Global leading automaker Volkswagen Group and California-based electric vehicle (EV) maker Rivian have entered a $5.8 billion deal to create their new joint venture (JV).
The deal, which is expected to start on November 13, intends to create electric architecture and software for the “next generation Software Defined Vehicles,” according to Rivian.
The “Big Four” automaker said it would invest $5 billion into the 50:50 JV in June to accelerate the development of software, but now that figure has risen nearer to $6 billion.
The JV will be headed by Wassym Bensaid (Rivian) and Carsten Helbing (Volkswagen Group).
Oliver Blume, CEO of Volkswagen Group, said:
“The partnership with Rivian is the next logical step in our software strategy. With its implementation, we will strengthen our global competitive and technological position. Today’s launch of the joint venture demonstrates the potential we want to leverage together in the coming years. We have a clear plan to offer our customers the best products and digital experiences at attractive prices through state-of-the-art development processes, innovative technological approaches, and a competitive cost base driven by synergies.”
The JV aims to use the existing Rivian electrical architecture and software technology stack, enabling launches from both automakers in the next three years, according to Rivian.
Volkswagen plans to complete the investment in Rivian and the JV by 2027. An initial investment of $1 billion has already been made and another $1.3 billion delivered at the closing of the JV.
The remaining investment of up to $3.5 billion is expected to come in the form of equity, convertible notes and debt at future dates, with the JV operating as an independent company.
RJ Scaringe, Founder and CEO of Rivian, said:
“Today’s finalization of our joint venture with Volkswagen Group marks an important step forward in helping transition the world to electric vehicles. We’re thrilled to see our technology being integrated in vehicles outside of Rivian, and we’re excited for the future. Rivian will continue to stay focused on creating best in class products and services that benefit our customers, helping to drive EV adoption.”
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