burn and significant losses. Rivian stock closed Tuesday at $11.96 a share, down roughly 49% in 2024.
The deal will help Rivian on its journey to become cash flow-positive, Rivian CEO and founder RJ Scaringe said Tuesday night during an investor call.
The partnership comes as automakers shift strategies amid slower-than-expected adoption of EVs.
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