Volkswagen invests 5 billion in Rivian: a major agreement for both companies

Rivian and Volkswagen have just signed an agreement that will cover US company accounts for up to 5 billion dollars in the coming years. The German automaker realized it needed help in one of its key divisions with its electric vehicle development, so it decided to take out its wallet and solve the problem.

The agreement, which came as a surprise, welcomes Creation joint venturewhich is nothing more than partnership aimed equally and in the same direction of Volkswagen and Rivian. The goal is not to create a new brand of electric cars, but use each other’s technology and the various business sectors in which they excel.

When Volkswagenthe agreement will allow it to advance by leaps and bounds in development and implementation of software and technologies for your electric vehicles. In this sense, the company was stagnant, so it will now take advantage of a renewed team with ideas more focused on electric mobility.

In fact, Volkswagen will start using Rivian IP license coming soon, since the transfer of this joint venture is one of the strategic conditions of the agreement. This will allow the German company to begin improving and integrating new software and technology into its own brand and that of its parent company. See Audi, Porsche or Lamborghini.

RivianAgainst, you will see economic benefits. These figures do not appear in their annual reports and are currently loses about $40,000 per car soldThis infusion of equity capital will provide the company with liquidity and cash flow that will make future launches profitable.

In addition, Rivian will also take advantage of large volumes of components processed by Volkswagen, which will significantly reduce costs and produce smaller cars at more attractive prices. In fact, the American company says the investment is great news for the development of the R2 and R3 SUVs, two announced vehicles that were on the waiting list due to the economic situation.

Any such injection of money is huge. Receiving support from the Volkswagen Group certainly strengthens its position in Europe and ultimately in Asia.

Vitaly Golomb, Investment Partner at Rivian

Volkswagen’s investment in Rivian

Speaking from a purely economic point of view, Volkswagen’s first step will be investment. Rivian shares worth $1 billion as of December 1, 2024.. After this “payment” the German will invest another 1 billion into the accounts of the American company, when joint venturemilestone, which is scheduled for the fourth quarter of this year.

Volkswagen will reacquire shares in 2025 and 2026 at a total cost of $2 billion, although these purchases will be subject to certain undisclosed milestones set in the agreement.

Finally, German will complete the move with a loan of another 1,000 million during 2026. to complete the announced investments.