Volkswagen announced it would invest up to $5bn in California-based electric vehicle startup Rivian, under a joint venture agreement to develop electrical technology and software together.
“The partnership is anticipated to accelerate the development of software for Rivian and Volkswagen Group,” the companies said in a statement. “It is expected to allow both companies to combine their complementary strengths and lower cost per vehicle by increasing scale and speeding up innovation globally.”
The deal, which begins with a $1bn investment that could grow to $5bn by 2026, is a major win for Rivian, which reported a $1.45bn loss during its first quarter.
The company, whose main vehicles retail for between $70,000 and $75,000, reported that it lost $39,000 on every vehicle it sold so far in Q1.
The infusion of cash, which is pending regulatory approval, could help the company resume construction on a Georgia plant that was paused to cut costs and launch a new, more affordable midsize SUV called the R2.
“This is important for us financially,” Rivian founder and CEO R.J. Scaringe told The New York Times.
The company’s stock, which has been down 49 percent overall in 2024, soared in after-hours trading on news of the partnership, growing nearly 50 percent.
Under the terms of the deal, Volkswagen would join Amazon in being a major outside shareholder of Rivian. Ford once owned a roughly 12 percent stake in the company and planned to co-develop EVs with Rivian but later exited the deal in 2023.
The EV market has been a complicated one for automakers, even for ones like Tesla, which has risen to become the most valuable automaker in the world.
The company reported a 55 percent decline in profits in Q1 and is planning an estimated 10 percent reduction in its workforce.
This month, EV maker Fisker filed for Chapter 11 bankruptcy protection.
