VW and Rivian have simply introduced that the 2 corporations will kind a three way partnership, bringing Rivian’s software program experience to VW’s merchandise and offering an preliminary $1 billion, and probably as much as an eventual $5 billion, in capital for Rivian to get via its push to ship its upcoming R2 automobile.
Rivian is at the moment working exhausting to get prices down in its quest for profitability. Whereas the corporate has massive money reserves, it’s operating via them at comparatively fast fee. The financials get just a little bit higher every quarter, however there’s nonetheless a whole lot of work to be carried out.
Not too long ago, Rivian introduced that it will delay constructing its plant in Georgia as a way to save over $2 billion within the quick time period, serving to scale back strain on its near-term financials.
Now, immediately, the corporate has had one other strain valve launched, as VW and Rivian have introduced they may kind a three way partnership to deliver Rivian’s software program to VW’s EVs, with VW providing an preliminary $1 billion in capital and probably as much as $5 billion by 2026.
“Our prospects profit from the focused partnership with Rivian to create a number one know-how structure. By means of our cooperation, we’ll deliver one of the best options to our autos quicker and at decrease value. We’re additionally performing in one of the best curiosity of our sturdy manufacturers, which is able to encourage with their iconic merchandise. The partnership suits seamlessly with our present software program technique, our merchandise, and partnerships. We’re strengthening our know-how profile and our competitiveness.”
Oliver Blume, CEO of Volkswagen Group
The partnership is effective for VW as effectively, as software program has been its greatest subject just lately. VW’s earlier CEO, Herbert Diess, stepped down in 2022, and it’s thought that software program points had been the principle purpose for his departure. In 2023, VW employed a former Rivian exec to assist with software program. It will need to have preferred what it obtained, as the businesses are deepening their relationship now.
The partnership begins with VW providing a $1 billion convertible notice to Rivian, which is able to convert into an fairness holding across the finish of this yr.
As well as, the 2 corporations will set up a 50/50 three way partnership round “subsequent era electrical/digital structure.” It will give VW fast entry to Rivian’s electronics structure, which has been seen as one of many main strengths of the corporate.
“We’re very excited to be partnering with Volkswagen Group. For the reason that earliest days of Rivian, we now have been centered on growing extremely differentiated know-how, and it’s thrilling that one of many world’s largest and most revered automotive corporations has acknowledged this. Not solely is that this partnership anticipated to deliver our software program and related zonal structure to an excellent broader market via Volkswagen Group’s world attain, however this partnership additionally is predicted to assist safe our capital wants for substantial progress. Rivian was created to assist the world to transition away from fossil fuels via compelling services and products, and this partnership is superbly aligned with that mission.”
RJ Scaringe, Founder and CEO of Rivian
After the institution of this three way partnership, VW says it’s going to make investments a further $4 billion into Rivian, in $1 billion tranches in 2025 and 2026, contingent on Rivian assembly “sure milestones.”
After the announcement, RIVN inventory is buying and selling up greater than 40% in after hours buying and selling. It had already risen 8% throughout immediately’s buying and selling session after an analyst improve. Rivian will maintain an investor name at 3pm Pacific, 6pm jap right here, and you may learn its investor letter right here.
Electrek’s Take
That is nice information for Rivian, and nice information for VW as effectively.
Nevertheless, Rivian has had plenty of previous partnerships that didn’t end up.
Rivian had beforehand partnered with Ford to construct Ford/Lincoln EVs and likewise with Mercedes to construct electrical vans. Each of these fell via, with the Mercedes deal together with a three way partnership and the Ford deal together with an enormous funding which Ford later trimmed.
Rivian has additionally partnered with Amazon to ship 100,000 supply vans. That partnership goes effectively with over 10,000 autos delivered, however the exclusivity portion of the contract just lately ran out, and now Rivian is searching for extra purchasers.
On this case, although, I can see a direct purpose for Voltswagen to wish Rivian’s assist. Whereas their software program is lots higher now than it was, software program has been the achilles heel of conventional auto corporations basically, and VW particularly. And with VW’s yearly income ($335 billion in 2023), they’ll spare just a little change to repair one in every of their main issues.
One different fascinating notice: VW just lately spun off its traditional Scout model right into a Rivian-like journey EV. That was seen as an try and compete in a market that Rivian is at the moment one of the best providing in. We surprise if this partnership will embrace utilizing Rivian’s experience for the Scout? Keep tuned.
