Rivian (RIVN) shares are soaring in extended trading hours after the electric vehicle maker announced a joint venture with Volkswagen (VWAGY), bringing in much-needed capital.
Volkswagen stated it plans to collaborate with Rivian to develop “next generation software-defined vehicle (SDV) architectures” for future EVs from both companies. The joint venture will leverage Rivian’s “zonal hardware design” and platform, along with Rivian’s expertise in electrical architecture. Rivian will license its existing intellectual property rights to the joint venture.
In return, Volkswagen will make an initial investment of $1 billion in Rivian through an “unsecured convertible note that will convert into Rivian’s common stock,” with additional investments of up to $4 billion staged through 2026, totaling $5 billion.
This announcement marks a significant milestone for Rivian, as it not only boosts the company’s financial standing but also strengthens its strategic position in the competitive EV market through collaboration with a major automotive player like Volkswagen.
Here are some key points from the announcement:
- Share Surge: Rivian’s shares surged over 40% in after-hours trading following the announcement, reflecting investor optimism about the deal.
- Joint Venture: The partnership with Volkswagen aims to develop next-generation software-defined vehicle (SDV) architectures. This includes using Rivian’s zonal hardware design and electrical architecture expertise.
- Investment: Volkswagen’s investment comprises an initial $1 billion through an unsecured convertible note that will convert into Rivian’s common stock. This will be followed by up to $4 billion in additional investment through 2026, totaling $5 billion.
- Intellectual Property: Rivian will license its existing intellectual property (IP) rights to the joint venture, allowing both companies to benefit from shared technologies.
This partnership is expected to accelerate the development of advanced EV technologies and potentially improve the production efficiency and market reach of both companies.
<blockquote class=”twitter-tweet”><p lang=”en” dir=”ltr”>This is exciting! Volkswagen Group CEO Oliver Blume and I are thrilled to announce the formation of a joint venture between our two companies. This partnership brings Rivian’s software and zonal electronics platform to a broader market through Volkswagen Group’s global reach and… <a href=”https://t.co/11XVNUo89J”>pic.twitter.com/11XVNUo89J</a></p>— RJ Scaringe (@RJScaringe) <a href=”https://twitter.com/RJScaringe/status/1805694762286301406?ref_src=twsrc%5Etfw”>June 25, 2024</a></blockquote> <script async src=”https://platform.twitter.com/widgets.js” charset=”utf-8″></script>
“The partnership fits seamlessly with our existing software strategy, our products, and partnerships. We are strengthening our technology profile and our competitiveness,” Volkswagen Group CEO Oliver Blume said in a statement.
“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 also is expected to help secure our capital needs for substantial growth,” Rivian CEO RJ Scaringe said in the statement.
For Rivian, the influx of new capital alleviates concerns about the company’s financial runway as it progresses towards the launch of its next-generation vehicles, the R2 and R3 mass-market SUVs.
